The myth-making propensity of a self-contained, insular entity is immense and the insularity of the Indian Railways has given birth to various myths. Lack of knowledge about a huge organisation creates imaginary concoctions about its strength, potential and achievements. Indian Railways, projected as a huge organisation under a single management, has generated different myths in the Indian psyche since Independence.

It is our endeavour to examine two such myths that are firmly implanted in our minds.

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Myth -1 

Passenger services are cross-subsidised by freight services

The cross-subsidisation of passenger services in Indian Railways (IR) is much talked about but this has crossed the realm of fact and has entered the domain of myth.

Indian Railways use certain infrastructure for both goods and passenger services, for example the same track is used for both goods and passenger services. Track represents the line with its substructure as well as the superstructure like signalling, traction distribution system and train passing installations. While these assets are shared, certain assets are of dedicated nature and some are service specific.
Coaches are used for passenger, parcel and catering services and wagons for goods service. In 2014-15, IR had 61,538 passenger carrying coaches and 2,54,006 wagons and the difference is worth noting.

While many costs are identified clearly for a specific service, common costs are apportioned among different services based on surveys, feedback from field units and data analysis. Certain element of subjectivity and prejudice influences the cost distribution exercise. Keeping such prejudices against coaching services in mind, the cost incurred per passenger km at Rs.36.88 is eminently comparable to the cost incurred per wagon km at Rs.35.30 (as in 2014-15).

Earnings are, however, identified and posted against specific service without any difficulty. In 2014–15, railways earned Rs. 42,189 crore from passenger services. Freight charges realised in 2014-15 added up to Rs.1,03,110 crore. Compared to their relative rolling stock strength, the passenger earnings have shown an edge over freight earnings per eight wheeler vehicle/wagon.

Operation of coaching trains and goods trains is however not exactly the same. Passenger carrying trains usually run to a timetable and carry passengers in both directions. But in Indian Railways, goods trains carry goods in one direction and run empty wagons in the return direction. This fact is often forgotten when cross-subsidy is talked about.  Almost half of the wagon kilometres are not productive. Therefore, in a round trip, the goods transported from one point to another have to bear the cost not only for the loaded journey but also for the return journey with empty wagons.

As there is no contract with the consignor or consignee with regard to the movement of wagons in the reverse direction with no traffic, cost of this journey is recovered from them indirectly. The freight rate is fixed taking into account the average cost of all loaded and empty journeys. Because of this, the consignor-consignee has to bear the burden of higher freight rate. This high freight rate has no relation with cross-subsidisation. This is in sharp contrast with the practice followed by road haulers or ocean liners, or airlines.

The myth of cross-subsidisation of passenger services has been exaggerated out of proportion to hide the real cause of high freight rates. The inability of the railway bureaucracy to find traffic for the return direction has perpetuated this myth and put undue pressure on passenger traffic.

Myth – 2

The most popular myth has become a cliché by overuse: the Indian Railway is the lifeline of the country.
During the first two decades after independence, the nationalised railway system of India emerged as the principal motorised mode of transport in the country. In the absence of any other network, railways provided extensive connectivity for the movement of people, goods and military. The railways carried about 80-85 per cent of the total passenger and goods traffic of the country and therefore truly earned the epithet ‘lifeline of the nation’.

Railways’ share in total traffic reduced slowly with the development of roadways and road transport.
They were also following the policy of limited discrimination against private trade and business in the non-core sector under the cover of the Preferential Traffic Schedule. The roadways progressively occupied the market space.

In 1974 came the countrywide railway strike, historic in many ways. Snapping of the lifeline shook the government of the day. More investment for development of roadways followed.

The development of National Highways started at a fast pace from 1995. By 2016, a large network of national highways of 100,087 km had been created, of which 26,200 km are 4-lane or 6 lane. State highways and Major District Road networks are about five times longer than this. As against such massive development of highways, major arterials and their connectors, the railway network is only of 66,000 route km.

Since the 1980s, railways were very consistently following the policy of carrying rake-load traffic from a single source to a single delivery point. This meant that the minimum parcel size would be around 3,500 tonnes with some variations.  Incentives and coercion in different forms were used to court bulk traffic offers and drive away the ‘piecemeal’ traffic. The earnestness of railway bureaucracy in achieving this goal was rewarded by the market by reducing their share to less than 30 per cent by 2007.

Since then, the physical growth of freight and passenger has been insignificant – at times negative. Between 2010-11 and 2015-16, the traffic output increased by only about 5.6 per cent and 16 per cent respectively.  The share of railways in total freight traffic has presumably gone below 25 per cent, belying the rosy  hopes raised by  the Vision 2020 Statement and the National Transport Report 2012 by the Rakesh Mohan Committee.

Still, Railway Ministers without exception refer to the railways as the lifeline of the nation in their speeches. Use of this epithet for Indian Railways should now stop. As Mr. Suresh Prabhu will not present a Railway Budget to the Parliament this year, he has spared himself the embarrassment of using a lesser epithet.  Let us see if Mr. Arun Jaitley, the Finance Minister, calls a spade a spade to justify higher investment proposals for Highways and passes on the prize epithet to the deserving mode.

Or will he make a serious bid to resurrect the railways?

The writer is a retired AGM of South Eastern Railway.