Indian Railway network is the prime infrastructural sector of the
country and in view of the fact that it is five to six times more
energy efficient, four times more efficient in land use and
significantly superior from the standpoints of environment impact and
safety, compared to other transportation options, it needs to expand
and develop in order to keep pace with the growth of Indian economy.

A massive investment is urgently required for the development of the
railway system. The budgetary support to the railways has been
increasing, but the quantum leap that the Indian Railways is seeking
to undertake, requires much more in terms of resources.

The high growth path that the country has embarked upon under the 11th
Five Year Plan, envisages that Indian Railway would need to spend
around Rs. 2,51,000 crore (US$ 62 billion) on various capacity
enhancement measures over the next 5 years. A major part of the
investment would come from internally generated resources and
Budgetary support to the extent feasible.

 However, to meet the massive investment needed, these would need to
be leveraged to mobilize an adequate level of extra budgetary
resources. Around Rs. 1,00,000 crore is expected to accrue from extra
budgetary resources including Public Private Partnership (PPP). PPP
would, thus, play a crucial role in the attainment of the strategic
goals outlined above.

In the past Indian Railways had made several attempts to rope in
private participation in areas such as catering, wagon ownership and
leasing and joint ventures for rail infrastructure projects. These
efforts were, however, limited in scale and scope. The current
strategy is to leverage private capital through PPPs to the maximum
extent in areas which are amenable to PPPs to improve efficiencies and
control costs.

To begin with the following projects have been identified to be
implemented fully or partly on PPP route:

Construction of Dedicated Freight Corridor
It has been planned to construct a new Dedicated Freight Corridor
(DFC), initially covering about 2700 route kms equivalent to around
5000 track kilometers with an approximate cost of Rs. 28000 crore (US
$6 billion) linking the ports of western India and the ports and mines
of Eastern India to Delhi and Punjab respectively. The construction of
this corridor will be implemented through an SPV which has been
created for the purpose through a mix of Engineering Procurement and
Construction (EPC) and PPP methods.

Ministry of Railways is in the process of selecting a global
consultant to advise on the concession agreement, principles of track
access charges and other financing and bidding issues. It is envisaged
that innovative ideas on design, construction and maintenance of
railway to achieve optimal life – cycle costs would be forthcoming
through PPP especially as the work progresses on the initial two
corridors and further corridors are taken up. The concessionaire could
also tap additional ancillary revenue streams through commercial
exploitation of land, construction of freight terminal/logistic part/
ICDs etc.

World Class Railway Stations
Railway stations at metropolitan cities and important tourist centers
need to be modernized to provide world class passenger amenities and
services to the multitude of passengers using these stations. Indian
Railway is planning to do so by attracting private investments in the
area by leveraging the land around and airspace above the stations.
The concessionaire would be expected to construct and maintain the
operational and passenger areas free of cost, share the revenue earned
from the real-estate created and hand over the same after the expiry
of the concessional period.

Altogether 24 stations have been identified in the first stage. These
are CST Mumbai (Carnac Bunder), Pune, Howrah (Kolkata), Lucknow, New
Delhi, Anand Vihar and Bijwasan at Delhi, Amritsar, Chandigarh,
Varanasi, Chennai, Thiruvananthapuram, Secunderabad, Ahmedabad, Patna,
Bhubaneshwar, Mathura, Agra, Gaya, Jaipur, Nagpur, Tirupati, Bangalore
and Bhopal. Pre-qualification process for bidders for the pilot
project for New Delhi Station has been initiated. Redevelopment of
Patna, Secunderabad and Mumbai will also be taken up during the
current year. Development of other stations and green field passenger
terminals would be taken up subsequently.

Commercial Utilization of Vacant Land
Indian Railways has approximately 43,000 hectares of vacant land.
These are mostly situated alongside tracks in longitudinal strips,
around railway stations, and in railway colonies especially in metro
and other important cities/towns with the potential of being used
commercially to generate revenue as well as capital for modernization
and capacity addition.

A new body, namely, Rail Land Development Authority (RLDA) has been
set up under the Railway (Amendment) Act 2005 to pursue, inter alia,
the main objectives of generating revenue and up grading railway
assets. 110 sites have already been entrusted to RLDA.

Manufacturing of locomotives/coaches/wagons Units
With sustained economic growth and the resultant demand for rail
transport, the requirement of rolling stock has increased manifold.
The requirement of coaches/Electrical Multiple Units is projected at
22689 vehicle units for the XIth Five Year Plan.

The gap between the requirement and the combined capacity of the two
Production Units at Integral Coach Factory, Perambur and Rail Coach
Factory, Kapurthala (around 2500 per annum) is planned to be bridged
by augmenting the existing capacity of these Production Units and
setting up a new manufacturing unit through a Joint Venture under
PPP.

Similarly, the requirement of Electric and Diesel Locomotives has been
projected at 1800 each during the 11th Five Year Plan i.e. 360 locos
per year. The existing in –house capacity for the manufacture of these
locomotives is presently 150 per annum and can be augmented to 200
locos each per annum for Electric and Diesel locos.

The gap between the requirement and capacity in this case too, is
planned to be bridged by setting up two locomotive manufacturing
units, one each for diesel and electric locomotives, through PPP. The
possibility of PPP through long-term demand guarantee to prospective
manufactures of modern wagons is also being explored.

The new wagon investment scheme is another means of attracting private
investment in building railway infrastructure under the PPP
initiative.

High Speed Corridors
Pre-feasibility studies are being awarded for a few identified
corridors to examine the linking of a few of our bustling metropolises
with high speed rail links to facilitate train travel over a distance
of 600-1000 km within 2.5 to 4 hours. All options including PPP will
be explored towards this end.

Operation of Container Trains and Construction of Multi-modal
Logistics Parks
Private operators have been allowed to manage rail-borne Container
Services on Indian Railways. Concession agreement setting out the
terms of such operation has been signed with 15 private operators. The
scheme is also open for other operators to join. So far private
operators have inducted 45 rakes and built 3 ICDs at Garihassru, Patli
and Loni.

Policy framework to facilitate setting up of Multi-modal Logistics
Parks (MLPs) in SEZs or private land with rail connectivity has been
formulated. The policy also envisages utilization of surplus railway
land available at suitable locations for development of MLPs and/or
bulk or dedicated freight terminals.

Port Connectivity
RVNL has been mandated to undertake capacity augmentation works and
port connectivity projects by establishing Special Purpose Vehicles
(SPVs). Some of the projects taken up or under consideration of RVNL
include Palanpur –Gandhidham gauge conversion project (linking Kandla
and Mundhra Ports to North India), Haridaspur – Paradeep New Line
(linking iron ore mines of Orissa and Jharkhand to Paradeep port),
Anugul-Sukinda (linking iron-ore and coal-belts of Orissa),
Obulavaripalli-Krishnapatnam Port of Andhra Pradesh, Bharuch-Dahej and
Surat-Hazira projects in the State of Gujarat and Penn-Rewas Port link
(Maharashtsa).

Budget Hotels and Food Plazas
Indian Railway Catering and Tourism Corporation (IRCTC) has been
mandated to develop catering services, budget hotels and food plazas
at major stations through involvement of private entrepreneurs.

IRCTC is commissioning new Food Plazas in Railway premises with
private participation. The license period for food plazas is of nine
years with a provision of extension for another three years. Already
53 such Food Plazas have been commissioned.
Indian Railways is also in the process of carrying out an examination
of the scope of need-based ‘base kitchens’ and ‘launderettes’ with
public private partnership to strengthen the infrastructure for on-
board services. Call Centers are also being planned under PPP by IRCTC
to cater to the need for information dissemination to the railway
customers.

Indian Railways is also planning to launch new services for the luxury
tourism segment on the pattern of ‘Palace on Wheel’ in partnership
with other interested State Governments.

The above mentioned list of initiatives is not exhaustive. This is but
a glimpse into the array of such activities planned by the Railways
that seek to place the efforts of the Indian Railways on a more sound
footing in its quest for a world class infrastructure. Such efforts
carry the potential of paving the way for the giant leap that this
organization has been gearing up for over the past few years. The PPP
route has well and truly opened up new vistas of growth opportunities
for the Indian Railways. (The author is Chairman, Railway Board)

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