7.1.1 Inadequacies and imbalances in transport threaten to constrain economic growth and the quality of life in both urban and rural India.

7.1.2 The country’s transport system, which comprises rail, roads, sea port and airports, is facing capacity saturation, which means lost economic opportunities and deterioration of assets and services. The modal mix of transport has been continuously shifting against the railways with the result that bulk of the freight (over 60%) and passenger traffic (over 80%) is carried by road, which is undesirable from economic as well as environment angles. A burgeoning energy import bill is one of the direct consequences of this.

7.1.3 In the urban areas, lack of adequate mass transport, complete absence of demand management and policy distortions in the area of fuel pricing and bank finance have resulted in an explosion of personalised transport comprising mainly of scooters and cars. This has contributed to high levels of pollution and alarming rates of accidents. On the other side, a large number of villages lack a reliable all-weather connection with nearby markets and towns. Some areas like North-East and J and K have remained physically and emotionally isolated because the transport system has not linked them with the rest of the country. Certain environment friendly and socially cost-effective means of transport like coastal shipping, inland water transport and non-mechanised transport, human or animal powered have remained undeveloped.

7.1.4 Annexure 7.1.1 indicating the growth of traffic and network underline the capacity constraints facing all the modes of transport. The Indian Railways have extended their route length from 53,596 kms. in 1950-51 to 62,725 kms as on 31.3.97 registering an increase of 17% only. On the other hand, freight in tonne kms carried has risen six-fold, while passenger kms. have grown by five times during the same period. On an average, only about 2000 kms have been added to the system in each decade, while the Eighth Plan contribution was even lower at 267 kms. Further, the Indian railway system is a multi-gauge one and the Broad Gauge part is 41,971 kms, of which only about 15,000 kms. are double/multi-track, despite the heavy congestion in the high density corridors.

7.1.5 The aggregate length of roads, which was 0.4 million kms in 1950-51, has increased eight-fold to 3.32 million kms in 1995-96 but the number of passenger buses has gone up 13-fold from 0.34 lakh to 4.5 lakh and goods vehicle fleet 22-fold from 0.82 lakh to 17.85 lakh in the corresponding period. Out of the total road length constructed during the Eighth Plan, 66% were constructed under Jawahar Rozgar Yojana (JRY). These roads are of limited value from the point of view of movement of heavy traffic. Further, only 20% of the surfaced roads are estimated to be in good condition, which compares unfavourably with other countries*. The national highway network, which carries about 40% of the road traffic, is just a little over 1% of the road network and just over 20% of the national highway network is single lane.

7.1.6 In the port sector also there has been an 11-fold increase in sea traffic from 19.38 million tonnes to 227.26 million tonnes from 1950-51 to 1996-97 with inadequate addition to the port capacity during the period. Much of the equipment at the ports is overaged and technologically obsolete. The major ports are operating at more than 100% capacity, as against the international utilisation norm of 55 to 65 per cent. This has resulted in congestion and increase in turn-around-time from 6.7 days in 1960-61 to 8 days in 1997-98.

7.1.7 Expansion of air traffic, of Indian Airlines from 83 million Revenue Tonne Kms (RTKMs) in 1960-61 to 698 million RTKMs in 1996-97, has also taken place without commensurate increase in the ground handling capacity or upgradation of navigational equipment at the airports.

7.1.8 Not only is the network to be further developed and strengthened, there is also a need to redress the imbalances in the spread of the transport infrastructure and facilities. Annexure 7.1.2 presets the position regarding the availability of rail and road network State-wise. In most of the North-East and J and K, road length per 100 sq. km of area is quite low as compared to the other States in the country. In J and K and Arunachal Pradesh the average is as low as 5.9 and 12.2 per 100 sq. km. respectively, compared to all-India average of 73 per 100 sq.km. The railways have very little presence both in J and K and in most parts of the North Eastern region. A high level Commission, which enquired into the backlog of the basic minimum services and the infrastructure needs in the North Eastern region, has characterised the lack of adequate connectivity both intra-regionally, as well as with the rest of the country, as the most important problem of the region.

7.1.9 Another imbalance is the rural-urban dichotomy. Much of the network of rail, roads, ports and airports is geared to the needs of the urban economy, while the vast rural hinterland is very poorly served by communications. Of the nearly 6 lakh villages, only about three-fifths are known to be connected by all-weather roads at the end of the Eighth Plan. Even in respect of the larger habitations i.e. villages of more than 1000 persons, connectivity is estimated to be of the order of 85 per cent at the end of the Eighth Plan and here also, most hilly areas and the States of Orissa, Bihar and Madhya Pradesh present a particularly patchy picture.

7.1.10 The economic costs of the gaps in the transport infrastructure are easy to. surmise. The congestion on the roads leads to low speeds, resulting in high energy consumption and increased pollution. It is estimated that lack of proper maintenance has increased the fuel consumption by 10-15 per cent per annum. In monetary terms, the loss to the economy is estimated to be Rs.3,000 to 4,000 crore per year. The delay on the roads and ports also results in high inventory costs for the industry, thus affecting its competitiveness vis-a-vis international industry operating on JIT(just-in-time) inventory principles. The congestion at the ports and the insufficiently developed air services also affect foreign investment decisions, which often place a great premium on the infrastructure.

7.1.11 The extreme overcrowding in almost all modes of passenger travel restricts personal mobility and the crush loading of suburban services, e.g. in the Mumbai suburban system, is injurious both to working efficiency and human dignity. The weaknesses of the transport infrastructure in the rural areas and in the remote regions deny them meaningful participation in the national economy. Environmental pollution of land , air and noise also affects the quality of life both in the cities as well as in the country side.

7.1.12 The railways and the roadways are the two main modes of transport carrying the bulk of freight and passenger traffic. Successive policy statements, including the National Transport Policy Committee Report (1980) as well as the subsequent Plan documents have recommended that the railways should be given the lead role in the transport sector because of their greater energy efficiency, eco-friendliness and relative safety. However, the railways have continued to yield their dominant position to the road transport. While in the freight traffic, the share of the road transport has been estimated to have increased from 11% in 1951 to 60% in 1996, in passenger traffic, the share has gone up from 32% to 80% during the same period.

7.1.13 The main reason for this continual slide in the railways’ share has been the inability of the system to grow in proportion with the increase in the traffic requirements of the growing economy. Since the railways are owned and managed entirely by the Government, resource constraints have all along led to under-funding of the system, which has meant under supply, both quantitatively and qualitatively. Faced with capacity constraints, the railway system chose to concentrate on the movement of bulk materials for the core sector, namely power, steel, cement etc., thus losing its clientele in the high value non-bulk sectors which often recorded higher growth rates. The skewed tariff policy, implying cross subsidisation of passenger traffic, has meant a continual increase in freight rates which, in turn, are driving away even some of the long distance bulk traffic from the railways to the roadways. On the other hand, road traffic being largely in the private sector has moved aggressively to occupy the space vacated by the railways and in this it has been aided by a liberal permit and regulatory system for national trucking, cheap finance made available by the banking sector and an energy pricing policy which has subsidised diesel, while the railways pay an exceptionally high tariff for their electricity consumption.

7.1.14 International trends indicate that with the growth of the highway and aviation technologies the traffic tends to shift away from the railways. However, in the continental economies like USA, China and erstwhile Russia, the railways have maintained their dominance. India’s size, geography and resource endowments also mandate a dominant role for the railways, not to mention the environmental considerations, which in recent years are causing a rethinking even in the developed world.

7.1.15 In the inter-modal context, the coastal shipping and inland water transport also have not been able to realise their full potential of growth though they are more energy efficient, environmentally cleaner and economical. In the case of coastal shipping, the development has been stymied by the constraints of port capacity and customs and procedural problems. Inland water transport has its spatial limitations and most of the waterways suffer from navigational hazards like shallow water and narrow width of channel during dry weather, siltation, bank erosion, absence of infrastructure facilities like terminals and inadequacy of navigational aids. At present, the share of these modes of transport is estimated to be less than 2%, though they have undeniable potential for relieving the pressure on surface modes of transport.

7.1.16 Non-motorised transport modes, powered by human and animal energy, could also play a bigger role in the developing transport scenario of the country. Bicycles, rickshaws and similar vehicles, and even hand carts, have a considerable role in urban areas for catering to short trips in congested areas and on narrow streets and lanes and for providing access to formal mechanised modes of transport. Animal carts are an essential part of the rural agricultural economy. But the elitist approach has not focussed on the development of these modes of transport as much as on the formal motorised modes, despite their manifold benefits like relatively lesser cost, simple technology, large employment potential, non-polluting operations etc. The provision of simple technological inputs of improved designs, standardisation of spare parts and ensuring safe and smooth movement could go a long way in achieving greater complementarity of various modes of transport catering to the varied needs of the different sectors of the economy.

7.1.17 In the urban, particularly the metropolitan areas there has been an explosion of personalised transport largely due to the failure of the Government to make available mass public transport in adequate measure. This trend has been abetted by the flooding of the consumer market with cars, light commercial vehicles and two and three wheelers, motorbikes of alluring varieties, financed by cheap credit and powered by subsidised fuel. This, combined with an almost total absence of demand management and rational road-use policies, has led to a phenomenal growth in the number of personal vehicles in recent years in the metro cities, most prominently in Delhi. The result has been a worsening grid-lock of traffic, causing fatal and other serious accidents on an increasing scale. The high levels of pollution have earned for Delhi even an international ranking.

7.1.18 In the transport sector, energy planning has a special significance not only because transport is the second largest consumer of energy next to industry, but also because different modes of transport use energy with varying intensity and efficiency. The transport sector consumed 18.80 million tonnes of oil equivalent (MTOE) of energy in 1984-85, which increased to 27.80 MTOE in 1993-94, registering an increase of about 48 per cent. In the case of liquid fuel, the consumption has gone up by 89% in the corresponding period. This points to the need for modifying the inter-modal mix in favour of energy efficient modes on the one hand and promoting energy efficiency in all modes by encouraging better design of vehicles through fiscal incentives, if necessary, better geometry and surfaces of roads and promoting greater awareness in the driving community as a whole, on the other.

7.1.19 The continuous increase in the growth of traffic in various modes of transport has raised serious issues concerning public safety. Table-7.1.1 gives the details of the accidents in different modes over a period.

Safety of operation is an area of concern in all modes of transport. Though the accident rate is coming down, the number of fatalities is still high. In road transport the number of fatalities increased from 15,000 in 1971 to 59,900 in 1995 which is truly unconscionable. Road safety has been a casualty both in the urban areas and the highways. In railways, the human failure and lack of proper man-machine interaction has affected safety. Another area of concern is the large number of unmanned level crossings, which are the scenes of frequent accidents. The provision of infrastructural facilities, particularly in the shape of modern commercial navigational equipment has lagged behind the growth of air traffic which has jeopardised the objective of providing safe and reliable air services. Country boats carrying men and materials in Bihar, West Bengal, Orissa and other parts of the country are often involved in accidents caused by overcrowding, coupled with the use of unserviceable crafts, inadequate traffic regulation and total absence of safety equipment on board.

7.1.20 Both the construction of transport infrastructure and the provision of transport services have an adverse impact on environment. The demand for infrastructure is increasing at a rapid pace and this is likely to go up leading to further use of the scarce land resources and the attendant problems of pollution of various kinds. The different modes of transport cause environmental degradation of various degrees and in diverse manner. The rail track and the roads use up scarce land and their construction has an adverse effect on the physical or the natural features of the areas, including a reduction in the vegetation cover. The road transport causes air and noise pollution, while the water transport poses the risk of marine pollution of the coastal waters. While there is a need to contain pollution and environmental degradation caused by all modes of transport, what is more urgently required is the containment of pollution caused by the operation of road transport, particularly in the mega cities. Table-7.1.2 presents the vehicular pollution load in some important cities.

It is necessary to encourage such modes of transport which are not heavily dependent on scarce land resources and to adopt construction procedures and practices which do not disfigure the land and do not create ecological problems. Strict enforcement of the anti-pollution laws, applicable to the transport sector, is also necessary.

7.1.21 Transport technology has a great influence on the productivity and safety of the transport sector. Thus, the modernisation of the transport system and the incorporation of the emerging technologies are essential elements of transport planning, which must, at the same time, be based on the local needs, instead of being imitative of the technology used in entirely different circumstances in some developed countries.

7.1.22 Technology upgradation has been a thrust area in the successive Five Year Plans, but, despite this, the progress has been slow, particularly in respect of bus chassis, engine design, multi-axle vehicles, construction of roads, cargo handling equipment at the ports, navigational and communication facilities at the airports, modernisation of rolling stock and signalling system in the railways. The position is much worse in regard to non-motorised transport. It is necessary to upgrade the technology in all these areas with a view to improving the productivity of operation and the quality of service, besides making the transport system more safe and reliable.

7.1.23 A comprehensive policy package is necessary to address the diverse issues facing the transport sector. It is imperative to strengthen the Indian railway system in its reach and capacity so that it effectively links the distant parts of the country, helps to develop the economic potential of the backward areas and carries the bulk of the nation’s long or medium haul traffic. Similarly, the road network needs to be expanded and strengthened to improve accessibility of the hinterland, especially the rural areas and to facilitate the integration of the isolated parts of the country. The length and breadth and the quality of the highways must be improved greatly as part of a national grid to provide for speedy, efficient and economical carriage of goods and people. Road transport needs to be regulated for better energy efficiency and pollution control, while the mass transport network needs to be made viable through a rational tariff policy and a refurbishment of the fleet. The capacity of the ports in terms of their berths and cargo handling equipment needs to be vastly improved to cater to the growing requirements of the overseas trade. The shipping industry needs to be enabled to carry higher shares of the sea borne trade in indigenous bottoms. The civil aviation sector needs to expand its carrying capacity for passengers and cargo, improve the ground handling facilities and provide connectivity to areas like the North-East. Conditions need to be created to ensure full utilisation of the capacities created in the public sector with large investments made in the past.

7.1.24 In the metropolitan areas, on the one hand, the provision of mass public transport has to be increased through a mix of environment - friendly modes - specially designed buses, light rail and metro and on the other, demand management has to be ensured through price-based as well as non-price-based measures so as to minimise the dependence on personalised transport. Similarly, non-mechanised transport should be accorded its rightful niche in a well conceived transport network.

7.1.25 To bring about this sea change in the transport scene, many policy initiatives will be needed, each backed by adequate investment and complemented by suitable policy changes in other sectors. A Task Force on Infrastructure has been constituted with the aim of attracting investments to specific projects.

7.1.26 The resource requirements of this agenda for transport development are very substantial. The requirement of the highway sector alone in the Ninth Plan is estimated at about Rs.40,000 crore and this is exclusive of the requirements of district and village roads. The total requirements of the transport sector add up to over Rs.200,000 crore, most of which will have to be found locally. The India Infrastructure Report rightly points out that no more than 15% of the funds required for infrastructure can be expected to come from external sources. External aid and borrowings have funded important transport projects in the past, particularly in the roads, ports and shipping sectors.

Efforts will be made to increase the flow of such external resources but, at the same time, the pool of local resources will be expanded so that want of counterpart funds for the external aided projects does not create undue regional and sectoral imbalances.

7.1.27 The domestic funding of the transport sector can be either public or private. Historically, the investments in the transport sector, particularly in the rail, road, ports and airports infrastructure, have been made by the State mainly because of the large volume of resources required, long gestation periods, uncertain returns and various externalities, both positive and negative, associated with this infrastructure. However, the galloping resource requirements and the concern for managerial efficiency and consumer responsiveness have led to the active involvement of the private sector in infrastructure services in recent times. In India too, considerable private investment exists in trucking, inter-city bus travel, shipping and lately in airline services. By and large mobile transport units like trucks, buses, wagons, ships and aircrafts lend themselves easily to private investment while the large fixed infrastructure has remained in the domain of public investment. However, statutory and administrative initiatives have been taken in recent years to involve private capital in the expansion and strengthening of infrastructure in the railways, road, shipping and the airports. The private participation can take many forms like full or joint ownership management contract, leasing, concessions like BOT etc. However, looking at the state of Indian capital markets, particularly for long-term debt, it may not be realistic to expect any large-scale contribution from the private sector in the transport area through evolution of a well developed policy and regulatory framework can result in gradual inflows from the private sector.

7.1.28 This underscores the need for adequate public sector outlays for transport. The share of transport in the public sector outlays has, however, been declining over several Plan periods. From 23% in the Third Plan, it dropped to 13% in the Eighth Plan and this has been partly responsible for the acute deficiencies being experienced in the transport sector in recent years, when the tempo of economic growth has accelerated (Annexure 7.1.3). It may be noted that when, in the Seventh Plan, the percentage of investment in railways to the total Plan investment was raised to 7.6% from 6% in the Sixth Plan, it resulted in a significant increase in output and productivity, with the railways carrying an unprecedented 70 million tonnes of incremental freight. There is, therefore, a strong case for increased allocations for the transport sector to relieve the constraints on further economic growth.

7.1.29 There is a general recognition that the transport sector has to improve the internal generation of resources for funding the Plan. In this context, tariff reform assumes crucial significance. Pricing for many of the transport services has hitherto been influenced by public utility considerations, giving rise to subsidies and concessions, many of which are unmerited. The result has been a depletion of resources and consequent contraction of investment. This has meant undersupply of services on the one hand and the appropriation of "rent" by intermediaries on the other. Therefore, the pricing policy will, in future, be based on full recovery of costs. Wherever subsidies or concessions are regarded as essential on public policy considerations, attempts will be made to provide these directly through the general budget or sectoral budgets so that their costs become apparent and the health of the transport enterprise is not impaired. Rigorous collection of service charges will also be emphasised and leakages plugged through suitable enforcement mechanisms. Such reforms will also make the transport sector more attractive for private investment. The managerial efficiency and the initiative of private enterprise will be utilised for collection of charges through franchise or contractual arrangements, wherever feasible.

7.1.30 In sectors traditionally funded entirely by the State, such as roads, attempts will be made to mobilise resources through user charges in various ways. Road users already contribute substantial revenues by way of taxes on fuels and vehicles, which go to the general exchequer. Currently a small amount equivalent to 3.5 paise per litre, out of the proceeds of excise and customs duties levied on motorspirit, is available for the development and maintenance of roads. It may be necessary to make use of the principle of user charges in the form of dedicated levies on fuels and other inputs used in the transport sector for raising substantial revenues meant for construction and maintenance of highways. An additional tax at the rate of one rupee/litre of petrol as announced in the Union Budget 1998-99 is a step in this direction. Similarly, major improvements in the existing highways are proposed to be taken up by the National Highway Authority of India through the public toll method. This , of course , will be in addition to the tolls to be charged by the private investors on road concessions under BOT arrangements.

7.1.31 Non-tariff measures will also be taken for resource generation, for example through commercial exploitation of land and air space on properties belonging to the railways and other government agencies, particularly in the metropolitan areas. This, however, will have to be handled through a transparent mechanism involving the concerned State Governments and local authorities.

7.1.32 Along with revenue mobilisation through tariff and non-tariff measures, stress will be laid on productivity of human and material assets and cost cutting will be pursued vigorously in the public sector transport enterprises. The staffing policy, as well as the compensation systems, will be reviewed to link them with productivity to the extent possible.

7.1.33 The budgetary support for the transport sector has been declining consistently over the years. For example, in the railway sector, the budgetary assistance declined from as high as 75% in the Fifth Plan to a mere 23% in the Eighth Plan. This combined with the policy of keeping the passenger fare low, forced the railways to resort to market borrowing, whose heavy servicing burden further eroded the internal surpluses of the system. There is a strong case for a higher budgetary support on both theoretical and practical considerations. The transport infrastructure has important externalities in view of its catalytic role in economic growth. Many of our transport enterprises cannot take tariff and investment related decisions on purely commercial lines. When projects are taken up on strategic considerations or uneconomic routes have to be served on social policy grounds or essential commodities are to be carried at concessional freight, it is only proper that budgetary compensation is provided in order that the financial health of the transport entity is not affected. In view of these considerations, the budgetary support to the transport sub-sectors will have to be enhanced. For development projects, which are commercially not viable, financial support will also be tapped from the beneficiary States which should share in the operational costs of such suboptimal investments.

7.1.34 As stated earlier, transport reform and development are not matters confined to financial investment in that sector only. Policy reforms or corrections will be needed in other related sectors. Energy pricing is one such area. For rectifying the modal imbalance in the transport economy, it is necessary to follow a fuel pricing policy in line with social costs. The abnormally high tariff on power used by the railways needs to be reviewed and revised.

7.1.35 In the road development programme, there is a need for a clear appreciation of the priorities. Removal of policy distortions in related sectors, a degree of demand management on the road sub-sector and supply improvement on the railways and other modes of transport will go a long way in serving the objectives of energy and environment conservation. There is a strong case for using the tax and subsidy mechanism to correct the imbalance. A steep increase in the user charges for roads is called for in the metropolitan cities so that the social costs of pollution and accident relief are passed on to the road users and the proceeds of the tax are used for promoting more benign modes.

7.1.36 In the preceding paragraphs, the overall scenario and various issues concerning transport sector as a whole have been discussed. In what follows, the status in respect of each of the sub-sectors in the transport sector in terms of the Eighth Plan review besides the emerging issues and strategies visualised for development, are elaborated.

7.1.37 The Indian Railways are one of the largest railway systems in the world with 63,000 route kms., approximately 7,000 locomotives, 34,000 passenger coaches, nearly 300,000 wagons and employing nearly 1.6 million staff. The system carries 11 million passengers and 1.20 million tonnes of freight per day. As a principal mode of transportation for long haul freight movement in bulk and long distance passenger traffic and for mass rapid transit in suburban areas, it occupies a unique position in the socio-economic map of the country and is considered as a vehicle and a barometer of growth.

7.1.38 The main thrust in the Eighth Plan for the Railways was on capacity generation, besides rehabilitation and modernisation, manpower planning and human resource development, energy conservation, safety, financial viability and customer satisfaction through reliable and better quality of services.

7.1.39 An outlay of Rs.27,202 crore, comprising Rs.5,375 crore (20%) of budgetary support, Rs.3,000 crore (11%) of market borrowings and Rs.18,827 crore (69%) of internal resources was provided to the Railways for the Eighth Plan. The financing of the approved outlay during each year of the Eighth Plan and the actual expenditure incurred are presented at Annexure 7.1.4 The investment during the Eighth Plan was financed through budgetary support of Rs.7311 crore (23%), extra budgetary resources to the tune of Rs.6161 crore (19%) and internal resources of Rs.18,830 crore (58%), totaling Rs.32,302 crore. The Plan head-wise details are given at Annexure 7.1.5.

7.1.40 Since the main stress was on capacity building, the targets and achievements in respect of various assets created during the Eighth Plan, which are given in Table-7.1.3 deserve attention.

				Table 7.1.3
		Target and Achievement  during  Eighth Plan-Railway Sector
----------------------------------------------------------------------------------
 Sub-sector                     Target       % of      Achievement       % of 
                           ---------------   total     ------------     actual
                            Physical Financial outlay  Physical Financial expend.
---------------------------------------------------------------------------------
New Lines (Kms)               -       900       3.31      669     1,292    4.00
Gauge Conversion(Kms.)      6,000   3,600      13.23     6915      4948   15.32
Electrification (RKM)       2,700   1,350       4.96     2708      1431    4.43 
Doubling (RKM)                -       600       2.21     1089      1113    3.45
Track Renewals(RKM)        12,500    4500      16.54    13972      5409   16.75
Signalling  and  Safety           -       675       2.48      -         914    2.83
Rolling Stock:
i) Wagons(FWS)           1,20,000  10,630      39.08    96488     13375   41.42
ii)	Locos:
    Electric                  750               815                 
    Diesel                    749               702
iii) Coaches                9,100              9496
iv) EMUs                    1,265              1116
---------------------------------------------------------------------------------

7.1.41 It will thus be seen that most of the investment has gone into replacement of the overaged assets mainly in the area of track and rolling stock. Here also, the achievement was far short of the targets in respect of procurement of wagons. Though the gauge conversion programme recorded significant achievement, the network expansion in terms of new lines was quite marginal. Multi-plexing of track in busy corridors has also been quite modest while electrification of important sections has received adequate attention.

7.1.42 During the period from 1950-51 to 1996-97 the freight transport output measured in terms of net tonne kilometre has increased by 6.3 times and the passenger output of non-suburban passenger kilometres by 5.4 times, while the network has grown by only 1.17 times in terms of route kilometres and 1.36 times in terms of track kilometres. Other inputs, such as number of passenger coaches, wagons and tractive efforts of locomotives, have grown by 2.0 to 2.6 times only. The increase in transport output has been brought about by more intensive utilisation of the available assets, improvement in productivity and technological upgradation. Table-7.1.4 gives a detailed picture of railway productivity during the last five years.

Wagon utilisation (BG) in terms of freight loading and movement expressed in net tonne kilometres (per wagon per day) has been moving up steadily and has reached 1840 NTKM in 1996-97, registering an increase of more than 28% over the Plan period. Other indices of asset utilisation also show some improvement.

7.1.44 In terms of total standard traffic units (tonne Kms + passenger kms) the output increased from 564.8 billion at the beginning of the Eighth Plan to 634.58 billion at the end of the Plan, representing an increase of 12.3% over the five year period i.e. a compound annual growth rate of 2.4 per cent. There is considerable shortfall compared to the targets set for the Eighth Plan both in respect of freight movement and passenger traffic. This was partly accounted for by the sluggish growth in the first two years of the Plan in the core sectors of the economy which are the mainstay of the railways’ bulk freight movement. The transport output was also affected by the drop in leads on account of reduction in spatial gap between the centres of production and consumption and changes in the pattern of development of industry. The later years recorded a considerably higher tempo of activity with the spurt in the economy and industrial growth of over 8%, which resulted in a record incremental loading in the later years of the Plan. Similar swings were also noticed in the passenger section of railways output.

7.1.45 Another promising development in the Eighth Plan was the performance of the Container Corporation of India Limited (CONCOR) which handled 96,000 Twenty feet Equivalent Units (TEUs) of international container traffic at the beginning of the Eighth Plan and reached a level of 400,000 TEUs in 1996-97, registering a compound annual growth rate of 33 per cent. The domestic container traffic, which was 12,000 TEUs in 1991-92, is expected to increase to 300,000 TEUs by 1996-97, registering an annual growth rate of 90 per cent. However, CONCOR’s share in total output is just over 2% and there is, therefore, enormous scope for growth in this area.

7.1.46 The Eighth Plan also saw the 760 km long broad gauge Konkan Railway Project nearing completion. The full length has been commissioned in January, 1998. This project, unique in technical complexity and financing arrangements involving four beneficiary States, will accelerate the socio-economic development of the Konkan region on the west coast.

7.1.47 The main thrust of the Ninth Plan would be on strengthening the capacity of the Indian railway system as the prime carrier of long distance bulk freight and passenger traffic. To this end, the railways will concentrate on multi-plexing and electrification of dense corridors, improvement in reliability of operations, containerisation of smalls and optimisation of total system operations.

7.1.48 The railways’ share in total traffic in the economy has been declining over the years. This has come down from 89% in 1951 to 40% in 1995 in respect of freight traffic and from 68% to 20% over the same period in respect of passenger traffic. If this decline is to be arrested, there is a need for a quantum jump in the rate of growth of railways traffic output. With the economy growing at about 6-7% per annum the railways will continue to lose their share if their output grows at a lesser rate. However, any immediate improvement in the growth rate cannot be expected, since a long gestation is involved in the augmentation of capacity as well as shifts in modal preferences. Therefore, it is proposed to take decisive steps in the Ninth Plan, which would on the one hand influence the modal choice through relative pricing based on social costs and on the other hand augment the capacity and improve the productivity of the railway system. This would provide the basis for first decelerating the decline of the share of the railways and then reversing the present trend in the subsequent five year Plans.

7.1.49 The railways have generally concentrated on the bulk movement of the materials of the core sector in the economy over long distances. This makes the railways vulnerable to cyclical fluctuations in these sectors and to geographical shifts in their operations. Business from these sectors has also tended to shift to roads because of the greater convenience and flexibility of that mode. The railways have also been priced out of certain sectors because of frequent increases in the freight schedule. The railways will have to gear up for providing reliable service at competitive freight rates to win back the bulk traffic which has traditionally been dependent on rail. At the same time, they have to reorient their business to diversify their freight base. Special value-added services on the basis of fixed schedules need to be provided to capture a fair share of the high value non-core traffic. A flexible freight policy is necessary to deal with sectoral shifts in the economy. The low volume piecemeal goods traffic over long distances is best suited for carriage by containers. This requires the railways and the roads to combine together and provide an integrated transport service. So much on the demand side. A greater reason for the decline in railways’ share in goods and passenger traffic has been their inability to generate adequate capacity to meet the growth of traffic. This is evidenced by the extreme congestion on the high density corridors i.e. "golden quadrilateral" connecting the metros of Delhi, Mumbai, Chennai and Calcutta. Also, the reach of the network has to be extended to integrate the more remote areas with the national economy. A substantial increase in the capacity of the railway system will call for a considerable step up in the level of investments, apart from improvements in productivity. Along with the rest of the transport sector, the railways have been seriously under-funded in recent Plan periods and the budgetary support has been woefully short of their needs. The market borrowings particularly of short and medium tenor are not suitable for financing an infrastructure sector like railways beyond a point, especially when socially-oriented projects are to be undertaken. Budgetary support is necessary for a public utility like the railways which has to take up developmental projects for social and strategic reasons. Even when the commercial character of railways is recognised there can only be a gradual downsizing of budgetary support because the tariff policies evolved over a long period take time to get adjusted.

7.1.50 However, there is no denying the fact that the expansion and the strengthening of the railway system will have to be financed mostly by the railways through generation of internal resources. This calls for a substantial improvement in the Indian railways’ operating ratio from the present high level of 90 per cent. This will require better operational and commercial management with emphasis on aggressive revenue generation on the one hand and rigorous cost control on the other.

7.1.51 In order to find the areas of strength and weakness, the Railways needs to rationalise its management and accounting system so that the cost of its various activities may be assessed and rationalised on commercial lines.

9th Five Year Plan (Vol-2)	[ Vol1-Index ] - [ Vol2-Index ]	<< Back to Index Next>
Transport and Communication Transport \|\| Postal Sector \|\| Telecom Sector \|\| Information and Broadcasting \|\| Information Technology \|\| Tourism