Railroading India’s Railways

• SHASHI THAROOR

NEW DELHI – Every February, the Indian Parliament performs a curious and unique ritual. The railway minister (a portfolio that exists in few democracies nowadays) presents the “railway budget" to the lower house for its approval. A packed chamber hangs on the minister's every word.

The practice began in the days of the British Raj, when the railway budget rivaled that of the rest of the Indian government. Of course, railway revenues today, at $23 billion, no longer dwarf the country's budget, which now stands at some $268 billion. But India's railways still produce other mind-boggling figures: 23 million passengers are transported daily (over eight billion per year, more than the world's entire population) on 12,617 trains connecting 7,172 stations across a 65,000-kilometer (40,000-mile) network. And, with 1.31 million employees, the railways are the country's biggest enterprise.

In short, the railways are the lifeblood of India's economy, touching the lives of every segment of society and playing a key role in moving people, freight, and dreams across a congested landscape. Yet much needs fixing.

India's trains carry four times the number of passengers as China's, despite covering only half as many kilometers, but still lose about $7 billion annually. The problem is that a succession of railway ministers, viewing the trains as poor people's only affordable means of transport, have refused to raise passenger fares, squeezing freight instead. This has proved popular with voters but disastrous for the country.

Though freight transport still accounts for 67% of railway revenues, with 2.65 million tons carried every day, the higher fares needed to subsidize passengers have deterred shippers. As a result, the share of freight carried across India by rail has declined from 89% in 1950-1951 to 31% today.

Instead, an increasing volume of goods is shipped by road, choking India's narrow highways and spewing toxic pollutants into the country's increasingly unbreathable air. By contrast, China's railways carry five times as much freight as India's, even though China has a far better road network.

Making matters worse, politicians have continued to add trains to please various constituencies – but without adding track. Indeed, owing to land constraints, India has laid only 12,000 kilometers of rail track since independence in 1947, adding to the 53,000 left behind by the British. (China added nearly 80,000 kilometers to its rail network over the same period.) As a result, several lines are operating beyond their capacity, creating long delays. Exacerbating this inefficiency are slow train speeds, which rarely exceed 50 kilometers per hours (and 30 kilometers per hour for freight), partly owing to the need to stop at an ever-rising number of stations to appease political interests.

But perhaps the biggest problem is how dangerous the railways are. Aging rails, tired coaches, old-fashioned signals, and level crossings dating back to the nineteenth century combine with human error to take dozens of lives every year.

Yet the railway ministers continue to insist on their populist approach. With the government losing $4.5 billion every year by subsidizing passenger fares, it has little money to spend on upgrading infrastructure, improving safety standards, or speeding up the trains. As a result, the railways run out of money before running out of plans. In the last 30 years, only 317 of 676 projects sanctioned by Parliament have been completed, and it is difficult to imagine how the railways will acquire the estimated $30 billion needed to complete the remaining 359 projects.

And if all of this were not bad enough, India's leadership seems not to recognize the challenges that the railways present. In a country where rail passengers cannot even expect a clean toilet, let alone an on-time arrival, Prime Minister Narendra Modi has spoken of introducing bullet trains – the latest in a string of irrationally grandiose aspirations. A technocratic new railway minister, Suresh Prabhu, has once again left passenger fares untouched and raised freight rates. Though, unlike his predecessors, he has resisted the temptation to announce any new trains, his plans for India's railways remain inadequate.

Prabhu's pledges include improving and expanding rail lines, introducing wireless Internet at railway stations, eliminating unmanned level crossings, creating a 24-hour toll-free number for users to phone in complaints, and installing security cameras to protect women passengers. These improvements seem to his critics to be marginal, at best, and have left his fellow MPs underwhelmed.

Prabhu's most impressive promise – to raise $140 billion from market lenders – is also his most problematic, as he has failed to clarify how exactly the railways would repay the loans. Given how high interest rates would have to be to attract investors, this will be no easy feat, especially because the railways currently have an operating surplus of just 6%, or about $100 million annually – barely 1% of the amount needed to upgrade and modernize the network.

It is far from clear how Prabhu's grand vision of a safer, cleaner, and speedier Indian railway system will be achieved in practice. The railway minister has created a dream budget –though “pipe dream" might be a more accurate description.

In fact, this is in line with the Modi government's approach thus far: lofty aspirations, soaring rhetoric, and quotable sound-bites have been accompanied by few specifics, no implementation plan, and no improvements in execution capacity. India's overburdened trains cannot run on hot air, but that seems to be what they are being offered for now.

Read more at http://www.project-syndicate.org/commentary/india-railway-budget-by-shashi-tharoor-2015-03#HclDCiw7bl2obzxA.99