India's clogged rail lines stall economic progress

Growth of Railways has been hampered by leaders more interested in winning elections

For most of that time the containers idle at the Jawaharlal Nehru Port near Mumbai because railway terminals, trains and tracks are severely backlogged all along the route. Counting storage and rail freight fees, Sahai estimates the cost of moving goods from Mumbai to Delhi at up to $840 per container — or about three times as much as getting the containers to India from Singapore.

“They don’t have any physical space,” Sahai, who is chairman of SKS Logistics of Mumbai, said about the government-owned Indian Railways. “And all their trains are booked.” As the world looks to India to compete with China as a major source of new global economic growth, this country’s weak transportation network is stalling progress.

Economists say India must invest heavily in transportation to achieve a long-term annual growth rate of 10 per cent — the goal recently set by the prime minister, Manmohan Singh. But whether measured by highways, airways or — particularly — far-reaching railways, India’s transportation is falling short.

Critics say the growth and modernisation of Indian Railways has been hampered by government leaders more interested in winning elections and appeasing select constituents, rather than investing in the country’s long-term needs. It is one of the many ways that the political realities of India’s clamourous democracy stand in contrast to the forced march that China’s authoritarian system can dictate for economic development.

A 40,000-mile, 150-year-old network, Indian Railways is often described as the backbone of this nation’s economy. And in fact it is moving more people and goods than ever: 7 billion passengers and 830 million tonnes of cargo a year. But its expansion and modernisation are not keeping pace with India’s needs.

“If it has to serve as the backbone of the Indian economy, the leaders of the Indian Railways have to think big, and they need to have a larger vision,” said S Ramnarayan, a professor at the Indian School of Business and co-author of a book about the railways. “Thinking in terms of incrementalism — a little extra here, a little extra there — doesn’t solve anybody’s problem.”

The crash on an eastern rail link late last month that killed 151 people and injured hundreds of others underscored the vital nature of the railroads, as well as their vulnerability. The crash, which authorities have attributed to Maoist rebels, was particularly disruptive because it disabled a busy east-west line that, along with many others, was already stretched thin.

Traffic between big cities like Mumbai and Delhi, for instance, often runs at more than 120 per cent of planned capacity, which means trains travel more slowly and tracks wear out faster than intended.

And because the railways’ tracks are too lightweight and the locomotives underpowered, Indian trains can haul no more than 5,000 tonnes of cargo, compared with 20,000-tonne capacities in the United States, China and Russia.

India’s fastest passenger services, the Rajdhani and Shatabdi, have top speeds of only 160 km (100 miles) an hour, while even the Amtrak Acela in the US can hit 150 miles an hour in a few stretches. China’s bullet trains, meanwhile, zip along at an average speed of 215 miles an hour.

Narrow ambitions

Political analysts say that the current railway minister, Mamata Banerjee, has been distracted by her party’s campaign to win elections in her home state of West Bengal. Those political ambitions, they say, have inspired populist policies by Indian Railways that are at financial odds with modernisation and capital investments.

Indian law allows the railways to acquire land quickly through hearings before magistrates; for example, Mamata has promised farmers and other landowners that the ministry will negotiate with each landowner whose property must be acquired for two large freight projects. While popular with landowners, the process could add years to the projects.

Mamata is hardly the first railway minister with a political agenda, though. And most of the ministers who preceded her have funnelled the railways’ limited resources into subsidies for passengers at the expense of freight service. Even though passenger services lost about $4 billion last year, the government has not increased fares for seven years. And it has even lowered some prices, in the face of inflation that has ranged from 3.8 to 13 per cent a year.

As a result, migrant workers, for example, can travel from Mumbai to their homes in Bihar, 1,050 miles away, for Rs 500 ($11). Last year, Mamata introduced a new monthly ticket good for travel up to 100 km for Rs 25. “It’s very difficult to run a business on that,” a senior railway official said. But, he added, Mamata is helping the “large number of poor in the country who are eking out a living.”

To subsidise passenger travel, the railways levy some of the highest freight tariffs in the world. India charges $395 to move a tonne of freight one km — four times what American companies charge and twice as much as in China. Business executives say their best hopes for improving the railroad’s costs and capabilities may ride on solutions not wholly reliant on Indian Railways.

Four years ago, the government began allowing private companies to operate container trains. One of the new carriers is IndiaLinx, which buys rail cars and leases tracks, locomotives and workers from the Railways.

Amitabha Chaudhuri, chief executive of IndiaLinx, said his company would carry about 95,000 containers this year, up from 55,000 last year. The company, which is owned by APL Logistics of Singapore, has seen strong demand for refrigerated containers, which are in short supply in India.

Analysts and officials also hope that plans proceed for dedicated freight corridors that would greatly increase capacity along the country’s most congested stretches of rail: Mumbai to Delhi in the west, and Punjab State to Calcutta on the east coast. The 1,700-mile network is expected to cost more than $9 billion.

For the western corridor, Japan has agreed to provide about $5 billion in low-interest loans to help India buy equipment and services from Japanese suppliers. And the World Bank is considering loans of up to $2.4 billion for the eastern corridor. Construction is expected to begin next year and be completed in 2017.

But broadly speaking, India does not have a stellar record of executing its plans. The backlog of rail projects runs 10 pages and is short $17 billion in required financing. The oldest incomplete project, a 46-mile line in West Bengal, began in 1974 and has been delayed because the state government has not handed over some land.

Analysts said it would be more efficient to connect smaller towns to main rail lines by buses. But Mamata has said that the railways must build lines to help spur development in remote areas and smaller towns. “We cannot and should not have a myopic view of viability,” she said during her annual budget speech in February. “What is not viable today, if connected, will become viable tomorrow.”