Railways must shun costly populism

The Union Railways Ministry should discard the thrill of electrification, because electricification is neither cost-effective nor is it good for a country which is struggling with huge power-deficits in the domestic and the industrial sectors, writes RC Acharya

The operating ratio is a well-established measure of the financial health of an industrial entity, and it’s basically a ratio of expenditure to earnings. Indian Railways has seen it creep up from a healthy 78.75 per cent in between 1960 and 1961 to 98.34 per cent in between 2000 and 2001. It is now is hovering about 90 per cent, close to reaching the bankruptcy level.

In plain words, for every Rs100 earned, the Railways can spare only Rs10 for replacing overaged assets such as locomotives, coaches, wagons and worn-out tracks — not to mention for laying new lines and initiating other projects in the pipeline, which cost a whopping Rs80,000 crore at the last count.

Over the last one decade or so, with not much money to spare, special grants from the Central exchequer have sustained the growth of Indian Railways, including a major input of Rs17,000 crore for a non-lapsable Special Railway Safety Fund to take up the urgently replacement of overaged assets and carry out critical safety inputs.

Announced by former Union Minister for Railways Nitish Kumar a decade back, was also a big dollop of Rs18,000 crore to undertake some of the major projects such as the construction of bridges and new lines, which had been stagnating for years on account of paucity of funds.

However, such generosity by the Union Ministry of Finance has of late been few and far between, and the refusal by successive Union Railway Ministers to carry out any hike in passenger tariff over the last one decade has resulted in continued cross subsidy of passenger by freight business. Not a very healthy trend, which is leading to a steady decline of Railway’s market share of freight business .

Now, on incumbent Union Minister for Railways Pawan Kumar Bansal’s shoulders rests the onerous responsibility of pulling the railways back from the brink of financial disaster. He can do so by adopting long-term policies, with major thrust on garnering higher freight, which is the bread winner for any railway undertaking in the world.

He would need to not only cut down on populist projects with low rates of return but also resist the temptation of announcing scores of new passenger trains which would further crowd out freight trains, slowing their speeds, and end with customers increasingly opting for the road sector. Perhaps, the time has also come to take a fresh look at the onward rush for another highly populist measure — electrification.

In a power-deficit nation such as India, each electric locomotive on track draws valuable electric energy from the grid, denying industries, and farmers, which increasingly have to opt for running highly inefficient diesel generators in order to meet their power needs or drive their individual pump sets.

When each of the 6,000 horsepower electric locomotive hits the track, we could also say goodbye to lighting in about 15,000 middle-class homes or villages. The highly industrialised State of Tamil Nadu is reeling under daily power cuts which is crippling production, boosting costs and making the facilities unviable. Disastrous tripping of the Western grid in December 1995 saw a repeat on a much larger scale more recently, involving the entire Northern grid, affecting industrial production and farm output.

On the other hand, a diesel locomotive does not draw an iota of electric energy from various power grids, and is in fact a virtual power-house on wheels, converting fossil fuel directly into locomotion. While in the case of electric traction, this process is carried out in three stages —converting thermal energy into electricity, transmitting it via the overhead lines and converting into mechanical energy — the diesel locomotive carries out the first and the third operations onboard, seamlessly and more efficiently, totally eliminating the second operation with its inherent losses, which can be as high as 30 per cent.

It is no surprise that against a generation of about 22 Gross Tonne Kilometres — a measure of transportation per million calories of the fossil fuel consumed by an electric locomotive — a diesel unit generates over 30 GTKMs, almost 33 per cent higher. With thermal power plants increasingly opting for imported coal on account of its higher calorific value and lower ash content, the argument of savings in foreign exchange by changing over from diesel to electric is no longer viable.

RC Acharya The writer is a former member of the Railway Board)

http://www.dailypioneer.com/columnists/item/53486-railways-must-shun-costly-populism.html

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