Railways: Choice and Competition - X

In the area of deregulating train operations and allowing private sector entry, there are some issues to think about.

I have been leading up to the possibility of allowing choice and competition, in the form of allowing the private sector to also run trains, both passenger and freight. Allowing the private sector to produce wagons, coaches or locomotives is also possible. But that raises a different set of issues, not the focus of the present column. When people argue in favour of private passenger and freight trains, they often don’t realize how bad the track capacity is. I have mentioned the A to F classification of stations earlier. Let me now mention the classification of railway lines, also graded.  So as not to confuse matters, I will stick to broad gauge alone.

The “A” category allows for speeds up to 160 km/hour, B up to 130 km/hour, C represents suburban, D is up to 100 km/hour and E is below 100 km/hour.  This does not mean trains along these lines touch these speeds.  Far from it, since there are severe constraints on track capacity. However, A is in some sense an important line, because of present and future revenue. And F is an unimportant line, defined through criteria of present and future revenue. That classification thus also reflects IR’s priorities for lines. By the way, this classification on the basis of speed was done in 1976. Before that, there were expressions like trunk routes, main lines, suburban lines and branch lines, expressions that continue to be used, although strictly speaking, they are no longer “official”.  A branch line is obviously less remunerative in general, though there may be some minor exceptions because exceptional categories of freight (say coal) are carried. It is a feeder line. Trunk routes are the most important. Lines between the metros will be trunk. And so on.

For the sake of easy comprehension, I have also given you a railway network map.  

However, this map conceals more than it reveals. The crux is line capacity and capacity for a railway network is different from capacity utilization for a manufacturing plant.

Most lines of the A and B category (trunk and main lines say) are running at a capacity of more than 100% and there are sections (if not the entire line) running at a capacity of more than 150%. I wish I had a ready line capacity map.  I don’t, but you will find such maps in the two Rakesh Mohan Committee reports. Such a high capacity figure not only means there isn’t enough time to pay attention to maintenance of track, important from the point of view of safety. It also means that since so many trains are running along lines (and sections) with high such high levels of capacity utilization, speeds slow down.

Let me use the example of a passenger train. For freight trains, I will have to use a slightly different one. Let’s use the example of a new, privately run passenger train from New Delhi to Howrah. The over-stretched line is such that the system cannot handle such a new train. On the other hand, the capacity figures are such that a new private train can be allowed from New Delhi to Ambala (not Chandigarh). Will the private sector be interested in running such an unremunerative train?

Most people don’t seem to know that private passenger and freight trains are allowed even today, except that they are only allowed in some segments and because of the capacity problem, such private goods trains aren’t time-tabled, so that you don’t know when the goods train will reach its destination. Indeed, it isn’t a matter of private goods trains alone. No goods trains are time-tabled. It is certainly possible to time-table all goods trains. If nothing else, this imparts discipline. Any time-tabled train is accorded priority in operations. Any train not time-tabled is neglected.  But let me not digress too much.  Consider the following lines: Delhi-Howrah, Howrah-Mumbai, Mumbai-Delhi, Delhi-Guwahati, Delhi-Chennai, Howrah-Chennai and Chennai-Mumbai. These are obviously the most attractive and remunerative routes. But on each of these, described as the high density network (HDN) routes, there are very few sections where there is capacity.  Together, this HDN network has 247 sections. Of these, only 30 have capacity below 80%. If I listed out these 30 sections, you would discover that not a single one of these is attractive. Once there are new lines and tracks, high speed networks and freight corridors, the situation will be different.  However, today, there is limited scope for new private trains.

Fair enough. But today, there is an existing Delhi-Howrah Rajdhani that is already time-tabled. Why can’t the running of this be handed over to the private sector? Indeed it can. However, think some questions through.

First, extrapolated, does this mean that the attractive and remunerative lines will be handed over to the private sector, leaving IR with unremunerative branch lines, so to speak? That makes IR finances worse. Note that for something like air services to the North-East, there is an explicit subsidy offered by the government proper to airlines. There is no such subsidy for IR.  Will something akin to a universal service obligation be imposed on the private sector?  

Second, who will determine the fares charged by the private sector?  (The Railways Act doesn’t allow anyone other than IR to collect fares.  But that is a minor amendment that can be done.) Will it be determined by the market or will the regulator determine tariffs? Several people ask me whether our Committee will recommend the setting up of a Railway Tariff Regulator. I must confess that I don’t understand the purport of this question, which is often driven by the motive of insulating determination of passenger fares from political compulsions. If we are going to allow competition, the Regulator has to do much more than setting tariffs. For instance, appropriate access by private operators to lines can itself be a problem. The question should be about a Regulator, not about a Tariff Regulator. Should that Regulator be sector-specific or should there be some sub-segment of the Competition Commission?  

Third, what does it mean to say that the private sector runs trains? Who drives the locomotives and who do those belong to?  (Other rolling stock can belong to the private sector.)  Whose responsibility is safety?  (Under the Railways Act, safety is the responsibility of IR.)  If safety continues to be an IR responsibility, who certifies the maintenance of rolling stock (other than locomotives)?  Since IR is one among multiple operators, who owns the track?  

Fourth, pending the resolution of these issues, can one allow limited private sector entry?  For instance, assuming a New Delhi-Howrah Rajdhani train continues to be run by IR, is it possible to allow private sector coaches in that train, with the private sector free to set fares for these coaches?  That same principle also applies to freight trains and to parcel post.

In the area of deregulating train operations, allowing private sector entry, you can thus see that there are some issues to think about.  It isn’t that simple.