With a focus on reducing costs, increasing speed and expanding logistics, Indian Railways drives India’s progress and unity
Every journey by train across India tells a story of the destinations reached and the people brought together to bridge gaps that geography and society once created. Indian Railways has a rich legacy that has been around for more than 170 years, with its recognition as the fourth-largest railway network in the world.
Of late, two large projects have captured the country’s attention, reflecting the transformative vision of Prime Minister Narendra Modi’s leadership. He inaugurated the Jammu Division, which addresses a long-standing demand and precedes the first direct train service to Kashmir in six decades. This will be the 70th railway division of the Indian Railways and the 6th under Northern Railways, all set to energise this region’s economy and fulfil a cherished dream of seamless connectivity.
Equally important was the foundation stone he laid for the headquarters of the newly created South Coast Railway Zone. This 18th zone would unleash a new trade, agriculture and tourism era, breathing fresh life into the local economy. Together, these achievements underscore Indian Railways’ role as a mode of transportation and a driver of growth and national unity.
The recent decisions align with the 2015 Railway Reforms report by economist Bibek Debroy, which recommended empowering field officers, General Managers, and Divisional Railway Managers. The government has implemented most of these suggestions, including creating a new division and zone to enhance the railways’ competitiveness. Additionally, initiatives like Vande Bharat trains and the KAVACH safety system focus on integrating technology. The establishment of Gati Shakti Vishwavidyalaya and the creation of the ‘Rashtriya Rail Sanraksha Kosh’ (RRSK) on April 1, 2017, address safety concerns, with a funding commitment of Rs 1 lakh crore for five years, recently extended with an additional Rs 45,000 crores for 2022-23. Indian Railways is progressing rapidly, but even powerful engines encounter challenges that require careful navigation.
While celebrating current achievements, it’s essential to identify potential obstacles ahead to maintain and accelerate momentum. Potential obstacles to growing at a faster rate require working simultaneously on increasing Share, Speed and reducing Service charges. Primarily 3 S Strategy. The first and foremost thing that Indian Railways should do is to reduce Service charges (Logistics Costs). According to the Economic Survey 2022-23, the current logistics costs in India are in the range of 14-18 per cent of GDP against a global benchmark of 8 per cent. While India has jumped up the rankings on the World Bank’s Logistics Performance Index from 54 in 2014 to 44 in 2018 and up to 38 in 2023, there remains a competitive gap of almost $300 billion (Rs 26 lakh crore). This is a significant improvement, as India has moved up six places from 44th in 2018 and 16 places from 54th in 2014. Indian Railways has taken commendable strides in this direction through track electrification, improvement in digital logistics systems, and enhancement of freight handling.
Building on these, there is a need for a time-bound plan to reduce logistics costs further. The key measures include increasing the share of rail in transporting bulk commodities, expanding terminal capacities, and ensuring last-mile connectivity efficiently. A policy to protect freight customers from cross-subsidisation and improve operational cost efficiency will also be pivotal in achieving global standards. The average speed of trains, both passenger and freight, is an area where Indian Railways has seen some success and has the potential for huge further improvement. The average speed of superfast trains in India is 55 km/hr, significantly lower than global benchmarks.
With a greater focus on terminal infrastructure and capacity, this speed could immediately increase by 7 to 10 km/hr. On the other hand, the average speed of goods trains is officially recorded at 25 km/hr; however, customers often experience a much lower speed of 13-15 km/hr due to delays and inefficiencies.
To improve the efficiency of operations, customer satisfaction, and competitiveness, efforts should be made to enhance asset reliability, reduce detentions at terminals by increasing their capacity, and invest strategically in specific sections to increase speed.
Finally, to increase the share of railways in the country’s logistics, which currently stands at around 27 per cent, it is essential to pursue a strategic imperative relentlessly. While Indian Railways has done a commendable job modernising freight terminals and expanding its freight network, there is still room for improvement to make rail transport the preferred choice for logistics.
Pricing must be competitive; rail freight charges should consistently remain cost-effective compared to road transport. Continuous investment in terminal improvements, enhancing customer experiences, and implementing customer-friendly policies will enable Indian Railways to further contribute to national logistics.
These initiatives position rail transport as the cornerstone of India’s logistics ecosystem, fostering sustainable economic growth. Modernising infrastructure and safety systems and introducing advanced trains have transformed the railways into a key driver of connectivity and logistics in India. As it embraces change, Indian Railways must focus on increasing its Share in the country’s logistics movement, that too with higher Speed and lower Service cost (3 S Strategy). Doing so can continue connecting dreams and people like never before.
(The writer professor of finance -XLRI Xavier School of Management and BJP leader; views are personal)
