V.K. Agarwal *

    Indian Railways is one of the largest systems in the world. It is also one of the very few railway systems in the world generating operating surpluses. With a modest beginning in India on April 16, 1853, when the first wheels rolled on rails from Bombay to Thane, the Indian Railways has emerged today as the main vehicle for socio-economic development of the country.

    Rail transportation has a number of favourable characteristics as compared to road transportation. It is six times more energy-efficient than road and four times more economical. The social costs in terms of environment damage or degradation are significantly lower in rail. Rail construction costs are approximately six times lower than road for comparable levels of traffic. It is the only major transport mode capable of using any form of primary energy.

Contributing to Modern Market Economy

    Since its inception, the Indian Railways has served to integrate the fragmented markets and thereby, stimulating the emergence of a modern market economy. It connects industrial production centres with markets and with sources of raw materials and facilitates industrial development and link agricultural production centres with distant markets. It provides rapid, reliable and cost-effective bulk transportation to the energy sector, to move coal from the coal fields to power plants and petroleum products from refineries to consumption centres. It links places, enabling large-scale, rapid and low-cost movement of people across the length and breadth of the country. In the process, the Indian Railways has become a symbol of national integration and a strategic instrument for enhancing our defence preparedness.

    The Indian Railways contributes to India's economic development, accounting for about one per cent of the GNP and the backbone of freight needs of the core sector. It accounts for six per cent of the total employment in the organised sector directly and an additional 2.5 per cent indirectly through its dependent organisations. It has in vested significantly in health, education, housing and sanitation. With its vast network of schools and investment in training, the Indian Railways plays an important role in human resource development. The Indian Railways, with nearly 63,000 route kilometres fulfils the country's transport needs, particularly, in respect of long-distance passenger and goods traffic. Freight trains carry nearly 1.2 million tonnes of originating goods and 7,500 passenger trains carry nearly 12 million passengers every day.

    Freight and passenger traffic carried by the Indian Railways has recorded an impressive growth ever since Independence. While the input indices in terms of route kms, locomotives, passenger coaches and wagon capacity have only doubled during this period, the traffic output indices have increased by six times. These achievements were due to selective inputs of affordable technology, adoption of innovative operational strategies, phased reduction of staff and operating costs and intensive monitoring of movements and maintenance areas.

    The Railways has developed indigenous capacity for rolling stock manufacture, including state-of-the-art electric and diesel locomotives and high-speed passenger coaches. It has introduced high-speed Rajdhani and Shatabdi Express trains and Mass Rapid Transit Systems in the metropolitan areas.

    Commissioning of the Konkan Railway, extension of Electric Traction to cover 30 per cent of the broad gauge network, gauge conversion of about 8,000 kms. and provision of about 15,000 kms of double/multiple lines are some of the major achievements. It has computerised passenger reservation facility covering 95 per cent of the workload. It has constructed bridges - engineering marvels across major rivers like the Ganga, Godavari and Brahmputra.

Corporate Strategy

    The Railways is sharpening its Marketing Capability to attract more and more freight and passenger business through constructive pricing mechanisms and tariff rationalisation and through customer focus. It has initiated steps to enhance market share in the bulk freight business as well as to secure growth in the non-bulk business, including less than rake load. Appropriate growth strategies for each passenger segment have also been evolved to secure recovery of various costs for the passenger business as a whole through internal cross-subsidisation within the various passenger segments.

    The Indian Railways has strengthened the high density network to make the system capable of meeting the projected demands of the freight and passenger business. It practises austerity especially in the areas of energy consumption, material management, overtime, travelling allowance and advertisements. It tries to reduce operating costs by improving efficiency in production and maintenance units; by improving the purchasing procedures not only to secure cost reduction but also to improve reliability; by reduction in man power in a phased manner and by improving organisational excellence through human resource development. It plans to withdraw from ancillary activities to enable the management to concentrate on primary business for running freight and passenger services. For tapping non-traditional sources of funding, the Railways has taken steps to attract external funding by involving domestic financial institutions and private sector participants at concessional rates of interest. Indian Railways is exploring the possibility of attracting investment in fibre-optic telecommunication network and commercial exploitation of air space above stations. Other steps include exploiting the leasing route for procurement of rolling stock, innovative financing techniques such as Deep Discount Bonds with repayments towards the end of the term of the load and "Sell and Lease Back"mechanisms to leverage the existing fixed as well as mobile assets.

Modern Technology

    The Railways plans to introduce modern technology in various spheres of its working. It aims at a stronger track structure with heavier and metallurgically superior rails, higher horse power, state-of-the-art electric and diesel locomotives, light and comfortable passenger coaches of modular construction with high speed bogies and lighter wagons with improved bogies with higher speeds and better payload. Other steps are solid state inter-locking, block proving by axle counters, centralised electronic interlocking, universal emergency communication and train radi in the areas of signalling and safety, optic fibre and digital microwave in the area of communication, dual voltage three-phase drive Electric Multiple Units for suburban services and Diesel Multiple Units (DMUs) and Main Line Electric Multiple Units (MEMUs) for mass intra-urban and suburban traffic. The Indian Railways is also planning to realise the potential of information technology in all areas of railway management and operations to cut costs and improve efficiency and safety.


    The Indian Railways has a glorious past and has achieved a phenomenal growth in both freight and passenger traffic by improving asset utilisation and efficiency of operations. The time has come when massive investments are required for expanding the rail infrastructure and give the Railways its due share in the country's infrastructure development.

    The debate on the transport sector in India has not focused adequately on the rail sector despite its many economic and environmental advantages. It is high time that Railways' role as a major infrastructure service provider is reinforced. Constructive support from the Government and the pro-active and market-oriented response to the challenges of an open economy will set the tone for the renaissance of the Indian Railways as we march towards the new millennium.