BW Communities

Locomotives Off Track

BW Online Bureau Nov 08, 2014

<?xml version="1.0" encoding="UTF-8"?><root available-locales="en_US," default-locale="en_US"><static-content language-id="en_US"><![CDATA[Highways in India are clogging up almost as fast as they are being built. The cause? Lumbering giants on the road. The number of freight carrying trucks is increasing at one of the fastest rates in post-reform India. Freight traffic on the road grew by 30 per cent last year. While some would welcome it as sign of increasing economic activity, this is actually a symbol of deep a flaw in India's transportation policy. Freight and goods are best carried over long distance on the railway network. This is the least costly way of shipping goods. Shorter distances and last mile delivery is offered by trucks. But in India, while road freight is ballooning — adding several tonnes of fuel fumes to the atmosphere — railway freight traffic increased only by 4 per cent last year.  Former Railways Minister, Mamata Banerjee had acknowledged this issue in her Vision 2020 document announced in December 2009. She also accepted that Indian Railways suffers from a big shortage of rolling stock and engines. The solution would seem obvious: increase the production of wagons and locomotives. But here is the surprising and indeed worrying truth. The process of setting up manufacturing units for new locomotives has not moved since October 2010. In February 2010, the Cabinet approved the railways plan to set up units to produce diesel and electric locomotive in partnership with private corporations. The railways promised to execute the tender and start work on the factories within six months. But inexplicably, the process came to a halt later the same year just before price bids were to be planned. Since then the ministry has postponed the resumption of the bidding process more than six times. Project Deferred And Derailed The ministry accepts that it needs 4000 electronic locomotives and 5000 diesel locomotives over a decade. After much deliberation the government agreed on the public private partnership model. Global tenders were invited. Railways would hold up to 26 per cent while the rest would be help by the private partner/consortium.  This model would ensure that latest technology would be deployed on ground in India. The electric locomotive plant would be in Madhepura and the diesel plant would be in Marhowra. Not surprisingly, both are in Bihar, given the dominance of Bihar in the ministry. Indian Railways would have procured 800 electric and 100 diesel locomotives from these plants. The rest would be made by the railways owned Diesel Locomotive Works, Varanasi and Chittaranjan Locomotive Works. The investment in the new plants would be over $1 billion. It would create thousands of jobs and create a thriving vendor base that would create an economic ecosystem of its own. But despite the obvious advantages this process has been held up for months. For a government keen to boost investment, create jobs and boost growth, such lethargy is inexcusable. There is the green aspect too which the ministry recognises. "By carrying more people and goods than other modes of transport, railways can help protect the environment…Indian Railways can be India's principal and foremost response to the challenge of climate change," thus spake Mamata Banerjee in her 2009 Vision document. She also has promised new generation fuel efficient locomotives. The politics of policy here seems befuddling. There could be an understandable worry about mismanagement of the tender process. But if the government could move to decide the $11 Billion dollar fighter plane bid there is little reason for pushing the locomotive manufacturing project off track. If mismanagement of bids is the fear, then all the Cabinet and the railways godmother, Mamata Banerjee need to do is put some more safeguards in the process. So far the journey of the project from request for bids to announcement of qualified bidders has been fairly smooth. It's the last step that is now holding up the process.   The Sam Pitroda Committee on modernising railways is expected to push the issue in its report to be submitted soon. But this process for setting up these plants has been on for over two years. It does not need another report to endorse it. Can the PMO step in here and put the process back on track? While private investors are running out of patience, Indian highways are running out of space. Pranjal Sharma is a senior business writer