PPP in rail space is a win-win situation for all

When it comes to the discussion on what it takes to make rail a more competent form of transportation in India, I will go as far as saying that much
of the future of India and providing value to the Indian citizens depends on it.In order to best appreciate the magnitude of the problem, here are some important aspects that need to be considered, when talking about Indian rail.

The overall Indian transport system currently carries approximately 2.8 billion tonnes of cargo, of which the road has approx 65% market share with rail trailing with about 30%. The 30% market share alone is represented by the 833 million tonnes (MT)moved by the Indian Railways last year.

While we have one challenge of increasing the rail market share to about 50% in order to bring efficiency into the Indian logistics sector, several reports suggest that basic demand in the Indian freight transport system itself is expected to grow from 2.8 billion tonnes to 5.2 billion tonnes over the next seven to 10 years.

So even if the rail market share does not change from the current 30% levels, we are still looking at doubling of movement on rail from the 800 MT levels today to about 1,600 tonnes over the next few years. And that just accounts for the domestic traffic. With emerging infrastructure such as the FTWZs, India is bound to see an increase in the overall box throughput from the current 6.5 million TEU levels.

There is an urgent need for both the Railways and private operators for ‘thinking big’ and collaborating in the true spirit of PPP.

If the Railways and private operators collaborate and increase the rail market share from the current 30% levels to 40% over the next few years, we are talking about 40% of the net Indian freight system – which is anticipated to be around 5.2 billion tonnes. This represents 2 billion tonnes of cargo that needs to move by rail.
Currently, the Indian Railways is moving just 833MT. Fighting for this 800 million tonnes is very different from collaborating for the 2 billion tonnes that is required for increasing the efficiency of the Indian logistics system.

I dare say that if this is not fixed, the financial ramifications for India will be horrifying. Can our roads really take 65% of 5.2 billion tonnes or 3.3 billion tonnes – even in a few years? How much product wastage, delays, unnecessary fuel burning, and inefficiency do we put up with?

With all that is discussed in regards to logistics in this country, this perhaps becomes ‘one of the’ if not ‘the most’ important issues that needs to be addressed. The truth is that if this initiative of privatisation of the rail sector is done in a manner where every private participant in the space is facing so many issues, how do we propose to initiate more PPPs in this sector as was recently announced by the Indian Railways? After all, we do not want PPP to stand for Poverty in the midst of Potential Plenty!!


Published in: on October 10, 2009 at 8:46 am  Leave a Comment  
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