The Expert Group on Modernisation of Indian Railways submitted its recommendations to the government a year ago, and the Central Government has taken some significant steps in its Rail Budget 2013-14 towards upgrading the rail infrastructure by way of introducing new technologies and modernising terminals, tracks, signalling systems, safety measures, etc. Requirements of modernising railway infrastructure including track, signalling, rolling stock and terminals have been identified and have been proposed as a major objective of the 12th Five Year Plan. Real fruits will be in the form of increased rail freight resulting from better automation and systems improvement, writes A Shivkamal.
The Indian Railways (IR) plans to upgrade its network with an aim to provide better and efficient and cost-effective services, and envisions to modernise its infrastructure through the induction of state-of-the-art and user-friendly technologies, with a view to bringing in radical improvements in line capacity, safety and efficiency. Signalling and Telecommunication Engineering provides for a whole range of technologies to provide cost-effective solutions in enhancing safety and line capacity and disseminating train running information to passengers so as to make their journey safe, comfortable and convenient.
While speeding up of trains is a constant endeavour, it is dependent on optimisation of the investments made by IR in modernisation of technology, high powered locos, modern coaches and better tracks.
Automatic signalling has been provided on 2,290 route kilometres on high density network of IR and automatic signalling works on about 1,750 route kilometres are in progress. Track modernisation of 19,000 km out of the total 64,000 km of existing track network have to be taken up on a priority basis if the IR has to sustain higher load to improve revenue generation.
Other modernisation plans that need immediate attention are automatic block signalling, deployment of on-board train protection system with cab signalling on all other routes and the introduction of GSM-based mobile train control communication system.
The Information and Communication Technology (ICT) in IR needs a major push, such as setting up Real Time Information Systems (RTIS) to provide real time information at stations on running trains; setting up Radio Frequency Identification (RFID) tracking system for wagons, coaches and locomotives to enhance wagon management and real time monitoring and computerising files to expedite decision making.
Efficiency is key
According to those who follow it closely, IR must remain financially sustainable so that resources generated can be ploughed back for efficient upkeep, operation and maintenance of the system itself for the benefit of the rail users.
Experts have called for facilitating private investments through PPP in Railways, and speedy implementation of key railway projects, such as the dedicated freight corridor, high-speed rail corridors, rolling stock and other capacity enhancement works.
“Investments in rail infrastructure are high priority as they add efficiencies to national competitiveness and reduce transaction and supply chain costs,’ says Chandrajit Banerjee, Director General, Confederation of Indian Industry (CII). “Higher revenues would offer more opportunities for targeting a zero-tolerance approach to issues in safety. Modernisation and technology upgradation of signalling, train protection warning system, integrated security systems, etc must be addressed”.
Industry players’ major suggestions for development of IR include improved project implementation, streamlined and time-bound approvals, project terms for ‘reasonable’ returns on capital for investors, and more efficient vendor management. In the long term, IR would need to look at heavier, faster and longer trains, plugging gaps in rolling stock supply, modern technologies for safety, better cargo handling, and other issues to improve performance.
Capacity creation in IR could be fast-tracked through key initiatives to encourage public-private partnerships (PPP). Transparency must be built into the process by adding frameworks for request for quotation (RFQ), request for proposal (RFP) and concession agreement templates, as in other infrastructure ministries, suggest industry officials. “Indian Railways envisages increasing of revenues by three times to Rs 2.70 lakh crore in the next 10 years and this will be possible only if private investments are encouraged and expanded,” notes railway transportation expert S Suranjana, an independent railway modernisation consultant, who has worked for Chinese firms, such as, Railway Sitchu Corp (China) and Tean Engineering.
Currently, the industry awaits changes in policies relating to wagon leasing, private freight terminals, special freight train operations, and others that would promote private sector participation in the rail sector, an official observes. “Consultations need to be held with stakeholders other than rail users, including logistics players, financial investors, and industry sectors for implementing rail projects,” the official says.
On taxing and price issues, transportation industry officials have recommended periodic changes in freight classifications and charges, with prior intimation to industry for greater stability and predictability. A system of ‘Premier Customers’ or users contributing more than Rs 1,000 crore annually could be considered. Industry bodies have emphasised that signalling, telecommunication and electrification material should be brought under Section 14 of CST Act and standardised to a rate of 5 per cent.
Vendor management: For better vendor management and procurement, IR must change its procedures. Improved order management, long-term contracts, procurements based on ‘life-cycle cost’ etc are some of the areas to be addressed.
The major missing link in vendor management is the automation process. For instance, modern and fool-proof procedures, such as, e-tendering and e-auctioning are still not mandated in the IR for modernisation. The procedure is still reliant on the age-old “file movement” techniques, which will not only cause protracted delays but act as an impediment for modernisation.
The Comptroller and Auditor General (CAG) of India has specifically pointed out to the absence of an automated vendor management system as the main reason for the losses during the commissioning of new projects. “The Railway Board placed reliance on the soundness of their vendor management system (Research Designs and Standards Organisation approved sources list) for the success of the decentralised procurement. However, vendors formed cartels in a number of tenders and railways were unable to control the vendor behaviour. Due to deficiencies in the vendor management system Zonal Railways/Railway Production Units failed to ensure reliable and timely supplies in the decentralised environment.”
The IR needs to modernise its supply chain management techniques and consider the possibility of entering into long-term tie-ups with vendors to ensure timely availability of the materials required. “They need to automate the entire process to ensure that a specific time frame for the complete procurement process from indent to supply is set and adhered to. Any automated vendor management can save between 20 and 33 per cent of the project cost, leading to better revenues. The systems for registration of vendors by making a detailed assessment of the vendors’ technical, financial and manufacturing capability have to be strengthened. The systems for elimination of vendors from the approved list in case of misbehaviour should also be in place,” points out Suranjana.
Modernisation = corporatisation?
The government should focus more on safety and modernisation besides improving existing track and separation of passenger and freight train lines, industry body ASSOCHAM says.
“The passengers want trains to run at much higher speed, even at 180 to 200 km per hour and heavy investment in safety-related areas like more efficient signalling, GPS-based train control,” an industry official said. Rajkumar Dhoot, President, ASSOCHAM, says that although India has one of the largest rail networks, it lacks corporate culture. “There is no escape from building a modern, scientifically designed and ICT-based railway system”.
The large private sector participation in railways will be possible if investors are convinced that government is committed to running it as a profitable entity.
Analysts also suggested a three-way split of the undertaking with the passenger and freight sections becoming separate entities and the operations alone under the direct control of the Railway Board.
“The financial arrangement could be worked out with the assets being owned by the Railway Board and treated as leased out to the two corporations dealing with passenger and freight customers”, they said.
According to the Minister of State for Railways Adhir Ranjan Chowdhury, Signalling & Telecommunication Engineering in its entirety provides for a whole range of technologies to provide cost-effective solutions in enhancing safety and increasing the line capacity. “Signalling and Telecom is an important input in the train operations and India should not leg behind in adopting the most modern signalling and telecom systems. It is necessary to revamp our telecom and signalling system using most reliable and efficient technology and infuse necessary funds for that purpose,” he says.
Resource management: Increasing scarcity of resources continues to stare IR in the face. Thin spread of funds has only compounded the problem. During the 11th Plan, IR could meet the target of new lines and electrification but fell short of the targets for doubling and gauge conversion, achieving only 2,758 km and 5,321 km respectively.
The Planning Commission has tentatively pegged the Railways’ 12th Plan at Rs 5.19 lakh crore with a gross budgetary support of Rs 1.94 lakh crore, internal resources of Rs 1.05 lakh crore, and market borrowing of Rs 1.20 lakh crore, with another Rs 1 lakh crore expected to be raised through PPP route. IR plans to provide free Wi-Fi facility on several trains, and also making e-ticketing possible through mobile phones. By the end of this calendar year, IR will put in place a next generation e-ticketing system which will bring about a paradigm shift in internet rail ticketing by significantly improving the end-user experience in respect of ease of use, response time as well as capacity. The system shall be able to support 7,200 tickets per minute as against 2,000 tickets per minute today. It will support 120,000 simultaneous users at any point in time against the present capacity of 40,000 users with capability to easily scale up as demand increases in future.
Freight traffic has been the mainstay of internal resource generation on the IR. This year the IR is set to achieve the milestone of entering the One Billion Tonne Select Club, joining Chinese, Russian and US Railways. This year the originating freight loading is estimated to be 1,007 mt, about 38 mt over 2011-12.
An ambitious target of Rs 1 lakh crore has been set to attract investments through PPP route during the 12th Plan. This is a challenging area for IR considering the capital intensive, long gestation nature of rail infrastructure projects and limited success achieved so far. Elevated Rail Corridor in Mumbai, parts of the Dedicated Freight Corridor (DFC), redevelopment of stations, power generation/energy saving projects, freight terminals are areas proposed for private investment during the 12th Plan period.
A target of Rs 1,000 crore each is proposed to be fixed for Rail Land Development Authority and IR Station Development Corporation in 2013-14.
The recently revamped participative policy enabling partnership with ports, large mines, industry and investors addresses the specific concerns of private investors. The models seek to create a win-win situation by ensuring payback of investment mainly through freight apportionment. An investment of up to Rs 9,000 crore is expected under these projects including Rs 3,800 crore for port connectivity projects, Rs 4,000 crore for coal mine connectivity and Rs 800 crore for iron ore mines connectivity improvements. But still a lot needs to be done in terms of upgrading the infrastructure on a priority basis. It is time India borrowed a few ideas from China where infrastructure work is accorded top priority.
Expert committee says
Expert Group on Modernisation of Indian Railways headed by Sam Pitroda submitted its report in February 2012. The Group was constituted to suggest ways and means to modernise Indian Railways to meet the challenges of economic growth, cater to the aspirations of common man, the needs of changing technology while ensuring at the same time socio economic requirements of the country.
Major recommendations of the Group include: Modernisation of 19,000 km of track, strengthening of 11,250 bridges, eliminating all level crossings, automatic signalling on A and B routes, cab signalling system and GSM-based mobile train control system on A,B,C routes.
The number of passenger trains has increased from 8,897 in 2001-02 to 12,335 in 2011-12. Yet, the losses on these operations continue to mount, increasing from Rs 4,955 crore in 2001-02 to Rs 22,500 crore in 2011-12 and is estimated to be Rs 24,600 crore in 2012-13.