Fast track: Speeding up railway modernisation can do wonders for the economy

Indian Railways ended 2015 on an optimistic note, with India and Japan signing an agreement to help launch a bullet train between Mumbai and Ahmedabad. This was followed up with a cabinet approval allowing Indian Railways to form joint venture companies with various states to mobilise new resources and take up special purpose vehicles. News reports further indicate that Indian Railways is also finalising the much awaited Rail Development Authority – which will set performance standards, make regulations, determine tariffs and ensure a level playing field for private investors, while buffering Indian Railways from political interference. This could be a gamechanger.

Because this would not only ensure optional pricing of services and mobilisation of new resources but also provide an institutional mechanism to reassure private investors. It would enable a substantial expansion of public private partnership projects, necessary to ensure the successful rollout of the massive five year action plan to transform Indian Railways at a cost of 8,56,020 crore.

Railways’ big historical blunder has been discouraging private players, which must be corrected with urgency. New investment is needed for debottlenecking the railway network and building new lines, plus for introducing state of the art safety mechanisms, wagons, engines and coaches, and also for stepping up the average speed of trains. All this will ensure better services and reduce travel time, helping reverse the recent fall in passengers. Indian Railways also has to do a better job of incentivising private investments in all major railway stations, alongside encouraging private passenger and freight trains and terminals, which would not only contribute to expanding the basic infrastructure but also boost growth. Revitalising Indian Railways would be good for passengers but it would also have the added benefit of reducing emissions from transport.