Friday, Oct 31, 2014

Railways, prime mover

The suboptimal distribution of passenger and freight traffic between rail and road has measurable economic implications. (Reuters) The suboptimal distribution of passenger and freight traffic between rail and road has measurable economic implications. (Reuters)
Written by Kamlesh Kumar | New Delhi | Posted: July 8, 2014 12:00 am | Updated: July 8, 2014 8:12 am

As the new government prepares to present the rail and general budgets, the focus is likely to be on developing rail and road infrastructure. A robust rail-road network will be essential to meet growth-led ­demand for passenger and freight tra­ffic in the years to come. Consi­dering the scale of investment inv­olved, the government may need to make hard choices in proritising between the rail and road networks.

In 1951, the railways carried the bulk of the freight (almost 90 per cent) and passenger (almost 70 per cent) traffic. Succeeding years saw a gradual shift away from rail to roads. At the moment, about 90 per cent of India’s freight is carried on the rail-road network, which is in turn shared between roads and railways in a 70:30 ratio. The road-rail network carries almost the entire passenger traffic in a 90:10 ratio.

The shift from rail to roads def­ies economic or social logic. Low freight and passenger rail fares have done immeasurable public good. The graded freight structure of the railways, which is inversely proportional to distance, has ensu­red that low-value cargo such as coal, minerals, fertilisers, food gra­ins and cement can be carried at substantially low rates. In general, railway freight charges are about half the road transportation char­ges for commonly used commodities.

The economic, social and environmental costs of building and maintaining a rail network is far lower than for roads. Building a rail network requires much less land, reducing land acquisition costs not only in terms of the area to be acquired, but also in time saved in prolonged land acquisition proce­edings. The railways are comparatively more energy efficient, less polluting and less of a drain on natural resources, both during the construction and operation phases.

As a more organised set-up, the rail offers greater scope to implement and enforce quality control. While roads are eventually clogged with linear ribbon development along the road network, the rail network is unaffected by such developments. Finally, while much needs to be done to improve rail safety, in comparison to road safety, the railways are several notches higher.

The suboptimal distribution of passenger and freight traffic bet­ween rail and road has measurable economic implications. In simple terms, if the railways moved 1 billion tonne of freight during 2013-14 and earned Rs 950 billion, the carriage of the same amount of freight thro­ugh roads would cost twice as mu­ch.

In other words, if the railways hand­led an additional 1 billion tonne of freight every year, preventing its div­ersion to roads, the resultant ­financial savings to the tune of Rs 950 billion may boost India’s GDP by more than 1 per cent. Also, an efficient and enhanced rail network is likely to decongest roads, thereby reducing the need for incremental investment in building road networks.

Considering an continued…

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