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| Putting railways on the right track | | | Chandrajit Banerjee | 3/4/2015 11:41:35 PM |
| Suresh Prabhu has promised new governance structures and better delivery mechanisms. If implemented well, these pragmatic steps can help Indian Railways emerge as a force multiplier for economic growth in the country
Railways Minister Suresh Prabhu has presented a prag
matic Rail Budget that addresses the imperatives of ca
pacity expansion, modernisation and upgradation, safety and passenger amenities. At the same time, he has proposed to tap new source of funds that will help strengthen Indian Railways.Indian Railways is the nation's lifeline.
It completed 160 years of service in 2013, and comprises 115,000 km of track. It is also the preferred choice of transport for many commodities. Railways plays a pivotal role in reviving the economic growth of the country. However, while the Indian rail network was among the most extensive during independence, it has not kept pace with the economy and technological improvements.Realising this, the Railway Budget has identified four major objectives: Improvement in passenger services, making railways a safer mode of travel, modernisation of infrastructure and ensuring financial sustainability. So, how do we meet the objectives.First, is to expand medium-term facilities. The largest expenditure, in the next five years, will be on dedicated freight corridor, electrification and doubling and tripling of tracks followed by network expansion and safety measures. Second, developing rolling stock, station re-development and logistic parks account for a significant part of the proposed `8.5 lakh crore five-year investment plan. This is a good investment as it imparts stability and certainty to the policy. Prabhu has laid out an innovative plan to raise financial resources. He has planned to tap insurance and pension funds and will also raise funds through special purpose vehicles.
For this, multilateral and bilateral development agencies can provide the resources, as it has been done with Japan for the dedicated rail freight corridor. Overseas development institutions such as the Asian Development Bank and the World Bank can partner with the Indian Railways.State Governments' engagement is vital to create stakeholder's interest with regards to projects that can bring high benefits to the States. Special purpose vehicles can encourage corporate management for specific projects and can take some of the financial burden off the budgetary balance sheet.
Indian Railways is planning to take a similar route to fund projects of interest to public sector enterprises dealing in bulk commodities such as coal, iron ore and oil. The private sector is also expected to play an important role by enhancing its engagement in areas such as last mile connectivity, expanding rolling stock capacity and modernisation of station infrastructure.
Private companies will be keen to participate in the bidding for station re-development projects, given the right conditions and the revamping of policy (so as to allow for open bids from interested parties, for example). Under the Make in India campaign, the private sector can contribute by purchasing machinery and equipment for Indian Railways.
The Confederation of Indian Industry is happy to note that many of its recommendations to the Railway Ministry have found place in the Rail Budget. For example, de-congestion of high density routes through doubling and tripling has been addressed. Also, dedicated freight corridors and electrification of the rail system have been accorded high priority.
The CII had also recommended better vendor approval mechanisms, by waiving of certain replicated requirements for pre-approved vendors, dedicated logistics parks, and rationalisation of tariff structure to attract freight business. One is hopeful that these will be addressed soon. There are three key areas of interest to the private sector.
First, the aspiration to enhance technology adaptation of the railway network can potentially work with entrepreneurs for development of new products. Indian Railways should specifically target Micro, Small and Medium enterprises for procurement purposes, and consider establishing technology incubation parks for the rail sector.
These can be connected with the upcoming railway research centers.The proposed innovation council and technology portal can also contribute to this effort. Second, Indian Railways has committed to energy audits to improve efficiency of energy usage. The private sector can offer technology and expertise in undertaking this task.
Third, monetisation of land assets is an important step. Digitised mapping of land records is expected to identify encroachments and free-up available land. Railway assets can also be leveraged to get advertising revenue. Prabhu has stressed his commitment to new governance structures, new delivery mechanisms, management reforms and transparency. With these innovative and pragmatic steps, the Indian Railways can emerge as a force multiplier for economic growth in the country.
( Courtsey@daily pioneer.com) |
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