Modi tries to get India's railways back on track
India's new government will next week roll out plans to overhaul its sprawling rail network, dubbed the "lifeline of the nation", which analysts say needs hundreds of billions of dollars of investment.india Updated: Jul 04, 2014 13:51 IST
The government will next week roll out plans to overhaul its sprawling rail network, dubbed the "lifeline of the nation", which analysts say needs hundreds of billions of dollars of investment.
Two days before prime minister Narendra Modi's new administration presents its first budget, a separate rail finance bill will be presented to parliament on Tuesday following a controversial recent fares hike.
The country's railway system is one of the biggest in the world, stretching from the foothills of the Himalayas to the southern beaches.
But observers say it has been neglected by successive governments over the past three decades of rapid economic growth during which car ownership has surged and low-cost airlines have mushroomed.
"I'm very glad the government is addressing the chronic logistics problem," said Arvind Mahajan, an infrastructure specialist at KPMG. "It has a lot of work to cover."
Still the main form of long-distance travel for most of India's 1.2 billion population, around 23 million people travel by train every day.
But some services are booked up for weeks in advance and overcrowding -- especially in lower-class carriages which lack air-conditioning -- means rail travel is often a miserable experience.
The network has a dreadful safety record with a government report in 2012 putting the number of deaths each year at nearly 15,000. Many are killed falling off overcrowded trains or crossing the tracks. Others are charred to death while perched on coach roofs as high-voltage electricity courses through overhead wires. As for freight, endemic delays make it sometimes impossible for businesses to predict when their goods will arrive.
Under the previous centre-left coalition, the main governing Congress party was happy to leave the railways ministry in the hands of a junior partner which showed little inclination to push reforms. While fares remained low, the ministry's losses grew ever higher and it was haemorrhaging some $150 million a month by the time Modi's right-wing Bharatiya Janata Party (BJP) trounced Congress in May's general election.
In a speech last month outlining the government's priorities, President Pranab Mukerjee said "modernisation and revamping of railways is on top of the infrastructure agenda". Echoing similar pledges in the BJP manifesto, the speech included promises to improve safety, expand services in the remote northeast and build a network of freight corridors for farm produce.
The government then hiked passenger fares 14.2 percent and freight rates 6.5 percent -- the steepest rise in 15 years. Although there was a subsequent partial climbdown, Finance Minister Arun Jaitley said India "must decide whether it wants a world-class railway or a ramshackled one". Mahajan said reducing government subsidies on the railways would help it meet inflation reduction targets.
"The government now needs to educate people ... that subsidies will not help bring prices down, but rather shoot them up," he said. D. H. Pai Panandiker, who heads the Delhi-based RPG Goenka Foundation think-tank, said Modi -- who as a boy helped his father sell tea on a platform -- wanted the railways to stop being a strain on resources. "Modi sees the railways network as a commercial enterprise and he realises that it must make both ends meet and can't remain subsidised forever," he told AFP. "All this hue and cry over the hike is politics and the common man knows this." But allied to the fares increase, analysts say federal and state governments must be prepared to invest vast sums.
"To expand, modernise and improve safety, the total bill could come to a staggering ... $400 billion over just the next 10 years," Ajay Dua, a former top civil servant, wrote in the Economic Times. "Currently, China invests $90 billion every year in its rail system compared to our paltry $10 billion. All those funds may not come from commuters and other users." Mahajan said the government would have to invest "somewhere around $300-$500 billion" in the next decade.
Travellers acknowledge the need for investment but are reluctant to pay. "It's a wreck," said Hari Sah as he waited for a train at Delhi's main station to take him back to his family in the northern state of Bihar. "But I also need to see my family from time to time," said Hari, who earns $160 a month driving an auto-rickshaw in the capital and whose ticket cost $25. "If I spend on travel, rent, food and send money back home then what will I save?" One of the big questions will be if Modi can develop a high-speed rail network, with China having offered its expertise.