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Passenger and freight traffic on Indian Railways has seen a consistent increase during the period from FY 2006-07 to FY 2011-12 at a CAGR of 8.54% and 6.70% respectively. Comparatively, creation of infrastructure has not kept pace. Infrastructure addition took place at a snail’s pace with CAGR for addition of line capacities and rolling stock over the same period being less than 5%. As a result, rail infrastructure has been facing stress and major routes face congestion and over-saturation. Particularly in the freight segment, from which Indian Railways (IR) earns nearly 70% of its revenue, IR has been losing market share to roads sector. Given that rail transportation forms is hugely important especially for transportation of major bulk commodities like coal, cement, food grains and iron ore, inadequate railway capacity expansions and modernization could stymie future economic growth of the country.
Recognizing the potential, Ministry of Railways (MoR) set ambitious growth targets in the 11th and 12th FYPs and initiated policies to create opportunities for private participation. The targets for 11th FYP were set considerably higher than those achieved in 10th FYP and with focus on creation of infrastructure, these targets were achieved and, in fact, surpassed in certain categories.
Railways set an ambitious target of Rupees one lakh crore for PPP in the 12th Five-Year Plan. Freight terminals, parts of DFC, redevelopment of stations and elevated rail corridor in Mumbai are proposed for private investment during this period. And to increase the possibility of it being a reality sooner, the FDI has been welcomed in infrastructure projects like elevated rail corridor in Mumbai, high speed trains and Dedicated Freight Corridor.
Future Trends and Upcoming Projects in Indian Railways
India’s planning commission has projected an investment of $1 trillion for the infrastructure sector during the 12th Five Year Plan, with 40 per cent of the funds coming from the private sector. It is one of the major sectors that propel overall development of the Indian economy. Unlike other developed countries, India’s geographical position poses some challenges in huge infrastructural development like building of roads, flyovers, airports, damns & bridges, etc.
In the modern infrastructural methods, precast technology is the most safer and durable option for building technology than some of the traditional methods. Pioneering use of precast technology can change the face of Indian economy by speeding up the course of action across varied proposed infrastructure projects.
But there are certain challenges in the Indian Railways that government is trying to understand, as the responsibility of keeping its promise which was mentioned in its manifesto by BJP as it had plans to roll out the service on Delhi-Chandigarh, Delhi-Lucknow and Delhi-Bhopal, that has been put on hold for a more realistic and feasible option of average speed to 130 km per hour unlike 310 kmph which Japanese trains have. RITES, the railways’ body which estimated the project to cost 2.5 crores per km as compared to 200 crores per km which a high-speed rail network requires.
Japan has offered to set up a joint venture company like the Delhi Metro Rail Corporation to finance bullet train projects in India. India opted for the Japanese Shinkansen technology over competing models including the Chinese offer on two considerations, and they include the safety of the Japanese technology and the niggling concerns about a tie-up with China on such a high technology project. The other is the cheaper funding that Tokyo has promised to make available for the project.