We need to seriously introspect and look at our road sector to see what could happen if India is not able to make rail more competent, given that India would need to move about 6 billion metric tonnes of cargo by 2020, even if this economy grows at a modest 6 per cent of compounded annual growth rate.
Owing to the 65 per cent road dependency of overall domestic freight movement in the country, the Ministry of Road Transport and Highway announced aggressive plans to build 20 km of roads every day. Herculean as this task is, it is barely enough to dent challenges and costs associated to hinterland transportation in India.
What we need is rail to be able to take at least 60 per cent of the domestic cargo movement by 2020 from its current 30 per cent levels — which would mean that it needs to move 3.6 billion MT of cargo in 10 years, up four-fold from the current 900 million MT level.
This would obviously mean more rakes. Today, the Indian Railways use approximately 4,000 rakes to move the 900 million MT of cargo. Moving 3.6 billion MT means we would need 16,000 rakes — approximately 12,000 additional rakes over the next 10 years at a cost of about Rs 2,40,000 crore at an average of Rs 20 crore per rake.
And this does not include the Rs 1,44,000 crore required to procure at least an equal number, if not more, of locomotives to move these rakes at an average cost of Rs 12 crore each.
This totals up to Rs 3,84,000 crore that will be required to be infused in rolling stock and locomotives. Obvious questions: where are we going to get these rakes from in 10 years? Even if we do, where do we keep them? And how are we going to move these additional rakes?
I feel the solution lies in a change in perspective. The answer lies not in volumes but in efficiency — through strategic
investments in the railway network. The average distance achieved by Railways today is 300 km per day — gross underutilisation of our locomotives that could easily move 900 km per day (triple the speed).
The slower speeds are not attributed to locomotive capacity — which can move up to 1,500 km per day — but poor core rail network infrastructure.
By making investments towards better signalling systems, doubling of lines, freight corridors, gauge conversions, sidings, mechanical testing centers and finding creative ways to use underutilised or unutilised railway terminals currently in the system, we could achieve this tripling of speed and therefore increased efficiency.
The above automatically implies that the Rail Network would then instead of 16,000 rakes to move 3.6 billion MT, need only about 5,500 rakes by 2020. This is an addition of only 1,500 rakes into the system from the current 4,000, which along with locomotives means a savings of a mammoth Rs 3,36,000 crore.
With the last budget, the Indian Railways announced their Vision 2020 for both passenger and freight movement which intends to infuse Rs 13,87,000 crore into improving the rail network. The Freight movement investment charter definitely needs to be re-looked at with the efficiency improvement perspective illustrated above and that will be the only way to ensure that Rail will indeed gain the 60 per cent market share of domestic cargo movement that this country desperately needs.
The money will only come through Public Private Partnership. Our inability to do this would directly insinuate higher product costs to the consumer, lower margins for Indian business houses and lower impetus to the growth of this economy.
(The author is chairman and managing director of Arshiya International)