The Hindu Business Line : Capacity expansion is the route to Railways’ future

Mr V. N. Mathur took over as Member (Traffic) of the Railway Board in April. An officer of the Indian Railway Traffic Service, he joined the Railways in November 1971. Mr Mathur recently discussed with Business Line various issues currently facing the Indian Railways.

Excerpts from the interview:

What is the biggest challenge facing the Indian Railways right now?

The biggest challenge facing the Indian Railways right now is to plan for the future and work out the modalities as to how to implement it within the stipulated time in the most cost-efficient manner.

Have you firmed up the plan?

The Indian Railways would like to achieve a freight traffic of 1150 million tonnes (mt) by the end of the Eleventh Plan, up from 725 mt handled in 2006-07 and a passenger traffic of an estimated 880 billion passenger kilometres during the same period, up from 660 bpkm.

What is the road map for achieving the targets?

It is simple: Capacity expansion. The capacity has to be expanded through new constructions such as doubling and laying of third and fourth lines, track renewal and gauge conversions as well as upgradation of existing facilities such as the signalling and communications systems. Also, there has to be sizeable acquisitions of rolling stock. How then do you propose to tackle this problem?

We are planning to launch three new production units in the joint venture.

Have you identified the joint venture partners?

Not yet. PricewaterhouseCoopers has been appointed to suggest how to go about this matter.

What about funding the plans?

We’ve submitted to the Planning Commission a Rs 251,000-crore proposal for implementation by the end of the Eleventh Plan. We’ve indicated mobilisation of Rs 90,000 crore from within and 29 per cent of the projected estimate by way of market borrowing. For the balance, we may have to approach the government for support. But then nothing has yet been finalised.

The Dedicated Freight Corridor is the Railway’s show-piece project. At what stage is it?

A core group has been formed and we’re going ahead as per the recommendations of RITES which is preparing the feasibility report.

What will be the organisational structure?

It will be a PSU structure under the Indian Railways, although the Railways may consider having a few small SPVs (special purpose vehicles) with private partnerships for small works such as construction of bridges, though at a later stage. The government insists on extra-budgetary funding as far as possible.

What is the project cost?

It is estimated at Rs 28,000 crore.

What will be the extent of Japanese funding?

We’re not sure yet. Much will depend on the separate study of the project being undertaken independently by Japan Bank for International Cooperation (JBIC). Based on the JBIC report, Japan International Cooperation Agency (JICA) will take a view on funding. We would like to have a Japanese funding of Rs 18,000 crore.

Your traffic throughput so far this fiscal has been less than satisfactory…

The answer is both yes and no. Yes, because there has been a shortfall from the target. No, because compared to the first quarter of the last year we’ve handled 10 mt more.

Let me explain. The freight traffic target for the current fiscal has been set at 785 mt , roughly 60 mt more than that handled in 2006-07.

In other words, the Indian Railways is required to handle an additional five mt of traffic every month on an average. In the first quarter we are supposed to handle an additional 15 mt but we handled 10 mt.

Why the shortfall?

Loading of coal, iron ore, and cement has been lower than estimated for a variety of reasons. There were problems at collieries affecting loading; coal accounts for the bulk of the Railway’s freight traffic. Iron ore loading too was unsatisfactory because of the poor demand from steel plants, both in the private and public sector, due to their own problems.

For example, South Eastern Railway, the country’s major iron ore loading zonal railway, would like to load on an average 55-60 rakes of iron ore a day at Chakradharpur division but the performance so far has been around 49 rakes a day which is higher than the last year’s daily average of 34 rakes but less than the target.

Why this is so?

The number of sidings available for loading is inadequate to meet the burgeoning demand. In case of iron ore, we’re required to cater to a wide variety of demands generated by as diverse groups as old integrated steel plants, new modern steel plants, the traders and the exporters scattered all over the country.

The allocation of rakes has to be fine-tuned to meet all these demands. But despite all these problems, I must emphasise, we’re confident of achieving the target. In fact, the performance in July will be good.

How?

We’re paying attention to the problem areas. For example, in addition to procuring additional wagons this year, the wagon availability is being improved through faster turnaround by reducing detention.

An inter-ministerial committee has been formed to supervise how to expedite the rake loading of imported foodgrains and fertilisers at various ports.

We’re hoping to post additional growth in cement, and iron and steel traffic. Also, the throughput of the containerised traffic on the domestic route is set for a big jump.

In the first quarter the growth of Container Corporation of India’s domestic traffic has been more than 25 per cent. I’m very hopeful.