Nomura Global Markets urges IR to move towards a more Commercial Approach
New Delhi: A reputed international market research organisation has advised Indian Railways to move towards a more commercial approach including phasing out of cross-subsidies between freight and passenger fares, between commercial and non-commercial lines and services and rightsizing the employee base.
The Japan based Nomura Global Markets Research Institute in its report has pointed that given the need to meet social objectives and in view of limited Government resources in India, a mix of socialist (public funding) and capitalist (private funding) models will likely be required.
Suggesting that Indian Railways learn lessons and experiences of other countries like United States, China and Japan to look for commercial or market based approach, the research report has mentioned that the current Railway Minister (Suresh Prabhu) has proven to be more proactive with several developmental issues and Nomura’s recommendations already being implemented.
The report has sharply criticized the inadequate investment over many decades which has led to railways reeling under severe capacity strains, hampering its services and making it uncompetitive but simultaneously given thumbs up to Prabhu’s approach in attracting investments, which according to the Japanese marketing team, is in “dire need for investments”.
“Political and social considerations have often dominated the economic considerations, amplifying the inefficiencies by cross-subsidising passenger services through higher freight rates. Over time, this has resulted in a vicious cycle of low investments and political interference, resulting in poor service quality and lower profits to plough back into investments. We believe to break this cycle, the government needs to step up investments in railway infrastructure,” says the Nomura report.
The Ministry of Railways had commissioned the organistaion for a research report for measures to re-invigorate Indian Railways. Appreciating Prabhu, Nomura has said that with an apolitical and reformist Railway Minister at the helm, a roadmap to revive IR’s efficiency, financials and spending was clearly in the offing.
“In our view, profitability achieved through these changes would generate the necessary funds for gradual capacity expansion, raise the efficiency of railways as a mode of transport (for logistic companies), lower logistics costs and have a multiplier effect on boosting manufacturing competitiveness and GDP growth. The government would need to continue to play a key role in providing services on less profitable routes from a social perspective,” it said.
Talking about several committees and various expert groups formed to address the challenges faced by IR over past decades, Nomura has said that a lot of these committees have time and again highlighted steps to bail out the IR but action has rarely been taken. Talking about the latest Bibek Debroy Committee, Nomura has pointed that most of his recommendations is already been done and on the right tracks.
The Nomura Global Research team has also appreciated the government’s move to empower the zonal railways to carry out projects which is departure from earlier projects were scrutinised by the Planning Commission, Ministry of Finance and CCEA even when financed by private parties.
Further it has also compared the fact over the past three decades, India’s road network has tripled, whereas the railway network (ie, total track length in route km) has grown by just 11 percent.
Mumbai: The central government has chosen railways as one of important driver for capital formation given the huge potential and multiplier impact it can have on the economy (~5x). Government has put together a plan to significantly step up investment in Indian Railways (IR).
New Delhi: Indian Railways has completed most of the work related to digitization of land record i.e. maintaining land data (details of acquisition/area/usages and land plans) in digital form, for this purpose a web based application called Land Management Module integrated with Track Management System (TMS) of Indian Railways has been developed.
New Delhi: Mission Raftaar was one of the seven missions announced by Railways Minister Suresh Prabhu in his budget speech this year, but work on six of nine semi-high-speed sections announced in 2014 are yet take off with no money left in the hi ministry’s kitty.
Hyderabad: Larsen & Toubro’s delayed Rs 16,000 crore metro rail project in Hyderabad is prone to significant risk in terms of the time it will take to complete as well as revenues it will earn thereafter, rating agencies have said.
New Delhi: Aiming at effective use of space technology in remote sensing and graphic information system (GIS) based applications, Railways is set to join hands with Indian Space Research Organisation (ISRO).
New Delhi: Railway Minister Suresh Prabhu on Monday asserted that Indian Railways can’t be compared to those of China and other developed countries. “What the Chinese have invested into railways is a mind boggling number. From 2009, they have put in more than 2 percent of their GDP whereas our share was 0.4 percent of our GDP.
The author has tried to capture personality traits of the ‘Metroman’ — as Sreedharan is widely known — from various perspectives: a reputation built on his honesty, integrity and his project implementation skills.
