The Hindu Business Line : Railways: Focus on investment to augment capacity

Additional capacity on other routes based on route-wise planning and low-cost capacity improvements would be the other elements of the 11th Plan strategy.

New Delhi June 2 The Railways has zeroed in on two key challenges during the Eleventh Plan (2007-12) — one in the realm of investments and another in the area of its core business of logistic solutions to freight customers and passengers, according to the report of the Working Group on Railway Programmes for the 11th Plan.

The working group report on railways concedes that the unprecedented increase in freight and passenger traffic has led to greater focus on strategic investments to augment capacity. The outlay proposed for the 11th Plan is Rs 2,30,000 crore comprising Rs 95,000 crore by way of budgetary support, Rs 75,000 crore through internal resources and Rs 60,000 crore of extra budgetary resources (EBR).

Dynamic pricing

Stating that the share of internal resources in the overall 10th Plan works out to 35 per cent as against budgetary support of 45 per cent, the share of EBR in the Plan works out to 20 per cent. "The financing of investment in the 11th Plan would continue to reflect this shift in a large measure," the report said, adding that the Railways have demonstrated the ability to generate substantial investible surpluses through dynamic pricing policies, increased volume and reduced unit costs of operations.

"In the 11th Five-Year Plan, the focus will be on higher internal generation, increased public and public-private partnerships (PPP) and generation of resources through leveraging commercial exploitation of its assets," the report noted.

Of the Rs 2,30,000 crore investment proposed, 25.70 per cent would be for rolling stock, 17.10 per cent for investment in PSUs, including the proposed high speed passenger corridor and 10.82 per cent for track renewals and the balance is set apart for new lines, gauge conversion, doubling, computerisation, signalling and telecom works, passenger and other amenities, and inventories and other peripheral programmes.

Second challenge

Referring to the second big challenge, which is to institutionalise the market response of pricing policies and planning priorities through a definite process of customer client focussed strategies, the report said the concept of lean season prices, concessional prices for empty return routes, higher prices for in-demand mineral exports, all remain part of the strategy of price discrimination and market segmentation based on demand factors.

"The main strength of Railways lies in its ability to obtain network-based economies from high volumes and extremely favourable energy efficiency compared to other modes. Inability to provide cost-efficient door-to-door service and differentiated service to customers is the prime weakness of the Railways," the report observed.

The proposal for capacity augmentation through construction of Dedicated Freight Corridors (DFCs) along the highly saturated freight lines is the new long-term strategy to provide premium services in freight and passenger.

The extant trunk routes along these dedicated freight corridors would also require investments to improve speed and capacity so that the quality of passenger services could be significantly enhanced.

Modernisation plan

Additional capacity on other routes based on route-wise planning and low-cost capacity improvements would be the other elements of the11th Plan strategy.

Pointing out that the Indian Railways Modernisation Plan (IRMP) 2005-2010, envisaged modernisation of passenger and freight business segments, the report said, the 11th Plan would continue this process. Technological improvements are forecast in fixed infrastructure and rolling assets.

Reduction in unit cost of operation by introducing heavier trains of 22.9 t/25 t/30 t axle load would be adopted with greater wagon. High capacity wagons with better payload to tare ratio fully exploiting the standard moving dimensions on existing routes and introducing longer freight trains on specified sections would be explored, it added.