Has anyone heard anything about the DFC in the budget or from GOI. It remains the most important railway project India has started but cannot seem to get off the ground. HSR is cool and everything, but DFC is vastly more important. I say for now divert the token Rs 100 crore from HSR to DFC. It will be better for the economy.
It is simply too early to depend on the whole PPP/FDI route to run the railways. IR is not a complete dinosaur like the AAI and there a heaps of good people there still. It is simply not professionally run at all. Find good people empower them to get things done in a time frame, give them a dedicated budget that cannot be blocked and things can turn around. Sreedharan came from IR after all.
Good write up below putting in another plug for relentless focus on the DFC.
http://www.livemint.com/Opinion/dpoB3yj ... udget.html
First, the bullet train dream. Bullet trains, travelling faster than 250 kmph, are, well, a seductive concept, but the fact is that only two lines in the world—one in Paris and the other in Japan—actually break even. Bullet trains that China has invested in run up staggering losses. The upfront investment is too high, and there is a limit to what passengers will pay for their tickets, so recovering costs may take decades, if they are recovered at all. The railway minister himself admitted in his speech that the investment would be “`60,000 crore for introducing one bullet train alone”. `60,000 crore! And this when, “(The Railways’) surplus, after paying obligatory dividend and lease charges, was…`602 crore in the current financial year.” But, of course, as Gowda put it, “it is the wish and dream of every Indian that India runs a bullet train as early as possible.”
Ok, now for the bullet trains’ slower cousins—the high-speed trains (160-200 kmph). Gowda wants to introduce them in nine sectors. Fair enough. But he misses the most economical and smartest way to do it.
Let’s go back to the basics. The Indian Railways makes its profits from transporting freight, and these profits are used to subsidise the passenger business. Yet, freight trains get stepmotherly treatment from the Railways. They are not timetable trains and spend possibly 50% of their travel time hanging around for the lines to clear. No wonder 70% of freight traffic has shifted to roads, even though road transport is more expensive and less environment-friendly. Hence the concept of Dedicated Freight Corridors (DFCs), railway lines only for freight trains, connecting important commercial centres of India. This is the most crucial project that the Indian Railways are working on right now, yet Gowda mentioned it only once in his speech.
Two of the six corridors planned—the Western DFC (Delhi-Mumbai) and the Eastern DFC (Ludhiana-Kolkata)—are targeted to be commissioned by March 2017. The ports in the Western region covering Maharashtra and Gujarat will be efficiently linked to the northern hinterland, and coal would move rapidly to the power plants in the north, and steel to the industries. The DFCs will have a massive impact on the Railways’ profitability, and the entire Indian economy. The average speed of freight trains will go up from 25 kmph to 70 kmph which will reduce the transit time from the present levels. At the same time, DFCs will allow higher axle loads per carriage and much longer trains. And the beauty of it is that the project will pay for itself because of the obvious advantages it would offer.
So what does all this have to do with high-speed trains? As pointed out by the National Transport Development Policy Committee (NTDPC), whose report I mentioned in my 7 July piece, with the construction and commissioning of DFCs, freight trains would get substantially diverted to the new freight corridors. This would present an opportunity to increase the maximum permissible speed of passenger trains on the existing corridors to 160-200 kmph (at present the maximum permissible speed for passenger trains is 150 kmph for a few trains and the average commercial speed is in the range of 70 kmph). This would, in turn, enable operation of overnight inter-city services in the distance range of 1,000-1,500 km, as also help connect cities within distance of 500-700 km with high-speed day services.
Increasing speeds to 160-200 kmph would need inputs by way of removal of speed restrictions, yard remodelling, fencing, improved signalling, easing of sharp curves and so on. The most opportune time would be to commence the exercise and implement the scheme when any section of the DFC gets commissioned, relieving the pressure of operating freight trains on an existing congested section.
For instance, as the NTDPC has calculated, with trains travelling at these speeds, one would be able to travel from Delhi to Mumbai in 11.5 hours instead of the current 16 (Rajdhani Express), Chennai to Delhi in 18 hours instead of the current 28 (Rajdhani), and from Mumbai to Ahmedabad in four hours (as opposed to the three hours envisaged for the first proposed bullet train).
Until the DFCs are complete (and they are, as I said, the most vital railway project for the economy), passenger trains travelling at this speed will slow down freight traffic and other passenger trains even more, and congest the network even further. This is the smartest way to build the high-speed rail network. Focus on the DFCs and piggyback the high-speed passenger trains on them. Of course, this means we will have to wait a bit, but in the long term, this will be the best for the railways and the economy.
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Gowda is willing to allow foreign direct investment (FDI) upto 100% in railways, other than operations. But which foreign firm will invest in an entity which has no credible accounting standards? The accounting system of the Indian Railways is organised to cater to government budget and control functions and does not follow accounting norms as prescribed in the Companies Act. The financial results of the Indian Railways, as presented to Parliament and for public information, include a Statement of Revenue Receipts and Expenditure (Profit and Loss account) and a Balance Sheet, but the contents of these documents depart substantially from the disclosure standards that are expected of going concern entities.
In other words, the Indian Railways’ accounts are not available in a format that is readily interpretable by lenders and investors. The present system of accounting does not give a true and fair financial picture. For example, the balance sheet does not show depreciation provisions and as a result it is impossible to ascertain the net block. Similarly, there is a no clear separation between revenue and capital, or between ‘top of the line’ and ‘below the line’, and the data is presented in a way in which one cannot ascertain labour productivity or employee cost.
This actually funny! Neither the government nor the Railway Board has any clue how the organisation would fare if its accounts were presented as per the Indian GAAP (Generally Accepted Accounting Principles) followed by companies incorporated under the Companies Act.