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Chapter # 14. Railways


By 2022-23, India should have a rail network that is not only efficient, reliable and safe, but is also cost-effective and accessible, both with respect to the movement of people and goods. This requires achieving the following objectives:

  • Augment the capacity of existing railway infrastructure.
  • Increase the speed of infrastructure creation from the present 7 km/day to 19 km/day by 2022-23.1
  • Achieve “100 per cent”2 electrification of broad gauge track by 2022-23 from the 40 per cent level in 2016-17.
  • Increase the average speed of freight and mail/ express trains to 50 km/hr (from about 24 km/hr in 2016-17) and 80 km/hr (from about 60 km/ hr), respectively.3
  • Improve the safety of the railways, achieving zero fatalities from the 2016-17 level of 238 fatalities and reducing the number of accidents from the 73 recorded in 2017-18.4
  • Enhance service delivery, achieving 95 per cent on-time arrivals by 2022-23.5
  • By 2022-23, the railways should have a freight load of 1.9 billion tonnes and an improved modal share of 40 per cent of freight movement from the current level of 33 per cent.6
  • Increase the share of non-fare revenues in total revenue to 20 per cent.

Current Situation

The Indian Railways (IR) is the fourth largest network in the world in terms of route km (67,368 km in FY17).7 It is also the largest passenger (1,150 billion-passenger km in FY17)8 and fourth largest freight (620 billion net-tonne km in FY17)9 transporting railway system globally. In FY17, 13,32910 passenger trains carried over 22.24 million11 passengers daily, i.e., almost equivalent to Australia’s population, while the freight transported was 1.1 billion tonnes.12 During FY07-FY17, railways’ revenue increased at a CAGR of 5.7 per cent to USD 25.1 billion13 in FY17, led by strong demand, increasing urbanization and rising incomes.

Despite its extensive reach and the substantial growth in freight load, the modal share of railways in the transportation of surface freight has declined from 86.2 per cent in 1950-5114 to 33 per cent in 2015, in part due to a shortfall in carrying capacity and lack of price competitiveness.

IR’s golden quadrilateral and its diagonals make up only 15 per cent of the total route of the railways but it transports 52 per cent of passenger traffic and 58 per cent of total freight load.15 This highlights the high saturation and over-utilized capacity on popular routes.

Since passenger and freight traffic move on the same tracks in India, we have not been able to increase speed or capacity in a significant manner relative to global benchmarks.

The expenditure on the railways as a percentage of transport expenditure declined from 56 per cent in 1985-90 (7th plan) to 30 per cent in 2007-12 (11th plan).16 Despite its contribution to the overall economy, under-investment in the sector has crippled operations and hampered capacity augmentation.

From 1950-51 to 2013-14, the route km increased by only 23 per cent against the growth in freight and passenger km of 1,344 per cent and 1,642 per cent respectively.17

The government has recognized the need for additional investment in rail infrastructure and scaled up investment by almost three times, from INR 53,989 crore in 2013-14 to INR 1.47 lakh crore18 in 2018-19 (BE).


  1. Congested networks: Over-stretched infrastructure with 60 per cent plus routes being more than 100 per cent utilized, leading to a reduction in average speed of passenger and freight trains.
  2. Organizational structure: Delays in decision-making, inadequate market orientation and long project approval durations lead to slow turnover times and delays in the implementation of railways projects.
  3. Internal generation of resources: Negligible non-fare revenues and high freight tariffs have led to a sub-optimal freight share. The lower relative cost of transporting freight by road has led to a decline in the share of the railways. Low and static prices for the passenger segment have also contributed to low internal generation of resources.
  4. Safety and poor quality of service delivery: There have been a number of accidents and safety issues in the IR in recent years. Poor cleanliness of trains and stations, delays in train departures/arrivals, quality of food and difficulties in booking tickets are key issues.
  5. Efficiency of terminals: Poor terminal facilities lengthen loading and unloading times. Eighty per cent of railway loads come from terminals. The functioning of terminals needs to be strengthened to improve rail freight.
  6. Economies of scale: The lack of scale economies especially impact management quality and system accountability.

Way Forward

  1. Better utilization of existing infrastructure to address congestion:
  • Prioritize ongoing projects to improve capacity utilization. Timely completion of these projects will generate more revenue. At the same time, we need to maintain and upgrade the existing network to ensure that supply keeps up with demand.
  • Ensure that the dedicated freight corridors (DFCs) and the Mumbai-Ahmedabad High Speed Rail (MAHSR) are completed on schedule, particularly by timely completion of land acquisition for DFCs. DFCs should be fully commissioned by FY20; feeder routes to the DFCs should be developed simultaneously.
  1. Ease organizational rigidity through structural reforms:  
  • Consider opening up the ownership and operations of freight terminals and ownership of locomotives and rolling stock to the private sector under a transparent, neutral (non-railway) and fair regulatory mechanism. This will improve performance and attract private players and investments.
  • Consider transferring coach and locomotive manufacturing and repairs to private players. However, since human safety is involved in the case of coaches and wagons, IR should continue to have regulatory and technical control over their manufacture and maintenance to ensure the safety of users in compliance with the General Rules of IR.
  • Separate suburban passenger transport from the rest of the network and put a light rail network in place in all major urban areas under local governments.
  1. Rationalize fare structures and subsidies, and monetize assets to generate revenues:
  • Revisit IR’s pricing model to make the passenger and freight segments sustainable. Freight tariffs should be competitive with the cost of road transportation.
  • Expedite the process of establishing the Rail Development Authority (RDA), already approved by the government19. DA must advise/ make informed decisions on an integrated, transparent and dynamic pricing mechanism to determine rail fares and rebalance the passenger and freight categories to improve efficiency and rebalance the modal mix of goods transport.
  • Monetize land resources with the railways, particularly through developing non-railway revenues such as through retail or other activities.
  • Increase retail revenues from railway stations by investing in facilities, modernizing stations and contracting space to private players.
  1. Enhance safety of trains to reduce accidents and modernize stations:  
  • The government has created the Rashtriya Rail Sanraksha Kosh (RRSK) in 2017-18 to address critical safety related issues.
  • Eliminate level crossings and cattle crossings and fence railway tracks in areas with high levels of activity to prevent accidents.
  • Increase the use of proven, advanced technol-ogies such as automatic train protection, fog safety devices, end of train telemetry devices and on-board/online condition monitoring systems.
  • Implement the 22 recommendations of the High-Level Safety Review Committee chaired by Dr. Kakodkar.20
  • Upgrade and ensure the smooth functioning of by-pass crossings and grade separations.
  • Redevelop 100 out of 400 identified railway stations by 2022.
  • Award station-cleaning contracts to private vendors and sharply increase the number of bio-toilets by 2019.
  1. Enhance the ease of doing business:
  • Set up an independent homologation and standardization agency to adopt new railway technology and improve the speed and reliability of the railway network.
  • Switch to common transport documents with (i) an internationally accepted liability regime for domestic and international transportation and (ii) common carrier status to all rail-based service providers.
  • To enhance credibility, ensure that there are no interim changes in tariff and non-tariff rules.
  • Use technology to schedule and route freight busi-ness to improve asset productivity and utilization.
  • Complete by 2022-23 the commissioning of the remaining 55 of the 100 new freight terminals announced in the Rail Budget of 2016-17 under ‘Mission Hundred’.21
  • Improve terminal efficiency by promoting the concept of ‘engine-on-load’ system, developing proper terminal layouts, adopting efficient operational practices, operating trains end-to-end, and using proper handling methods/ systems for loading and unloading operations.22
  1. Set up an independent regulator for the Indian Railways:
  • The government has already approved the formation of the RDA, an independent regulator for IR in February, 2018. The regulator’s functions will include the following:23
  • Take decisions regarding price regulation and enhancement of non-fare revenue.
  • Protect consumer interests, promote competition, efficiency and economy and ensure a fair deal to stakeholders and customers.
  • Help attract investment, promote efficient resource allocation, benchmark service standards and enforce standards.
  • Put in place measures to absorb new technologies and develop human resources.
  • Provide a framework for non-discriminatory open access to the dedicated freight,corridors.


NITI AYOG - New India @ 75

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