9.5.3 Due to the vast geographical spread, uneven distribution of natural resources and large population, the advantages of railways as an important and inexpensive mode of transport are obvious. Demand on the Railways for carrying freight and passenger traffic is increasing very fast and it is expected that by the turn of the century the growth of freight and passenger traffic would be almost double of the level attained in 1987-88. In a situation where demand is rising faster than capacity and when the present capacity is fully committed to carry core sector traffic like coal, foodgrains, petroleum, oil and lubricants (POL), fertilizers etc., the Railways are left with no margin for carrying general cargo or other types of industrial traffic even when offered. Increasing railways' capacity to handle higher quantum of freight and passenger traffic, thus, becomes extremely im- portant and would need to be attended to during the Eighth Plan period.
9.5.4 A review of plan investments in the past would indicate that the outlay on railway sector as a percentage of total plan outlay ranged between11.10% & 15.5% in the first three plan periods came down to as low as 6.9% to 5.9% in the next four plan periods upto the Seventh Plan. As a result, the investment planning for Railways in the recent years has been barely adequate to meet the minimum needs of the traffic growth; consequentially the network expansion has been low.
9.5.5 The growth of rail transport in India has been impressive. From 1284 million originating passengers in 1950-51 the figure had reached nearly 3653 million in 1989-90. Passenger kilometres have increased four fold from 66517 million to about 2,80,848 million. Similarly, originating revenue tonnage increased by more than four times from 73 million tonnes in 1950-51 to 310 million tonnes in 1989- 90. Net tone kms (revenue) have increased six-fold from 37565 million in 1950-51 to 2,29602 million in 1989-90.
9.5.6 The Indian Railways have assets worth nearly 19730.59 crores as on 31.3.1990 and employ 1.65 million people. As on 31.3.1990 Indian Railways had 3,336 steam locomotives, 3610 diesel locomotives, 1,644 electric locomotives, 27,992 coaches, 6861 other coaching ve- hicles, 3100 EMUs and 3,49,661 wagons. Over the last three decades the Railways have recorded an average growth rate of 5 % per annum in both freight and passenger traffic.
9.5.7 The railway system operates through 7,076 railway stations. Four sides and two diagonals of the golden quadrilateral with its vertices at Delhi, Bombay, Calcutta and Madras carry more than 50% of passenger and 60% of freight traffic. It has been estimated that in order to keep pace with the demands of a vibrant economy, it will be necessary for the Indian railways to almost double the existing capacity by the year 2000 A.D. The Eighth and Ninth Plans are, therefore, crucial for the Railways. The thrust in the Eighth Plan has to be in the direction of capacity generation, rehabilitation and modernisation. Manpower planning, human resource development, energy conservation, greater safety, financial viability and above all customers' satisfaction through reliability and quality of service are other important objectives.
225
9.5.8 Due to technological changes, change of traction and operational improvements and innovations, staff redundancies occur. The major areas are steam locomotives, goods sheds, marshalling yards etc. Manpower planning, manpower reduction and human resources de- velopment have to be the main planks to ensure productivity in the future. Qualitative improvement in the employees' profile is needed now more than ever before. While staff productivity, as measured by the number of traffic units per employee, utilisatiion of assets in terms of net tonne kms. per wagon day, wagon turnround, loco utilisation etc., have improved over the years, there is scope for further improvement in these areas by resorting to technological upgradation and further improvement of operating pattern through innovative approaches. Similarly, there is need for placing greater emphasis on energy conservation, phasing out steam locomotives and measures to reduce the consumption of HSD and lubricating oil. Introduction of low idling features in diesel locomotives, use of rail and flange lubricators and energy audits of major railway installations are some of the areas which call for greater attention and action. Similarly, improvement is called for in track technology since the track constitutes the basic infrastructure of the Railway system.
9.5.9 The railways, operate under certain constraints. They have limited freedom to fix fares and freight rates to reflect the actual costs. The railways are a basic infrastructural necessity and act as a catalyst for economic growth. In the process, Railways tend to subsidise in a way and nourish the economy and incur social cost, much beyond the normal call of any transport system. The impact of the social burden on the railway finance has been growing over the years. In 1975-76, these losses stood at Rs. 188 crores while in 1989-90 they were about Rs.2104 crores. The loss in passenger traffic, both suburban and non-suburban, loss in carrying certain essential commodities like foodgrains, salt, fodder and losses on account of uneconomic branch lines mostly account for the social burdens.
9.5.10 Indian Railways are wholly owned and operated by the Government of India. The budgetary support from the general exchequer for the railway plan, however, is declining over the years. It came down from 75 % in the Fifth Plan to 58% in the Sixth Plan and to about 40% in the Seventh Plan. In 1990-91 and 1991-92, the budgetary support has been of the order of 33% and 32% respectively. While on the one hand there is need for investment to support and increase the transport capacity, on the other, due to resource constraints, the budgetary support for Railway plan is declining. The Railways, therefore, had to take recourse to market borrowings during the Seventh Plan by floating bonds through Indian Railways Finance Corpo- ration. About Rs.2500 crores were borrowed during the Seventh Plan period. While the market borrowings, to some extent, bridged the gap between the requirement and availability of resources, it has been imposing a heavy drag on its working expenses. Compared to 6.5% divi- dend which the Railways had to pay on the capital provided by the general exchequer, it had to pay 14.5% as leasing charges for 10 years' railway bond (interest and amortisation cost). There is, therefore, a need to restrict the limit of market borrowings which otherwise may threaten the financial viability of the system.
9.5.11 The physical target sand achievements during the Seventh Plan are summarised in Annexure-9.2. The picture that emerges is as follows :-
(i) Additional freight traffic of 70 million tonnes was carried, in 1989-90 as compared to the year 1584-85. This, in itself, was a remarkable achievement compared to the performance in the past. However, a shortfall of about 11 million tonnes in the targetted traffic of 345 million tonnes was observed mainly on account of less than anticipated offer of coal, foodgrains and steel traffic for movement.
(ii) There was increase in the lead of freight traffic during the first three years of the Plan in relation to what was assumed at the time of the formulation of the Seventh Plan. Against a target of 680 kms. at the end of the Plan, the average lead reached a level of 726 kms. during 1987-88 Thereafter, the average lead started showing a downward trend during 1989-90 it is estimated to be around 708 kms. The efforts to rationalise bulk movement, in order to keep
226
down the lead of haul, will need to be continued.
(iii) The passenger traffic (non-Suburban) increased by 6.5 per cent per annum during the first three years. During the last two years, the increase slowed down. Overall, during the Seventh Five Year Plan, the increase is estimated to be of the order around 4.8 per cent per annum. It is pertinent to note that investment planning in the Railways has been done largely on the basis of regulated growth of passenger traffic, preference being given to freight movement in a situation of overall constraint of resources. Growth in passenger traffic in actual practice could not, however, be contained and has exceeded the targets. The result was the continued use of old and overaged coaches which in turn bring down the quality of service. Replacement of overaged coaching stock warrants special attention during the Eighth Plan.
(iv)lmpressive gains have been recorded in productivity levels expressed in terms of freight loading and movement. The wagon utilisation index reached a level of 1453 Net Tonne Kms (NTKms) on Broad Gauge sections by the end of 1988-89 from 1150 NTKMs during 1984-85, dropped down to 1428 NTKMs in 1989-90. An increase of about 24% was witnessed during the plan. The increase in the index on Metre Gauge sections was about 43 percent. The need to augment the capacity of the railway system to meet the projected traffic as well as to provide a cushion to take care of seasonal peaks was highlighted during the Seventh Plan. Severe constraint of resources, however, came in the way of allocating the requisite funds to the Railways. Financing through open market borowings (a relatively costlier form of funding) had to be resorted to. The financial resources generated and made available were, however, still short of requirements. While the Railways have met the demand for freight services, especially in respect of bulk commodities to critical users, the same cannot be said about some other commodities and also general users. The share of the Railways in the movement of commodities like cement, fertilizers etc., needs to be substantially stepped up in the interest of reducing costly road movement. Railways would need to continue their efforts to further optimise the use of their fixed and rolling assets. It is clear that greater investment will have to be directed towards easing capacity constraints in selected segments of the trunk routes.
(v) In the above context, development of terminals is also an important requirement. Loading and unloading arrangements in respect of bulk commodities are the responsibilities of the major users of rail services like the collieries, the thermal power stations and other maJor industries. The major users have not made investments necessary for development of rapid handling terminals which can substantially reduce the detention of the rolling stock. The time has now come to seriously reconsider this arrangement and explore the pos- sibility of the Railways sharing the required investment with the major users in the interest of better utilisation of the rolling stock.
(vi)The Railways had recorded an excellent performance during the the Seventh Plan in terms of additional transport effort, rehabilitation of the system, financial performance, better productivity, technological upgradation and modernisation and industrial relations. The incremental originating revenue earning freight traffic went up by 73.6 million tonnes from 236.4 MT to 310 MT which is equivalent to the increase in the previous two decades. On the financial side, the Railways declared a surplus of Rs.533 crores after meeting the dividend liability in full It is noteworthy this was achieved while making substantially stepped-up contributions to the Depreciation Reserve Fund (Rs.6735 crores) and Pensions Fund (Rs.2310 crores). But, there is continuing need to contain operating expenses and increase traffic receipts. The losses in the operation of passenger services are increasing at an alarming rate. There is a limit to the extent to which the losses can be offset by cross - subsidisation.
227
In fact, the tariff for freight traffic has now reached a level where further increases are likely to prove counter-productive. Adjusting the passenger fares to reduce losses appears inescapable. Action in this direction is essential to provide adequate resources for development.
(vii) An outlay of Rs.12,334 crores was provided to the railways for the Seventh Plan. Financing of the approved plan outlays during each year of the seventh plan 1990-91 and 1991-92 and the actual expenditure incurred is presented in Annexure 9.3 The investment during the Seventh Plan was financed as follows
(Rs. crores)
(i) Budgetary support 6942 (41.95%)
(ii) Bonds 2520 (15.22%)
(iii) Internal resources 7087 (42.82%)
Total 16549
The plan headwise details during the Seventh Plan, 1990-91 and 1991-92 has been indicated in Annexure 9.4
(viii) Normally, all new railway line projects are undertaken out of the loan capital by way of budgetry support. For the first time, a new experiment carried out for funding the construction of the Konkan Railway by raising of market borrowings and setting up of a Corporation where the equity contribution is to be shared between the Ministry of Railways and the beneficiary States, in the ratio of 51: 49. The balance amount required would be raised from the open market in the form of taxfree bonds.
(ix) It has, however, to be recognised that all the investments made by the Railways do not directly go to augment the capacity of the system. A major portion of investment on made the replacement of overaged assets do not add to capacity except to the extent of upgraded equipment. Similarly, allocations under electrification may not necessarily result in capacity augmentation but only improve operational efficiency and lead to conservation of fossil fuels. Again, there are a large number of miscellaneous items of expenditure such as works undertaken for operational reasons as well as for staff welfare and passenger amenities. Similarly, investments made by Railways in public sector undertakings, metropolitan transport and inventories do not result in capacity augmentation. It is observed that almost half of the total allocations of the Railways go in for such other works, not directly linked with increasing capacity of the system.
(x) A major feature of the modernisation efforts made by on the Indian Railways is the progressive use of computers. Over the last decade, computerisation is being progressively extended to core accounting systems, inventory control, management information system in the production units and operational control rooms, passenger reservations and recently to freight operations. Computerised reservation facility will shortly cover 18 cities constituting almost 64% of the total reservation work load in the Railways. Many studies relating to the introduction of freight operation information system (FOIS) have been undertaken and completed with the assistance of a specialised Organisation set-up for the purpose. As a first step, the freight operation information system is being installed on the Northern Railway to evaluate its projected efficacy before extending it to other zonal railways.
Areas of Concern and Major Issues 9.5.12 Railways' Share in Total Traffic- Though the Railways are energy efficient and eminently suited for movement of freight traffic over medium and long distance, a good share of this traffic is carried by road. To reverse this trend it is necessary to substantially improve, inter-alia, (a) the carrying capacity on selected section of the Railways (b) the operational efficiency and commercial practices of the Railways; (c) linkages with road transport at loading and unloading centres.
228
9.5.13 Capacity Requirements - There is hardly any slack in the railway. The capacity assessment of the system necessarily has to contend with certain inherent characteristics of the Railways as a mode of transport. Common physical assets are made use of to provide different types of transport services like freight and passenger movement and any change in the mix alters the output of the system. Again, a considerable portion of the assets is location-specific and cannot be adjusted to changes in the demand for services. Additional output henceforth would be possible only on the basis of adequate investments - both for creation of additional capacity and for replacement of assets. The important rail corridors connecting major centres of activity which handle massive volume of traffic have reached a saturation level. Development of alternate routes, rather than additional trackage on these routes, may subserve the purpose of both easing the traffic and opening new areas of development. Further, a systems approach needs to be adopted while building new railway lines so that aggregate capacity of Railways could be enhanced.
9.5.14 Facilities/amenities to the passengers - As against the target of 2% growth in passenger traffic, the actual increase is anticipated to be around 5% per annum and will continue to remain so. The increasing passenger traffic cannot be ignored any longer, particularly the long distance travel. Adequate investments have to be considered for meeting the realistic demand. On the other hand, efforts to shed short distance travel would need to be pursued vigorously. Appropriate policy measures are required to be taken in this regard.
9.5.15 Energy Conservation - The Railways are a major user of liquid fuels and must contribute to energy conservation. The gradual change of traction from steam to diesel and to electricity has undoubtedly increased the energy efficiency of the system. The Railways have initiated steps for introduction of new fuel and energy efficient diesel and electric locomotives. Appropriate R&D measures need to be taken to improve on the fuel efficiency of the existing locomotives, which would remain in operation for years to come.
9.5.16 Renewal/Replacement - A major effort was made to accelerate the renewal/replacement of overaged assets in order to progressively reduce the backlog in this regard. About 19000 Kms. of tracks were renewed during the Plan and all the old locos and most of the overaged wagons were replaced. A substantial backlog of track ( 11500 Kms. of track length) and bridges (2400) persists. A large number of coaching stock has yet to be replaced. There can, therefore, be no let up in emphasis in this direction.
9.5.17 Electrification - Electrification programme, taken up by the Railways during the Sixth and the Seventh Plans, will have to be continued. Apart from completing the electrification on the major trunk routes, it would be desirable to go in for electrification in other high density routes on a continuous network basis.
9.5.18 On Line Performance - The incidence of `on-line failures' of fleet and equipment is fairly high. Such failures on the crowded traffic corridors, even if stray, tend to bring about a quasi- paralysis of the corridor which the system cannot take in its stride. The sine-qua-non of economic operations on the Indian Railways must be the absolute reliability of the equipment. The proportion of the fleet awaiting repairs has improved in relation to the targets/norms fixed by the Railways (Annexure-9.5. ). However, t e maintenance infrastructure is still inadequate in relation to the rolling stock. The pace of modernisation and rationalisation of maintenance facilities requiring reduction in the number of workshops, conversion of multi-activity shops to uni-activity shops and creation of facilities for composite rakes is slow. Further, the Railways continue to engage themselves in production activities leading to sub- optimal utilisation of workshop capacities. They need to off-load some of their manufacturing activities and concentrate on their assigned role as transport operators. The modernisation and rationalisation programme must result in no "on-line failures".