JVs with states can push station redevelopment nod
With the FY16 Railways operating ratio certain to deteriorate with a shortfall in both passenger and cargo revenues—till the end of October, the shortfall was already over Rs 9,000 crore—what happens in FY17 depends on the efficiency gains it is able to make; the 7th Pay Commission will add to the wage bill, making balancing budgets that much more difficult. Apart from the savings in fuel costs that have come about this year thanks to the fall in global diesel prices—electricity costs will also come down with competitive tendering—the biggest achievements will be the Lalu Prasad-type achievements in the loading rates. From a 22.9 tonne axle load for freight trains, the Railways have done their trials and hope to get the railway safety commissioner’s approval within a week for axle loads of 25 tonnes—a total of 30,000 wagons are to be converted to this, of which 12,000 are to be ready by February itself. New wagons have also been designed to increase the carrying capacity by around a third—how much this will yield will depend upon how fast new wagons are ordered. Permission has been got to add two more coaches to passenger trains, and while around 900 coaches have already been added to various trains, doing this for all trains means operational re-jigging including extending the size of the platforms themselves as well as the loops around which trains travel. The railway regulatory bill is to be put up for discussions next week—the role of the regulator, sadly, is to be recommendatory, not mandatory—but little progress can be made here till the Railways is able to segregate costs; that exercise is still under way in a few pilot projects and could take a year or more to complete.
Awarding contracts for electric and diesel locomotives is a big step considering how vested interests ensured the projects got pushed back during the UPA years, and though only a third of the R100,000 crore capex budget for FY16 was spent in the first half of the year, the Railways is confident of meeting the target, and officials say work typically picks up in the second half—in the case of the Dedicated Freight Corridor (DFC), officials say R17,000 crore of tenders have been given out in the last one year and this will reach R55,000 crore in another year; phased commissioning of small stretches is to start within a few months and will help decongesting the network.
Though a few railway stations are to be handed over to the private sector for redevelopment, progress here has been poor with civic permissions taking forever—those for the New Delhi railway station have been in the works for a decade now. It is not clear why the Railways have adopted the Swiss Challenge method for 400 railway stations since there are working models for the airport privatisation, but with the Railways planning to ask potential bidders to obtain all clearances themselves, the move is unlikely to gain quick traction. One way out could be to give a minority stake in the redevelopment JVs to various state governments which will, then, have an even large incentive to provide clearances—given the boost a big station redevelopment would give to the country’s reforms image, this is something that needs to be pushed in earnest.