Goverment of India
Ministry of Railways
Expert Group for Modernizaion of Indian Railways
Shri Dinesh Trivedi,
Minister for Railways
Govt of India
New Delhi, Date: 25 Feb. 2012
Dear Sir,
Report of the Expert Group for Modernizaion of Indian Railways
We are pleased to submit the report on Modernization of Indian Railways - by the Expert Group constituted by Ministry of
Railways through a notification dated 21-09-2011. Indian Railways is in urgent need for modernization and generational
change to assure safety, improve productivity, take advantage of advanced technology, respond to ever increasing demand
and meet inclusive growth aspirations of the country.
In order to prepare a plan the Expert Group had a series of consultations with the Railway Board, domain experts, Industry
leaders, Labor leaders, Planning Commission and others. We focused on a five pronged strategy related to Core assets, New
revenue models, Projects, Enablers and Resource mobilization. We also focused on 15 key areas related to Tracks, Signaling,
Stations and Terminals, PPP, Land, Dedicated Freight Corridors, Information and Communication Technology, Indigenous
development, Safety, Funding, Human Resource and Organization. It is important to keep in mind that Safety and Modernization
are two faces of the same coin. In order to make Railway safe it needs to be modernized and to modernize it is to make it not only
efficient and productive but also safe.
Modernization plan proposed by the Expert Group requires funding of Rs. 560,000 Crores in the next five years. Arranging
funding for the entire plan is crucial even though the amount involved appears large and daunting. We believe it is possible to
raise this amount to implement the plan fully if immediate measures are initiated to ensure that the four main sources of funds
namely – Budgetary support, Internal generation by Railways, Monetization of blocked assets coupled with resort to PPP and
Fund raising from Financial institutions and Markets, domestic as well as international, are harnessed concurrently in a timely
manner. Simultaneously substantial change is required in Organization, Human resource and Administrative and Financial
culture conducive to PPP, along with mission mode approach in all 15 key areas to assure timely implementation.
At present, Indian Railways is close to falling into the vicious circle of diminishing efficiency, falling safety standards, eroding share
in national freight and passenger traffic and possibly ending up as a burden on the national economy instead of being its bulwark
and vital support. This downtrend must be arrested now so that the Indian Railways becomes operationally and financially sound,
perform its due role in the national growth serving as a life line and making noticeable contribution to national GDP.
Recommendations (113 in 15 key areas) of the Expert Group are really a call to action. It is time to act and implement these
recommendations now.
Shri Sam Pitroda,
Chairman
Shri Deepak Parekh,
Member
Shri M.S.Verma,
Member
Dr. Rajiv Lall,
Member
Shri G. Raghuram,
Member
Shri Vinayak Chatterjee,
Member
Shri Ranjan Jain,
Secretary
S. NO. Contents Pages
1. Introduction .................................................................................................. 1
2. Methodology ............................................................................................... 2
3. Strategy ...................................................................................................... 2
4. Recommendations ...................................................................................... 4
1.0 Track & Bridges .......................................................................... 4
2.0 Signaling .................................................................................... 5
3.0 Rolling-stock ............................................................................... 5
4.0 Stations & Terminals .................................................................. 6
5.0 PPP Initiatives ............................................................................ 6
6.0 Land & Airspace ......................................................................... 7
7.0 Dedicated Freight Corridors (DFCs) ........................................... 7
8.0 High Speed Passenger Train Corridors....................................... 8
9.0 Review of Projects ...................................................................... 8
10.0 Information and Communication Technology (ICT) ..................... 9
11.0 Indigenous Development ............................................................ 10
12.0 Safety .......................................................................................... 10
13.0 Funding ....................................................................................... 11
14.0 Human Resource ........................................................................ 14
15.0 Organization ............................................................................... 14
6. Summary ..................................................................................................... 17
7. Expert Group Members ............................................................................... 19
8. Annexures ................................................................................................... 21
Table of Contents
1
Report of the Expert Group for
Modernization of Indian Railways
Introduction
Indian Railways (IR) is the third largest railway network in the world with 7,083 railway stations, 1,31,205
railway bridges, 9000 locomotives, 51,030 passenger coaches, 2,19,931 freight cars and 63,974 route
kilometers. Today IR operates 19,000 trains each day, comprising 12,000 passenger trains and 7,000
freight trains. It transports 2.65 million tonnes of freight traffic and 23 million passengers every day
and 7.2 billion passengers per year. It currently has 1.36 million employees and an annual revenue
base of Rs.1,06,000 crores as projected on March 31,2012. Indian Railways is also home to great
talent and excellent organization focused on operation, efficiency and safety.
The country presently suffers from a severe and chronic under-investment in railway infrastructure.
The resultant disproportionate diversion of freight and passenger traffic to roads while causing
substantial loss in revenue to the Indian Railways also imposes a heavy burden on the country
which is measurable in terms of a much larger freight cost to GDP ratio and higher environmental
cost per route Km of Freight and passenger traffic than in other countries. Undeniably there is an
urgent need to enhance capacity of and modernize the Indian Railways to meet country’s social and
economic aspirations in the 21st Century. With modernization and restoration of balance in the intermodal
transport mix railways can be a significant engine of inclusive growth and development for the
country and can potentially contribute an additional 1.5% to 2% to GDP. IR will then, create new jobs,
save energy, improve environment, while moving people, raw material and goods more efficiently
nationwide. Highly critical industrial inputs like coal which contributes nearly 45% to Railways freight
traffic will get the much needed special attention as a modernized Railway system will focus on
efficient evacuation, movement, and delivery of coal or other important goods in a much more
effective manner.
Leveraging new opportunities would, however, require generational change with bold vision, clarity
and various new initiatives to look beyond day-to-day operations towards building next generation
technologies, network, system and processes necessary to significantly enhance safety, productivity,
efficiency and quality. At present, we have a unique window of opportunity, which must be capitalized
with a sense of urgency to transform railways to deliver timely benefits to the people and the nation.
In order to evaluate options and make key necessary recommendations for modernization, the Ministry
of Railways constituted an Expert Group for “Modernization of Indian Railways”. The details of the
constitution and the Terms of Reference of the Group are attached in Annexure 1.
2 3
Methodology
The Expert Group first met with the Hon’ble Railway Minister Mr. Dinesh Trivedi and the Railway Board
to understand the current status, objectives, challenges and opportunities. The Group also reviewed
the Indian Railways Vision 2020 document as well as previous reports and recommendations on
Railway reform including the Prakash Tandon Committee Report (1994) and the Rakesh Mohan
Committee Report (2001) etc. This was followed by a review of the financial status and opportunities of
the railways with the Finance Commissioner and other Board Members. The Group also had detailed
discussions with Advisers, Domain Experts, individually and collectively, as well as interactions with
the Safety Committee, Industry leaders, labour leaders, representatives of the Planning Commission
and other stakeholders. Based on many discussions, perception, priorities and programs, 11 Working
Groups consisting of domain experts from Railways were organized to analyze specific verticals.
This was followed by the review and discussion of presentations submitted by the Working Groups to
integrate into the overall modernization plan.
(Terms of Reference and composition of the 11 Working Groups is provided in Annexure II and the
detailed whitepapers and presentations of the Working Groups are compiled in Vol. II of the report hereof)
Strategy
To recommend ways and means to modernize Indian Railways the Group focused on two fundamental
drivers SAFETY and GROWTH and a five-pronged strategy:
a) Modernize Core Assets: There is an urgent need to modernize the key revenue
generating assets of the railways such as tracks and bridges, signaling, rolling stock
and stations and terminals.
b) Explore New Revenue Models: To meet the funding needs for modernization and
growth it is important to look at opportunities related to PPPs, land and airspace
utilization, dedicated freight corridors, and high speed trains.
c) Review Projects: To ensure financial viability, social benefits and timely
implementation it is imperative to review and assess capital projects sanctioned and
work-in-process and suggest necessary priorities and appropriate actions.
d) Focus on Enablers: For a holistic and long term approach to modernization
and execution there is a need to focus on key enablers such as ICT, indigenous
development and safety.
e) Mobilize resources: For railways to capitalize on this timely opportunity it is important
to mobilize substantial additional funding, strengthen human resources and revamp
organizational structures.
Exhibit 1 – ‘15 Focus areas’
Core Assets
1.0 Track
and
Bridges
Signaling Rolling Stock Stations &
Terminals
Revenue
Models PPPs Land
Dedicated
Freight
Corridors
High Speed
Trains
Projects Review of existing and proposed Projects
Enablers ICT Indigenous
Development Safety
Resources Funding Human Resource 15.0
Organization
Based on the five-pronged strategy ‘15 focus areas’ were identified and selected as illustrated in
Exhibit 1 to drive Modernization:
4 5
Recommendations
To modernize Indian Railways, we submit the following 15 sets of recommendations:
1.0 Track & Bridges
1.1 Modernize 19,000 kms of existing tracks (of routes A, B & D special): A, B and D
special routes (refer Annexure III for details) comprise nearly 40% of the total network
and carrying about 80% of the traffic. It should be upgraded with strong and robust
track capable of carrying heavier freight trains at 25 tonne axle load and achieving
higher speeds of 75/100 kmph. The tracks on A & B routes should be fit for passenger
speeds of 160/200 kmph.
1.2 Eliminate level crossings and Provide fencing alongside tracks: Upgradation of tracks
would also require elimination of level crossings and replacement by ROBs/ RUBs
(It is proposed that initially IR should focus on Delhi-Mumbai and Delhi-Kolkata
sections as these routes will be relatively free from freight trains due to commissioning
of DFCs. As a part of DFC, elimination of level crossings on parallel alignment
i.e. Vadodara to Mumbai and Khurja to Kolkata is already planned. Therefore for
modernization, IR only needs to focus on Delhi-Vadodara and Delhi -Khurja sections.
As a rough estimate, Rs. 4000 crores would be required to build ROBs, limited height
subways and manning of the unmanned level crossings).
It would also require fencing alongside the tracks for access control. (Fencing of track
will be of two types. In urban, semi urban and other habitation we need robust fencing.
It will cost nearly Rs 40 lakhs per km. In rest of the areas we need light fencing to
prevent cattle. It will cost Rs 10 lakhs per km. Total cost of fencing will be about
Rs 1000 crores). Further, modern maintenance practices and reliable safety standards
should be introduced for these tracks.
1.3 Strengthen 11,250 bridges to sustain higher loads at higher speeds: It may be noted
that out of 1.31 lakh bridges, around 25% are over 100 years old. 11,250 bridges on
A, B and D special routes will require strengthening.
1.4 Provide 100% Mechanized track maintenance on Routes A and B: This would provide
for superior quality of track laying and maintenance.
We feel that these measures will increase throughput capacity of freight trains by 10% as well as
increase the net revenue per freight train by 30%. This would also enhance the life of rails from 525
GMT to 800 GMT and ensure strong and robust track for heavier freight trains at higher speeds. The
cost of the above mentioned initiatives is estimated as Rs. 33,046 crores and should be completed
in 5 years.
2.0 Signaling
2.1 Implement Automatic Block Signaling on A and B routes with Train Management
System
2.2 Provide communication based train control like Moving Block System on C class
routes of Central and Western Railways
2.3 Deploy on-board train protection system with cab signaling on A & B routes
2.4 Introduce GSM-based mobile train control communication systems on ‘A’, ‘B’ & ‘C’
routes
2.5 Establish Centralized Maintenance Control Centers
This would substantially improve the safety of workers and passengers as well as generate a 30%
increase in capacity and associated revenue potential. The cost is estimated as Rs. 25,000 crores and
should be completed within 5 years.
3.0 Rolling-stock
Modernize Rolling stocks with investments in the following:
3.1 New generation locomotives:
• Electric locomotives (9,000 & 12,000 HP)
• High horse power diesel locomotives (5,500 HP)
3.2 Traction development for improvement in fuel efficiency, emission & reliability
3.3 High speed potential LHB coaches (160/200 kmph)
3.4 Upgraded suburban coaches
3.5 Train sets for high speed inter-city travel
3.6 Modern high pay to tare ratio wagons
3.7 Green toilets on all passenger trains
3.8 Heavy haul freight bogies
These investments would substantially increase revenue potential and improve safety, efficiency
and passenger comfort. The above efforts will also lead to capacity enhancement, enhanced asset
utilization and increased productivity. The cost of the above mentioned initiatives is estimated at
Rs. 72,571 crores (refer Annexure IV for detailed break up of each item) and should be completed
within 5 years.
6 7
4.0 Stations & Terminals
4.1 Modernize 100 major stations out of the total 7083 stations immediately.
A total of 770 stations should be targeted for redevelopment in the next 10 years.
4.2 Develop 34 multi-modal logistics parks at identified locations to provide integrated
transport infrastructure facilities for users.
4.3 Modernize existing Railway Freight Terminals-Take up top 50 terminals.
4.4 Enhance customer amenities and services at stations and on trains, with special
provisions for physically challenged passengers
The above efforts would lead to substantial revenue generation, improved management &
customer services as well additional traffic due to new logistic parks & modern terminals. The
estimated funding requirements would be approximately Rs. 1,10,000 crores for redeveloping the
proposed 100 stations (estimated as Rs. 2,000 crores per station for the top 30 stations; Rs. 1,000
crores per station for the next 30 stations and Rs. 500 crores per station for the remaining 40
stations) and Rs. 17,000 crores for development of 34 multi-modal logistics parks and modernization
of existing freight terminals. The time period for completion should be 5 years.
5.0 PPP Initiatives
Develop PPP models in various areas of Railways to attract private investment to augment
core capabilities related to:
5.1 Stations and Terminals
5.2 High speed rail corridors
5.3 Elevated rail corridor
5.4 Private freight terminals
5.5 Leasing of wagons
5.6 Loco and coach manufacturing units
5.7 Captive power generation
5.8 Renewable energy projects (solar, wind etc.)
5.9 Railway Hospitals
5.10 Railway Schools
5.11 Merchandizing
The above initiatives should provide significant additional resource mobilization, lead to speedy growth
and augmentation of railway capabilities and improve collaboration and efficiency. The total cost of the
above mentioned initiatives excluding stations & terminals and Dedicated Freight Corridors is estimated
as Rs. 97,000 crores (refer Annexure V for detailed break up of each item). This cost estimate does not
include costs of stations redevelopment, logistics parks and dedicated freight corridors.
6.0 Land & Airspace
Leverage and Monetize Land and Airspace:
6.1 Conduct GIS Mapping of land resources available with IR expeditiously
6.2 Complete digitization of land records and perfection of titling at the earliest
6.3 Obtain policy concessions from Government of India (GOI). For long term lease and
licensing by Railways, land rights must belong to them. A special dispensation from
the concerned government ministries, departments and agencies at the central, state
and local levels would be critical for successful commercial exploitation of surplus
land by the IR.
6.4 Garner state government support for land use and higher FSI.
6.5 Monetize Land assets through creative PPP initiatives
6.6 Monetize Airspace above the platforms & rail tracks: a pilot project could be immediately
taken up in the Mumbai suburban railway system to monetize the air space
6.7 Set up SPV, if required more than one, to handle Land and Airspace
This would generate additional resources, lead to efficient utilization of land and airspace as well as
ensure speedy development, growth and improved customer service. Monetization of surplus land and
airspace could mobilize Rs 50,000 crores for IR. (at a conservative estimate of Rs 5 crores per acre
for 10,000 acres of surplus land which has been identified in urban centres for commercialization).
A part of this can be received as an upfront payment and the rest through periodic lease revenues.
7.0 Dedicated Freight Corridors (DFCs)
7.1 Construct Eastern and Western Dedicated Freight Corridors (3,338 Kms) in the
next 5 years
7.2 Construct North-South, East-West, East-Coast and Southern Dedicated Freight
Corridors (6,200 Kms) in the next 10 years
7.3 Upgrade feeder routes to DFCs (6,000 kms) for 25 tonne axle load train running
These initiatives would lead to segregation of freight and passenger traffic on trunk routes,
improvements in service delivery, and generate additional freight carrying capacity of about 2,400
million tonnes through Eastern & Western DFC. It would also ensure higher average speeds of freight
trains (expected to increase to a level of 60 kmph from the current average of 25 kmph).
8 9
The total cost of this is estimated at Rs. 2,04,000 crores for all the corridors. The proposed timeframe
is 5 years for Eastern & Western DFC and 10 years for North-South, East-West, East-Coast and
Southern Dedicated Freight Corridors.
8.0 High Speed Passenger Train Corridors
8.1 Construct a High Speed railway line between Ahmedabad & Mumbai with speed of
350 kmph.
8.2 Undertake detailed studies for 6 other High Speed rail corridors already identified.
These include: (1) Delhi-Chandigarh-Amritsar (450 km); (2) Hyderabad-Dornakal-
Vijayawada-Chennai (664 km); (3) Howrah-Haldia (135 km); (4) Chennai-Bangalore-
Coimbatore-Ernakulam (850 km); (5) Delhi-Agra-Lucknow-Varanasi-Patna (991 km)
& (6) Ernakulam-Trivandrum (194 kms). The likelihood of initiating projects in these
corridors in next 5 years is low and so no attempt has been made to estimate the cost
of these projects.
This would lead to increased connectivity, traffic and faster intercity travel. The cost of the high speed
line between Ahmedabad & Mumbai is estimated as Rs. 60,000 crores. This cost has also been
included under the PPP initiatives. The proposed timeframe is 10 years.
9.0 Review of Projects
9.1 Expedite implementation of following ‘priority projects’:
9.1.1 101 projects in advanced stage of completion where 50% to 90% of the
investments have already been made.
9.1.2 Projects already sanctioned-rail tracks: Out of a total of 340 rail track
projects [new line (129), gauge conversion (45) and doubling (166)
projects] of total track length 33,133 km, the following would be taken up
as priority projects:
9.1.3 115 doubling projects covering a length 6643 km (sanctioned)
9.1.4 15 new line/gauge conversion projects covering a length 700 Km
(sanctioned)
9.2 Sanction Project for-rail tracks: 15 new line/doubling projects covering a length 3,092
km (not sanctioned)
9.3 Implement Electrification of 7,500 RKM in the next five years.
9.4 Add 10,000 km of new lines in the next 5 years: These new lines are to largely
achieve social inclusion and would not be remunerative.
9.5 Provide funds for non-viable projects being implemented purely for social inclusion
through a special fund set up by GOI for this purpose. Reimburse O&M deficit
determined through transparent accounting and agreed to by the regulator.
9.6 Provide the ‘first’ and ‘last mile’ connectivity by creating appropriate policy framework.
9.7 Identify and commission in a mini mission mode bypasses at junction stations and rail
flyovers for grade separation.
The above initiatives would lead to increased access in remote areas, additional effective broad gauge
rail trackage of nearly 24,000 track kms in 5 years and additional electrified tracks of 7500 RKM. The
cost estimate is Rs. 53,827 crores for ‘priority projects’ (refer Annexure VI for breakup of investments)
and Rs. 1,00,000 crores for construction of new lines. The proposed timeframe is 5 years.
(Both of these estimates are not included in the total estimates for modernization and need to be
completely provided for under the 12th FYP.).
10.0 Information and Communication Technology (ICT)
10.1 Set up Real Time Information Systems (RTIS) to provide real time information at
stations and on running trains
10.2 Set up Radio frequency identification (RFID) tracking system for wagons, coaches
and locomotives to enhance wagon management and real time monitoring
10.3 Provide internet access at 342 railway stations (58 ‘A1’ class & 284 ‘A’ class)
immediately
10.4 Establish unified IP-based ICT platform for 6000 railway stations
10.5 Review CRIS and integrate into IP-based ICT agenda
10.6 Leverage and expand Railtel optical fiber network
10.7 Use ICT to modernize Organization, Management, Development, Finance, Project
Management, Research, Procurement, Payment etc.
10.8 Introduce e-file to computerize Railway files and expedite decision making
10.9 Introduce Mobile ticketing & commerce for a variety of Railway applications
10.10 Upgrade & Integrate Railway websites and use social media creatively for customer
feedback, consumer education and social messages
This would lead to improvement in wagon utilization and availability by 10%; efficient tracking of trains,
locomotives and cargo; enhancement of communication services (voice, data & video services) and
improvement in quality of passenger services. Further, it would provide across the board benefits
to both customers and railways. Customers will benefit from improved on board information, station
security, safety, services and facilities while railways will benefit from resource mobilization using
innovative business models and safety and security of its passengers and assets. The total cost
of these initiatives is estimated as Rs. 1,315 crores (refer Annexure VII for details) and should be
completed in 1 to 4 years.
10 11
11.0 Indigenous Development
11.1 Develop substantial indigenous capabilities to be a global leader in:
• State-of-the-art railway technologies
• Railway Components and equipment for global markets
11.2 Establish Indian Institute of Railway Research with Centers of Excellence in:
• Safety
• Wagon prototyping
• Mechatronics
• Green toilets, etc
11.3 Upgrade existing railway R&D facilities
11.4 Strengthen RDSO to build local capabilities
11.5 Upgrade indigenous manufacturing (foundry facilities for higher axle load bogies)
11.6 Develop Indian Standards, critical vendors and protocols for Railways
11.7 Enhance University Interface with Railway Laboratories in Academic Institutions
A focus on strengthening indigenous capabilities will increase local production and domestic
manufacturing as well make India a hub for technology, equipment and services export globally. Total
cost of these initiatives is estimated as Rs. 464 crores (refer Annexure VIII for details). Implementation
could commence immediately and be scaled up on the basis of the results of the pilots. Research
Design and Standards Organization (RDSO) is currently undertaking 100 R&D projects in rail related
technologies under the proposed 12th FYP with estimated spending of Rs. 2,206 crores.
12.0 Safety
12.1 Deploy latest track machines for mechanized maintenance of track
12.2 Install wheel impact load detectors
12.3 Modernize and renovate railway workshops
12.4 Equip trains with Train Protection Warning System (TPWS)
12.5 Install vehicle borne digitized and recordable ultrasonic flaw detectors to cover the
entire railway system
12.6 Eliminate unmanned level crossings by manning, closure, merger, construction of
over bridges and underpasses
12.7 Upgrade coaching depots
12.8 Upgrade disaster management facilities & related Services
12.9 Upgrade Network Management Centers
12.10 Use Social networks/cameras/Videos and other new tools and technologies
extensively for safety & Security
The benefits of these measures would be enhanced safety and security for passengers and railway
workers. Total cost of the above initiatives is estimated as Rs. 39,836 crores (refer Annexure IX for
details). However this cost is not included in the total estimates for modernization since a separate
committee on Safety has been set up by the IR under Dr. Kakodkar.
13.0 Funding
13.1 Mobilize total investment requirements of Rs. 5,60,396 crores for the proposed
modernization initiatives.
Railway sub-group of XIIth five year plan has estimated additional requirement of Rs. 4,42,744 crores
for various other investments proposed to be undertaken during the 12th FYP and not covered under
modernization initiatives. Table 2 below provides a summary of the total investment requirements
(both for modernization and as recommended by the XIIth plan sub-group on Railways):
13.2 Outline an investment of Rs 8,39,000 crores, during the XIIth FYP, which includes Rs
3,96,000 crores of modernization plan investment recommended by us. It is a quantum
jump from investment levels of Rs 2,03,000 crore in the XIth plan and Rs 84,000 crore
in the Xth plan.
13.3 Based on the discussion with various stakeholders the Committee recommend
the funding pattern given in table 3 below - see page 13. [The main sources of
funds for IR are internal generation (revenue surplus), gross budgetary support (on
which IR currently pays an annual dividend of 5%) and extra budgetary resources
comprising market borrowings, bonds and PPPs.]
Follow the following funding pattern and bridge the gap of Rs. 16,469 crores from
the following sources:
a. Disinvestment in Railway PSUs.
b. Re-densification/ commercialization of surplus land in existing railway colonies in
different locations. A few pilot projects could be immediately explored.
c. Commercial exploitation of railway schools and hospitals, without displacing any
of the priorities from the point of view of IR employees. Management contracts
(on the basis of revenue sharing) could be tried for some of the larger hospitals/
schools with a view to achieve significant upgradation of standards.
d. Modernization surcharge from passengers on a per passenger km basis.
12 13
13.4 Source through PPP the balance requirement of Rs 164,000 crore of the modernization
plan to be included in the XIIIth plan. This makes the total PPP funding for the
modernization plan as Rs 3,93,000 crores. Details of PPP investment and source of
revenue through PPP are indicated in Annexure X.
13.5 Create a separate ‘Modernization Fund’ on the lines of SRSF to fund these initiatives
in a sustainable manner.
Table 3: Sources of funds to raise the amount of
Rs. 8, 39,140 crores required in the next 5 years:
Sources of Funds (Rs. in Crores)
S. No. Sources of funds Rs. in crores
1.
2.
3.
4.
5.
6.
Gross Budgetary Support
Internal Generation
Leasing/Borrowings
PPPs
Dividend rebate
Road Safety Fund
250,000
201,805
101,000
229,024
24,000
16,842
Total 822,671
Table 4: Gap in Applications & Sources of Funds:
S. No. Gap in Application and Sources of funds Rs. in crores
1.
2.
Total investment requirements
Sources of Funds
839,140
822,671
Gap to be funded 16,469
Table 2: Summary of Total Investment Requirements
1200 Total Investment Requirements (Rs. '000 Crores)
1000
800
600
400
200
0
Modernization
Requirement
12th FYP
additional
Total
investment
requirement
Required
during 12th
FYP term
Required
during 13th
FYP term
560
443
1003
839
164
Table 1: Total investment requirements for Modernization
600
500
400
300
200
100
0
Rs. '000 crores
Tracks & Bridges
Signaling Systems
Rolling Stock
Station & Terminals (PPP)
Logistics Parks (PPP)
ICT initiatives
Indigenous Development
Dedicated Freight Corridors (Part PPP)
Other PPP initiatives
Total for
Modernization
Investment Requirement for Modernization
(Rs. '000 Crores)
33
25
72.5
110
17
1.3 0.45
204
97
14 15
14.0 Human Resource
14.1 Install and operationalize immediately modern Computerized Human Resource
Management System with data base and inventory/Resume of all present employees
and skills required to meet modernization plan
14.2 Reduce and gradually eliminate induction of unskilled staff
14.3 Create and impart specialized courses in partnership with academic institutions and
others especially for Vocational Education, Supervisors and Management
14.4 Launch a series of in-service training programs immediately
14.5 Rationalize and consolidate multiple services and cadres without sacrificing the
benefit of specialization and business capabilities
14.6 Offer graduate programs in Railway technology at IITs and Railway management at IIMs
14.7 Enable lateral recruitment from market for specialist functions
14.8 Upgrade ICT skills of present officers and employees substantially
14.9 Review and Restructure existing training institutions for improving ecosystem and
Modernization
14.10 Review Railway Health System separately to meet aspirations of Railway Families
and Modernization plans
14.11 Create a system of reward for collective performance and variable pay linked to
incremental surplus generated by various units
15.0 Organization
Organizational reforms are essential to ensure that IR is able to achieve the goals set out for
modernization. The structure of the IR has remained largely unchanged for decades and it remains
a functionally oriented institution that is organized around its cadres instead of around its businesses
or customers1.
The following organizational reforms are recommended to empower officials, speed up the decisionmaking
process and introduce professional project management systems in IR.
15.1 Re-organize Railway Board along business discipline to reflect Chairman as Chief
Executive Officer and Members for
• Safety
• Business development/ Commercial
• Technology/ ICT & Signaling
• Freight
• Passenger Services
• Infrastructure
• Finance
• HR
• PPP
15.2 Create commodity wise Key Account Directors under Member Freight for major
commodities like coal, iron ore, steel, foodgrain, fertiliser etc. Coal is 45% fo totalfreight
traffic and needs special attention.
15.3 Create Key Account Directors of suburban, long distance passenger etc. under
Member Passenger.
15.4 Ensure autonomy, flexibility and accountability at all levels with clear P&L
responsibilities
15.5 Make provisions for handling of all parliamentary functions (liaison functions with
government, including handling of Parliament questions) by a Joint Secretary level
officer in the Ministry, which would set the RB free to focus exclusively on business
issues.
15.6 Empower Zonal Railways along with accountability:
• The present system of seeking sanction for Capital investment to be included
in the Works and Rolling Stock Programs of railways from the Railway Board/
Ministry should give way to a more decentralized decision-making in critical
areas like safety, trafic facility, passenger amenity and other areas, by delegation
of powers at the zonal level.
• GMs of Zonal Railways to be empowered to take decisions, within a framework of
rules and investment limits. The Zonal Railways should also be made accountable
for return on capital, transport output, profitability and safety.
15.7 Revamp accounting systems so that separation between the cost of infrastructure
services and the operational activities and rational pricing is achieved and trainwise,
route-wise profitability analysis is available. This would help assess the usage
charge of infrastructure and rolling-stock resources and also in accurate allocation of
overheads. This would also help in computation of the cost of operation of trains and
services and appraisal of profitability of various business lines.
15.8 Re-engineer Business Processes to streamline the decision-making process to bring
about accountability, result-orientation and responsiveness at all levels and develop
IT tools with this objective in mind.
1 Report of the Expert group on Indian Railways, 2001 (under Dr. Rakesh Mohan) 15.9 Modernize procurement processes and benchmark products and suppliers
16 17
15.10 Review the existing PPP policy framework in the light of hitherto poor response and
PPP experience.
15.11 Create a post of Member (PPP) responsible for project development and processing
of all PPP projects to facilitate their speedy sanction by the Government and award of
concession. The Member should have a multi disciplinary team of officers, including
finance, to deal with various railway projects.
15.12 Establish a Committee for approval of PPP projects to be headed by Chairman Railway
Board with Financial Commissioner, Member (PPP) and the concerned member to
whose area of responsibility the project belongs. The process and procedure followed
should be similar to that of PPPAC followed in Government of India. The Board should
decide and approve the projects and they should not be examined or referred back
by the members to their respective directorates. The projects thereafter should follow
the normal procedure of approval by PPPAC and CCI.
15.13 Appoint a ‘PPP Ombudsman’ to resolve any disputes that may arise between the
private sector and the government in interpretation and enforcement of provisions
of the agreements. The Ombudsman should be a quasi judicial authority and should
have the authority to give directions which are binding on all parties.
15.14 Constitute a Railways Tariff Regulatory Authority in order to provide a level playing
field to all stakeholers.
15.15 Establish a separate Authority/SPV/Organization for implementation of Major Projects
such as development of high speed corridors, redevelopment of railway stations etc.
15.16 Build capacity for the officers at the Zonal railways to manage PPP projects. A PPP
cell should be constituted in each zone to identify, develop, implement and monitor
projects at the zonal level.
15.17 Computerize all Railway business/ operations including financial management,
inventory, HR and other assets
15.18 Implement ‘Mission Mode’ approach for all 15 focus areas with clear objectives,
measurable milestones, tangible deliverables, and well defined timelines.
• Each of the 15 Missions should be headed by a Mission Director for a three-year
term, with autonomy to take decisions in their respective areas.
• All the Mission Directors and associated teams should report to the Railway
Board.
• Each Mission should be provided with appropriate budget and operational
autonomy to implement.
• Each Mission Director should use standard project management tools to manage
and monitor.
15.19 Set up a High Level Committee to facilitate co-ordination amongst the 15 missions,
fast-track implementation and adderss bottlenecks, coming in the way of implementation.
Summary
In summary, we have tried to simplify as much as possible the complex task of modernizing
the massive Indian Railways system with multiple priorities, many challenges and varied
perceptions. We realize that the task is very complex and requires political will, organizational /
management support, substantial funding, new direction, new thinking, mobilization of resources,
innovative PPP and new business models, and a lot more. We strongly believe that through this
modernization plan Indian Railways can add an additional 1.5 to 2% to national GDP and fuel
growth and prosperity in the next decade. We also believe that at this time Indian Railways must
keep clear focus on Safety and Growth with a five pronged strategy and multiple initiatives to
capitalize on core assets, generate new revenue models, review current and new projects, focus
on enablers and mobilize resources.
We have made a total of 113 recommendations. Our recommendations in 15 areas are critical
for the kind of generational change Railways require. To implement these recommendations, as
suggested above, 15 individual Missions are required with substantial resources, leadership,
plans, autonomy, freedom, flexibility and advance program management tools and technology
to execute. It will also require several mini and micro Missions within each Mission Directorate
to implement multiple tasks. Similarly, organizational reforms suggested by us are critical to
mobilize resources, provide policy direction and ensure time bound implementation. Based
on our analyses and interactions with the Planning Commission, we strongly believe that it is
possible to mobilize financial resources to meet substantial growth needs in the Railways.
To build consensus we have had a series of interactions with all key stakeholders and we thank
each one of them for their support, input and advice, especially Railway Minister, Chairman
Railway Board, FC, Members, Advisers, domain experts, industry leaders, labour leaders,
Planning Commission etc. Our interactions with the Railway officers and experts have convinced
us that generational change as proposed by the Expert Group is possible. DMRC has shown
us that with the right leadership, autonomy, flexibility and accountability it can be done. We are
individually and collectively available as an Expert Group to discuss these recommendations and
provide our help and support in speedy implementation.