Last Updated: July 27, 2016
World Bank India country director
Last Updated: July, 2016
RAILWAYS SECTOR REPORT | January, 2016
The Indian Railways is among the world’s largest. Spread across 7,146 stations, the 64,600-km network enables the running of 19,000 trains on a daily basis. India's railway network is recognised as one of the largest railway systems in the world under single management.
The railway network is also ideal for long-distance travel and movement of bulk commodities, apart from being an energy efficient and economic mode of conveyance and transport.
The Government of India has focused on investing on railway infrastructure by making investor-friendly policies. It has moved quickly to enable Foreign Direct Investment (FDI) in railways to improve infrastructure for freight and high-speed trains. At present, several domestic and foreign companies are also looking to invest in Indian rail projects.
Gross Traffic Receipts of Indian Railways for the year ending March 2016 is estimated at Rs 167,834 crore (US$ 24.88 billion)#. Further, for FY 2016-17, Gross Traffic Receipts estimated at Rs 184,820 crore (US$ 27.4 billion), a growth of 10.1 per cent. Indian Railways has appointed Ernst & Young (EY) as a consultant to discover its advertising potential, which is in line with the Railway Budget proposal of increasing non-fare earnings to over Rs 5,000 crore (US$ 741.2 million) in five years.
Freight earnings stood at Rs 111,852 crore (US$ 16.58 billion) in FY 2015-16, growing 5.7 per cent over 2014-15.
Freight loading stood at 1,107 million tonnes in FY 2015-16 compared to 1,095 million tonnes in 2014-15, indicating growth of 1.1 per cent.
Passenger earnings stood at Rs 45,376 crore (US$ 6.73 billion) in FY 2015-16, growing 7.5 per cent over 2014-15.
The total approximate revenue earnings from other coaching amounted to Rs 4,325 crore (US$ 641.14 million) during FY 2015-16, registering an increase of 6.96 per cent over 2014-15.
The total approximate numbers of passengers booked during the Financial Year 2015-16 were 8.1 billion.
Foreign Direct Investment (FDI) inflows into Railways related components from April 2000 to March 2016 were US$ 710.98 million.
Following are some of the major investments and developments in India’s railways sector:
Minister of Railways Mr Suresh Prabhu has said that the investments by the Ministry in 2015-16 were double the average investment over the past five years. Presenting the Railway Budget 2016-17 in the Parliament, Mr Suresh Prabhu announced capital expenditure for 2016-17 at Rs 121,000 crore (US$ 17.94 billion), which will be implemented through joint ventures with states and developing new frameworks for Public-private partnership (PPP).
Some of the achievements of the Ministry of Railways in 2015-16 were as follows
Mr Suresh Prabhu, Minister of Railways, has stated that the Indian Railways will go through substantial reforms which will include restructuring of the railway board, accounting reforms and setting up of a regulator in order to improve competitiveness in the sector.
The Ministry of Railways is focusing on its massive US$ 140 billion investment plan to modernise the railways and improve safety, performance and passenger amenities, as per Railways Minister Mr Suresh Prabhu.
The state of Haryana has taken the lead among all states of India to partner with the Ministry of Railways in creating rail infrastructure, by formation of a Special Purpose Vehicle (SPV) between Haryana and Indian Railways, as announced by Mr Suresh Prabhu, Minister of Railways, Government of India.
The Indian Railways have finalised a policy to set up solar power plants on rooftops of railway premises, which will help to reduce dependence on fossil fuels by generating electricity from solar panels, as part of the Solar Mission of Indian Railways.
Ministry of Railways has signed a Memorandum of Cooperation (MoC) and Memorandum of Understanding (MoU) with governments and national railways of Japan and Russia for cooperation in areas such as high speed corridors, speed raising of existing routes, development of world class stations, heavy haul operations and modernisation of rail infrastructure.
The Railway Ministry plans to give a digital push to the India Railways by introducing bar-coded tickets, Global Positioning System (GPS) based information systems inside coaches, Information Technology (IT) integration of all facilities dealing with ticketing issues, Wi-Fi facilities at the stations, super-fast long-route train service for unreserved passengers among other developments, which will help to increase the passenger traffic.
The Ministry of Railways in November 2014 issued Sectoral Guidelines for permitting domestic/foreign direct investment (FDI) in construction, operation and maintenance in the following identified areas:-
i) Suburban corridors through public private partnership (PPP), ii) high speed train projects, iii) dedicated freight lines iv) rolling stock including trains sets and locomotive/coaches manufacturing and maintenance facilities v) railway electrification vi) signalling system vii) freight terminals viii) passenger terminals ix) testing facilities and laboratories x) non-conventional sources of energy xi) railways technical training institutes xii) concessioning of standalone passenger corridors (branch lines, hill railways etc.) Xiii) mechanised laundry, xiv) rolling stock procurement, xv) bio-toilets, xvi) technological solution for manned and unmanned level crossings, xvii) technological solutions to improve safety and reduce accidents. The guidelines will encourage foreign investors for making investment under ‘Make in India’ programme. An ‘Investors Meet’ was also held in December 2014 to encourage foreign investors in making investments.
According to Mr N Sreekumar, Chief General Manager of Container Corporation of India Limited, the Indian Railways is coming out with a new rating system. Addressing an event organised by Indian Institute of Logistics, Mr Sreekumar said the government is going to restructure the railway board. He also stated that the total logistics sector in India would undergo a transformation with the east and west freight corridor coming into being.
Promising "watershed development" of Indian Railways, Minister of Railways Mr Suresh Prabhu announced a series of reforms in the rail sector, including the introduction of remote sensing technology to improve safety, rail bookings on mobile phones and wi-fi at railway stations.
The Indian Railway network is growing at a healthy rate. In the next five years, the Indian railway market will be the 3rd largest, accounting for 10 per cent of the global market.
Exchange Rate Used: INR 1 = US$ 0.0148 as on July 11, 2016
References: Press Releases, Department of Industrial Policy and Promotion, Press information Bureau, Media Reports, Railways Budget 2016-17
Notes: # - As per Railways Budget 2016-17
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Last Updated: July 27, 2016
World Bank India country director
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