The Union Railway Minister has recently flagged off the country’s first freight train with an all-aluminium wagon rake.

What is the news?

• This move is a part of the country’s ambitious plan to modernize rail transportation and facilitate large carbon savings.

Aluminium-bodied trains

• Indian Railways proposes to shift its passenger and freight operations gradually to aluminium-bodied trains.
• A blueprint for its production and introduction was finalized even before the onset of the covid-19 pandemic.
• The Modern Coach Factory (MCF) at Rae Bareli has signed a transfer of technology contract with South Korea’s Dawonsys for such passenger coaches in early 2020.
• The execution of the project was held back because of the pandemic and its fallout.
• These coaches will be rolled out now.

What is the plan for their introduction?

• At present, India’s high-speed trains, including the Rajdhanis and the Shatabdis, use Linke Hofmann Busch (LHB) coaches that are made of stainless steel.
• Only the interiors use aluminium, which makes them lighter as compared to conventional rakes.
• The Indian Railways plans to procure 400 new generation Vande Bharat train sets with better energy efficiency and passenger riding experience.
• The use of aluminium body coaches in these new generation trains will be considered.

Will aluminium trains reduce carbon footprint?

• Aluminium trains consume less energy.
• Besides, the metal is recyclable.
• It is estimated that switching to aluminium will save 1,500 tonnes of carbon emissions a year.
• With the Railways planning to deploy over 100,000 wagons in the coming years, the potential annual CO2 reduction could be to the tune of over 5 million tonnes with a 15-20% shift to aluminium wagons.

Material advantages of aluminium

• These coaches, being lighter than stainless steel ones, are preferred for higher speed systems.
• They are lighter by up to 30% compared to stainless steel coaches.
• They offer low haulage cost and higher payload, better fuel efficiency and lower pollution levels.
• Also, aluminium trains take less time to manufacture and thus can help speed up capacity for production.
• The new metal trains will help the Railways hike its share in overall freight transportation from the current 18%.

What about the cost of building?

• An all-aluminium passenger coach and wagon system would raise the cost of manufacturing rolling stocks by about 35% since the price of aluminium, globally, is far higher than that of steel.
• However, the advantages of the metal outscore its high price. It is estimated that as the metal is recyclable, the new coaches would have up to 80% resale value.
• The recyclability will also help in times of global volatility in metal prices.
• This is why aluminium trains command a lion’s share in the US, Europe and Japan.

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Context

The SilverLine Project to be built by the government of Kerala will link Thiruvananthapuram in the south to Kasargode in the north.The project has received its share of criticism, much of it from political quarters, but also some academic sections.

Need for high-speed rail in Kerala

• Saturated road network: For Kerala, with its saturated road network, the building of a fast, environmentally-sustainable high-speed rail link must surely be seen as a sound governance response.
• Indeed, a study of INDC (Intended Nationally Determined Contribution) plans under the Paris Climate Agreement is instructive in this context.
• Low-cost emission option: The EU study on mobility notes that HSR is the least-cost emission option among all modes of long-distance transportation.

The arguments against the project

• Critics have put forward three principal lines of argument, namely, its alleged adverse environmental impact, financial unviability, and technical unsuitability.
• Environmental impact: The most compelling environmental issue before us is climate change.
• Building capacities now to achieve a carbon net-neutral world over the next three to four decades is a core aspect of the national strategy of all nations.
• In this context, the SilverLine project scores high with respect to India’s own climate objective of achieving net-zero emissions by 2070.
• Let us recall the driving forces behind Japan’s decision to develop the Shinkansen.
• In the context of the global oil crisis, energy-insecure Japan wanted to develop a public transportation system that was energy-efficient and would also address national concerns with respect to imbalanced regional growth.
• After the Kyoto Protocol was signed, more efforts were made to increase the speed of the various series of Shinkansen to meet the objectives of energy efficiency and CO2 reductions.
• Financial viability: Large-scale infrastructure projects are not based on short-term financial viability considerations alone.
• When the London Underground was conceived, it was not considered financially viable.
• Today, London’s economic activities are inconceivable without it.
• Green technologies that we consider cheaper than fossil fuel technologies were not initially financially viable, and were unable to survive without government subsidies.

Conclusion

There are abundant international examples of the role played by large capital-intensive infrastructure projects in the transformation of the town and country, regions, and nations.

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Context

On July 1, 2020, the Indian Railways launched the formal process of inviting private parties to run trains on the Indian railway system. Hopes of a large participation were belied as there were no bids for nine clusters and only two bids for three clusters.

Why current model of inviting private players to run trains has failed?

• Lack of equal relationship: IR wants the capital and technology without giving up control, while the concessioner wants a far more equal relationship to be moderated by a regulator.
• Constraints on efficient decision-making: IR has imposed constraints that prevent efficient decisions and adopted an organisational design that does not take into account the characteristics and associated risks that will determine outcomes and investment decisions.
• Lumpiness of investment: The biggest dampener is the lumpiness of investment before a single passenger can be carried.
• High risk involved: Train sets have to be purchased without really knowing how much traffic the service will be able to attract in the face of rising competition from airlines.
• IR does not guarantee the investor that, in case the concession fails, it will acquire the train sets.
• Absence of regulator: The other big dampener is the absence of a regulator for resolving disputes.

Suggestions

1) Remove the lumpiness of investment by establishing rolling stock company

• The central issue is how to align the three interests.
• 1) India’s need to be capable of designing and manufacturing state-of-the-art rolling stock.
• 2) IR’s need for private capital participation.
• 3) Private capital’s necessity of earning a profit.
• Establish a company to lease rolling stock: The above 3 interests can be aligned provided the lumpiness of investment in train sets can be eliminated by establishing a company that leases rolling stock not only to concessioners but also to IR.
• The rolling stock company, apart from leasing train sets, can also be the window for bringing in new technology.
• This will also enable reducing the concession period from 35 years to a more reasonable 10-15 years, bringing in competition.
•  For starters, IRFC, which is already into leasing rolling stock, can be that company.

2) Bring in new technology by opening IR’s rolling stock market to international manufacturers

• There is need to move the rolling stock industry up the industrial value chain and bring about a structural change of the Indian economy.
• Long term arrangement with suppliers: This can only be brought about by a vision that encourages long-term arrangements with rolling stock suppliers.
• Open the market for global players: An arrangement that gives access to IR’s rolling stock market is the only way to compel global players to share technology and form joint ventures with Indian companies.

3) Investment in research

• Technology transfer requires understanding the critical elements of the technology and absorbing them into the design-production process.
• This calls for the investment of large sums of money and the involvement of universities, research institutes and national laboratories.

4) Make changes to attract private investors

• For attracting private players, the risks for the concessioners needs to be reduced.
• The period of the concession needs to be reduced to around 15 years.
• Establish regulator: There is a need to establish a regulator and moderate charges like the amount for the maintenance of tracks and stations.

Conclusion

With these changes, the plan may still take off. However, the initiative will remain limited to just running trains if there is no long-term vision.

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Indian Railways has launched the process of opening up train operations to private entities on 109 origin-destination (OD) pairs of routes using 151 modern trains.

Objectives of privatisation

• To introduce modern technology rolling stock with reduced maintenance.
• Reduced transit time.
• Boost job creation.
• Provide enhanced safety.
• Provide world-class travel experience to passengers.
• Reduce demand-supply deficit in the passenger transportation sector.

Issues with the move

1) Responsibility issue

•  Railway crew will work the trains (151 trains in 109 routes) which will be maintained by the private investor.
• All the other infrastructure, track and associated structures, stations, signalling, security and their daily maintenance owned by the Railways will be fully utilised in running trains.
• Thus, the responsibility of the private investor ends with investment in the procurement and maintenance of coaches.
• Train operation, safety and dealing with every day problems rests with the Railways.
• In case of an unfortunate event, fixing responsibility will be an issue.

2) Day-to-day problems

• Provision of an independent regulator to resolve disagreement, discords and disputes.
• But this regulator will not be able to solve day-to-day problems of dichotomy unless the basic issue is resolved.

3) Speed issue

• Nearly all trunk routes in the existing network are speed limited to 110 kmph very few permit speeds of upto 120-130 kmph.
• To raise it to 160 kmph, as proposed, there has to be track strengthening, elimination of curves and level crossing gates and strengthening of bridges.
• There is no appreciable reduction in transit time for most proposed trains, when compared with the timings of the fastest train now operating on that route.

4) Passenger fare issue

• In the proposal, the Railways or government have no role in fixing passenger fares.
• Fares will be beyond the common man’s reach.
• Fare concessions extended to several categories of people will not be made available by the private investor.
• The very objective of commissioning the Railways as a public welfare transport organisation is defeated.

5) Reservation in Jobs

• The private investor is not bound to follow reservation regulations in employment.
• This, in turn, will deprive employment opportunities for those who are on the margins of society.

6) Limited Coverage:

• An advantage of Indian Railways being government-owned is that it provides nation-wide connectivity irrespective of profit.
• Privatisation of railways would mean the railways will become a profit-making enterprise, this would lead to the elimination of railways routes that are less popular.
• Thus, the privatisation of railways can have a negative impact on connectivity and further increase the rural-urban divide.

7) Impact on the Economy:

• Indian Railways is the backbone of India, it provides low fare transportation to agricultural and industrial trade.
• Therefore, privatisation of Indian railways shall definitely affect the Indian economy at large.

• Way forward
• There should be no need for the government to take a dual role of a facilitator as well as a participant.
• In the case of the metro railway services, Hyderabad, for example, an ideal PPP project, the concessionaire is solely responsible for daily maintenance, operation, passenger amenities and staff issues.
• The State government steps in when it comes to land, power, permissions, law and order, etc. Fare determination is in consultation with the government.
• Instead of a private entrepreneur, Indian Railway Catering and Tourism Corporation, a government undertaking which has gained experience in running the Tejas Express trains, could have been given the role.

Consider the question “Indian Railways often hailed as the lifeline of the country continues suffering from several issues. In light of this, evaluate the pros and cons of the privatisation of railways.”

Conclusion

This project of privatisation of trains should not result in the common man being deprived of travel facilities. The Indian Railways is a strategic resource for the nation hence it should not be judged solely on its profit-generating capability or market-based return on investment.

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The article analyses the implications and issues with the Indian Railways recent move to allow the private investors to operate the passenger trains on selected routes.

Let’s understand the structure of IR’s passenger business

• It operated a daily average of 13,523 passenger trains in 2018-19.
• It includes 3,695 inter-city mail and express services.
• 3,947 ordinary short-distance-stopping “regional” trains.
• 5,881 electrical multiple units operated on suburban sections for intra-city passengers.
• The regional/sectional trains, with multiple stops, cater to short-distance journeys (an average of 111 km in 2018-19) and contribute maximum loss in passenger business.
• The inter-city mail and express services constitute IR’s core passenger business.
• It needs to be duly nurtured and developed.
• Within this category, only the upper-class portion will be of interest to private operators, due to flexibility in fixing fares.

Now, let’s analyse the implications of privatisation decision

The stated objectives are-

• 1) Reducing the supply-demand deficit.
• 2) Encouraging modal shift from air to rail.
• 3) Significantly reducing transit time.

Let’s analyse the issues with the objectives

1) Reducing the supply-demand deficit

• Passenger ridership on railways has almost been stagnant at 8,354 million in 2018-19.
• The Railways’s endemic capacity constraint has kept its share in the nation’s transport market steadily decreasing.
• Despite the demand for more trains, its seven high-density corridors stretched over 10,500 km remain clogged.
• Its stations and maintenance wherewithal are over-stretched.
• Speeds remain low and services far less than satisfactory.
• Rail travel demand far outstrips supply and remains set to further grow substantially.
• The steadily growing services sector continues to trigger high mobility and demand for passenger travel, generally in the upper classes.

2) Modal shift from air to rail

• Transfer of traffic to rail will depend on-
• 1) reduced journey time
• 2) the frequency of rail services
• 3) offering accommodation on demand.
•  Rail travel needs to appropriately match air and road services in terms of pre-board and onboard convenience, reliability, and speed.
• As it faces competition from budget airlines, high-capacity buses, and personal cars, IR needs to craft a concerted strategy to expand, accelerate and modernise its inter-city passenger services.

3) Reducing transit time

•  Freight, as well as passenger trains across the network, have remained stuck in slow tracks over decades.
• The “pilot project” of IRCTC-operated upscale “Tejas” train-sets clock virtually the same travel time as the older Shatabdis on these routes.
• On completion of the two ongoing DFCs by December 2021, and the contemplated up-gradation of existing Delhi-Mumbai and Delhi-Kolkata rail routes will see trains running at 160 km/h.
• Most other paths with mixed freight and passenger trains jostling for space and constrained by speed limits.
• This will lead to the new train-sets to be substantially under-utilised in terms of their potential, and at far below expectations of customers for faster and frequent services.

Issues

1) Absence of regulator

• An autonomous regulator, vital for the equitable and effective functioning of the private operators.
• It is not without a challenge that the private train operators will strive to provide value for money to passengers and ensure their profitability in an environment of a price war.
• So, the absence of an autonomous regulator is essential.
• Experience of the licensed container train operators with the Railways alone driving policy and settling disputes has not been encouraging.

2) Concessions issue

• A 35-year concession in an age of rapidly evolving technologies impacting design contours of train-sets as much as customer expectations raise plausible questions.
• Taking a plunge in 100 paths without first testing the waters on few selected sections is could also give rise to issues.

Suggestions

•  Some structural shifts in IR’s business management are now a clear imperative:
• 1) Segregating its passenger and freight businesses for focussed attention.
• 2) Restructuring the tariffs rationally and urgently.
• 3) Developing terminal infrastructure.
• 4) Leapfrogging the conversion of the existing dual-use high demand trunk routes into semi high-speed corridors.

Consider the question “What are the objectives of the recent move of the India Railways to invite the private investors to operate some passenger trains on selected routes? What are the issues railway’s passenger service faces? Suggest the measures to deal with the issues.

Conclusion

The result of the move would suggest the future path for the operation for railways. But it must ensure the level playing field to the private players to test the efficacy of the move.

Source:

https://www.financialexpress.com/infrastructure/railways/private-trains-on-indian-railways-network-why-one-cant-ignore-several-red-flags/2025432/

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Indian Railways has launched the process of opening up train operations to private entities on 109 origin-destination (OD) pairs of routes using 151 modern trains.

Practice question for mains:
Q. Indian Railways has been the lifeline of India’s growth story since Independence. Discuss various opportunities and challenges ahead of its privatization.

Why such a move?

• From a passenger perspective, there is a need for more train services, particularly between big cities.
• The Railway Board says five crore intending passengers could not be accommodated during 2019-20 for want of capacity, and there was 13.3% travel demand in excess of supply during summer and festival seasons.

Moving the paralyzed system

• The Railway Board has moved ahead with a long-pending plan, setting a tentative schedule for private train operations, expected to begin in 2023 and in 12 clusters.
• At present, scheduled passenger train services remain paralyzed during the COVID-19 pandemic, and various railways have been running only specials such as those for workers.

What is the background of the decision?

• The present bid is only for a fraction of the total train operations — 5% of the 2,800 Mail and Express services operated by Indian Railways.
• The overall objective, however, is to introduce a new train travel experience for passengers who are used to travelling by aircraft and air-conditioned buses.
• Without an expansion, and with the growth of road travel, the share of the Railways would steadily decline in the coming years.

Bibek Debroy Committee Recommendations

• Several committees have gone into the expansion and the modernization of Indian Railways.
• In 2015, the expert panel chaired by Bibek Debroy constituted by the Ministry of Railways a year earlier, recommended that the way forward for the railways was “liberalisation and not privatization”.
• It asked for entry of new operators “to encourage growth and improve services.”
• It also made it clear that a regulatory mechanism was a prerequisite to promote healthy competition and protect the interests of all stakeholders.

Why is the move significant for Indian Railways?

• For the Railways, one of the largest organisations in the country, operating not just trains for passengers and freight, but also social institutions such as hospitals and schools represents a radical change.
• It was estimated that a one rupee push in the railway sector would have a forward linkage effect of increasing output in other sectors by ₹2.50.
• Train services operated by Indian Railways cover several classes of passengers, meeting the social service obligation to connect remote locations, and adopting the philosophy of cross-subsidy.
• In more recent years, it has focused on revenue generation through dynamic demand-based pricing.

Private players will be game-changers

• Private operators are not expected to shoulder the burden of universal service norms, and will focus on revenue.
• Even the first IRCTC-run trains have a higher cost of travel between Lucknow and Delhi than a Shatabdi train on the same route that almost matches it for speed.
• So private operators would have to raise the level of their offering even higher, to justify higher fares, and attract a segment of the population that is ready to pay for this difference.
• The government would have to explain that it has monetized its expensive fixed assets such as track, signalling and stations adequately for the taxpayer, who has paid for them.

Challenges ahead

• Several critical issues remain unaddressed. For one, there will be questions over the financial viability of some routes.
• Railways also tend to cross-subsidise passenger fares through freight revenue.
• This translates to below-cost pricing, which will make it difficult for private players to compete.
• On the other hand, higher fares needed to cover costs might bring them in direct competition with airlines, pricing them out of the market.

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The Indian Railways has announced that it achieved 100 per cent punctuality of its passenger trains on July 1, a never-before feat.

Try this question:

Q.Discuss various issues crippling the punctuality of the Indian Railways.

A big achievement for Railways

• Usually, the Indian Railways run over 13,000 passenger trains and over 8,000 freight trains every day.
• It is important to remember the context – very few trains are running now, and the punctuality of the Railways can hardly be compared with its own performance on this count in pre-COVID times.
• The 100 per cent punctuality has been achieved when the network is running just 230 passenger trains – along with about 3,000 loaded freight trains and 2,200 empty ones.
• This is no mean achievement – it is indeed not an easy task given all the constraints that the Railways usually face while running a train on its designated path and time slot.

Why do trains get delayed in India?

• There are a number of reasons, which is also why the achievement of the Railways is significant.
• There are unforeseen situations such as a failure of assets like the signalling system and overhead power equipment.
• Several types of breakdowns can occur, related to rolling stock, tracks, etc., that make a train lose time along the way.
• Then there are external unforeseen problems like run-over cattle and humans, agitations on the tracks, and the like.

And what have the Railways been doing right?

• The maintenance of tracks was carried out in a quick time during the COVID period in various critical sections, so the average speed increased, and stretches of slowing down were minimized.
• Better and modern signalling is also making an impact.
• Another reason is better planning and operations analysis.

How do the delays impact the overall system?

• In normal times, these failures take away a lot of scheduled time when the train is detained even for a short time because making up the lost time during the remainder of the journey is a tricky business.
• It’s not as though a train can just run faster to make up for a lost time. In a network chock-a-block with trains, a train hardly ever has such leeway built into its pre-set path.
• Any train that gets delayed inordinately due to whatever reason during the journey theoretically eats into the “path” – or time slot allotted on the track – of another train.
• It then becomes a matter of which train to prioritise. Conventionally, Rajdhanis and premium trains get priority of path over ordinary mail/express trains.
• Freight trains, whose runs are not exactly time-sensitive, are usually held up to make way for passenger trains.

But why do the Railways have to juggle operations in this way?

• It’s a constantly dynamic scenario in which railway operations professionals take calls all the time.
• At the heart of the problem are network capacity constraints. It basically means that there are more trains than the network can handle in a given time bracket.
• Around 60 per cent of all train traffic is on the Golden Quadrilateral, even though it represents just about 15 per cent of the total network.
• There are projects to enhance capacity by building additional lines and modernizing signalling systems, etc.

Minimizing the delays

• The Railways are working on what is called a “zero-based timetable”.
• In this concept, which is to be introduced soon, every train that enters the network is justified based on needs and costs.
• It is expected to make train operations more seamless.

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During the eight months period from 1st July 2019 to 29th February 2020, approximately 28.93 Lakh berths remained vacant in Rajdhani, Shatabdi and Duronto type trains having Flexi fare.

What is Flexi Fare System?

• The flexi-fare scheme was introduced by the IRCTC in 2016 for the 142 “premium trains” such as Shatabdi, Rajdhani, and Duronto (now Vande Bharat Exp. as well).
• Under this dynamic pricing system, the base fare increases by 10% with every 10% of berths sold, with a limit set at 1.5 times the original price.
• The scheme was applicable to all classes, except AC first class and executive class. The pricing system is still in force.

Reasons for flexi fares:

1. Indian Railways run about 12900 passenger trains per day and the railways is losing around more than 40% of what they spend on passenger trains.
2. The trains like Rajdhani are the ones in which the elite class prefers to travel. So, some revenue can be garnered from them.
3. The cost of service is almost double of what is being charged from the passengers.
4. Freight business is already very expensive in India as compared to other countries in the world. Therefore, a further increase in this area is not feasible.

Issues with the system

• After the introduction of Flexi-fares, the railways lost 700,000 passengers in just 11 months while the additional revenue earned as a result of the scheme was ₹ 552 crore.
• While drawing upon the fundamentals of dynamic pricing, what Indian Railways failed to introduce was a simple principle that Flexi-fares work ways, hikes, and declines.
• The railways model just focused on increasing fares with no provision for a decrease in price when demand is low.
• While half of the decision-makers in the Railway Board support it, half of them oppose it stating that what the railways require is an increase in ticket prices across the board.

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The Kashi Mahakal Express is the country’s third ‘corporate’ train after the two Tejas Express trains between Delhi-Lucknow and Mumbai-Ahmedabad started over the past few months.

A new model

• This is a new model being actively pushed by Indian Railways- to ‘outsource’ the running of regular passengers’ trains to its PSU, the Indian Railway Catering and Tourism Corporation (IRCTC).
• This has been dubbed an ‘experiment’ as a natural extension of this model is to lease out 100 routes to private players to run 150 trains, something that is in the works.

How does the model work?

• In this model, the corporation takes all the decisions of running the service– fare, food, onboard facilities, housekeeping, complaints etc.
• Indian Railways is free from these encumbrances and gets to earn from IRCTC a pre-decided amount, being the owner of the network. This amount has three components- haulage, lease and custody.
• The haulage charge IRCTC is paying for the Tejas trains is in the range of Rs 800 per kilometer.
• This includes use of the fixed infrastructure like tracks, signalling, driver, station staff, traction and pretty much everything needed to physically move the rake.

Finances

• On top of that IRCTC has to pay the lease charges on the rake as Indian Railways coaches are leased to its financing arm, the Indian Railway Finance Corporation (IRFC).
• Added to that there is a per-day custody charge, of keeping the rake safe and sound while it is in the custody of the PSU.
• Roughly each of these components works out to be around Rs 2 lakh per day for the New Delhi-Lucknow Tejas rake.
• In other words, IRCTC has to pay Indian Railways a sum total of these three charges, roughly Rs 14 lakh for the Lucknow Tejas runs in a day (up and down) and then factor in a profit over and above this.
• This money is payable even if the occupancy is below expectation and the train is not doing good business.

What powers does IRCTC have?

• Being a corporate entity with a Board of Directors and investors, IRCTC insists that the coaches it gets from Railways are new and not in a run-down condition, as is seen in many trains.
• The quality of the coaches has a direct bearing on its business.
• In this model, IRCTC has full flexibility to decide the service parameters and even alter them without having to go to Railway ministry or its policies.
• To that end, the business of running trains can be run with the independence needed to run a business with profit motive.
• This, policymakers believe creates the environment for enhanced service quality and user experience for the passengers.
• IRCTC gets the freedom to decide even the number of stoppages it wants to afford on a route, depending on the needs of its business model.

What is Indian Railways’ benefit from this model?

• The bright side for Indian Railways is that it doesn’t have to suffer the losses associated with running these trains thanks to under-recovery of cost due to low fares and its own hefty overheads.
• The lease on its coaches is also taken care of.

Is this the same model for private train operators?

• The model in which private train operators are sought to be engaged is different wherein along with haulage of Rs 668 per kilometer the operator needs to agree to revenue sharing with Railways.
• The company willing to share the highest percentage of revenue will win the contract.
• Private players may not need to pay lease and custody charges as it is expected that they will bring in their own rolling stock.
• All this is because over the next five years, after the two dedicated freight corridors are operationalised and a lion’s share of freight trains move to the corridors, a lot of capacity will free up in the conventional railway lines for more passenger trains to run to cater to the demand.
• The government wants private players and maybe also its own PSU, along with Indian Railways, to share the load of pumping in more trains into the system.

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