Railways: Choice and Competition II

Our stations need to be modernized, with better amenities for passengers, and this has to be done by the private sector. Which raises the question: How many stations are going to be viable commercially, with a sustainable revenue model?

I am supposed to write a column once a month. This deviation in frequency is because of the interest the earlier Railways column generated. If I wait, our Committee will already have submitted its report. So here goes, with the usual caveat. What I have to say—if it spills over from the factual to my own views—has nothing to do with what the Committee will necessarily recommend.

Most customers are concerned with better amenities; and customers can mean passengers, freight or parcel. Typically, most reactions come from passengers and one of the things passengers want is better stations. In this column, I will focus only on stations.

There are 8,495 railway stations and they aren’t homogeneous. Indian Railways (IR) divides stations into different categories and it is necessary to be familiar with this nomenclature. A1 represents non-suburban stations that have annual passenger earnings of Rs 60 crore or more. A represents non-suburban stations with annual passenger earnings of between Rs 8 and Rs 60 crore. B represents non-suburban stations with annual passenger earnings of between Rs 4 and Rs 8 crore, or stations that have tourist importance, or stations that are important junctions (some subjectivity in this).

C represents suburban stations. D represents non-suburban stations that have annual passenger earnings of between Rs 60 lakh and Rs 4 crore, while E represents non-suburban stations that have annual passenger earnings of less than Rs 60 lakh. F is the category of “halts”.

I will not burden you with details about the distribution of these stations across zones. Overall, 75 are A1, 332 are A, 302 are B, 483 are C, 983 are D, 4,158 are E and 2,162 are F. There is a difference between improving the A1 or A, and improving the F. Within A1, for a reason I will mention in a minute, there is a difference between improving CST Mumbai and Lokmanya Tilak, or improving New Delhi and Anand Vihar.

There is an impression that IR has plenty of land, such as a figure of almost 500,000 hectares. But not all of this is vacant. Some of this is used for tracks, yards, buildings, afforestation, commercial licensing and so on. I can argue that North Block occupies prime land. It can be relocated elsewhere and that prime land used for some commercial purpose. That’s a completely revolutionary way of looking at things and that argument can be bolstered and indeed applied to some of the land IR uses (hospitals say). But if one doesn’t follow that revolutionary mode, vacant land is actually around 50,000 hectares and there is an additional catch.

Some of this vacant land may not be in places where you want to develop the A1 or A type of stations. Having said this, there is a Railway Land Development Authority (RLDA), set up in 2006-07. Among other things, RLDA will modernize stations.

To use an airport metaphor, RLDA isn’t going to do the Delhi Terminal 3 (T3) kind of railway station. It’s more the T1 kind, incremental (While T3 is an entirely new terminal, the original domestic terminal in Delhi airport, T1, went through modernization, very extensive renovation—especially the interiors, and some reconstruction). These stations won’t be greenfield. At best, they will be brownfield. Around 50 stations will take that route. Leading in that development are stations like Gwalior, Bengaluru, Gaya, Sarai Rohilla and Vijayawada.

Fair enough. But how long is that going to take? When will we see better stations, even if they are of the T1 type? An amendment was inserted in the Railways Act in 2005-06, specifically, Section 11(da). This effectively states that if commercial development is intended, such as to develop a station, this amendment will override any other law. That is, you don’t need municipal clearances and states cannot invoke state-level laws.

But that’s the legal interpretation. In practice, you still need urban planning kind of clearances. If a state wants a modern station really badly, that can take one year. Otherwise, perhaps three years. From then, another four years. For those five stations I have named, say four years from now—the T1 kind of railway station.

Do realize that IR also has to improve tracks and platforms to enable this. Also do realize, part of station development is the idea of separating suburban from non-suburban passengers and diverting existing long-distance trains from stations like New Delhi to Sarai Rohilla. There is often local resistance to this, such as in Sealdah or Howrah, the two stations in Kolkata which serve long-distance routes. In the process, there are also issues like moving food stalls away from platforms to a waiting area, since they dirty platforms, no matter how careful you are about cleaning. And then, why should we allow non-passengers entry?

But there is better news, a bit like T3. Because there is also something called the Indian Railway Stations Development Corporation (IRSDC), a fallout of the 2011 report of the Expert Group for Modernisation of Indian Railways headed by Sam Pitroda. This was announced in the 2012-13 budget and set up in 2012, with equity from IRCON and RLDA.

Hence, there are two tracks to station development—RLDA and IRSDC. The IRSDC ones are virtually greenfield.

In 2009, IR developed a manual for developing railway stations. This is a two-volume report: Volume 1 is the substantive report, and Volume 2 has the annexes. If we can adhere to this manual, these stations will have every kind of amenity. (Don’t ask me for a copy of this report. I don’t think there is a soft version and my hard copy version of Volume1 runs to 260 pages).

The first such stations we will see are in Chandigarh, Habibganj, Shivaji Nagar, Bijwasan, Anand Vihar and Surat. I would guess that by 2018-19, at least one of these should be functional.

I hope I have not given the wrong impression. IR isn’t developing these stations. It doesn’t have the money. Whether it is of the T3 or T1 type, station development has to be revenue-neutral for IR and has to be commercially done by the private sector. Indeed, there has to be a surplus, so that IR has resources for operation and maintenance, and post-station development.

After having paid IR lease charges, how many of those 8,495 railway stations are going to be viable commercially, with a sustainable revenue model, especially when the private entity is borrowing at 10-per-cent-plus? I have mentioned six of the T3 type and five of the T1 type. I suspect we are talking about 20 modern stations and no more, everything else remaining the same.