The chronic under-investment in Indian Railways has not only impacted its operation but also created hurdles in speedy creation of infrastructure. Examine the challenges and steps taken by the government in this regard.

Indian Railways is a lifeline of the nation. It provides affordable transport to poor passengers and carries 40% of freight traffic.

Challenges in infrastructure creation:

  • Lack of budgetary Support – Government is facing fiscal deficit constraints. Railways is thus suffering from shortage of funds.
  • Low profitability – operating ratio is 96% which means that the Railways loses 96 paisa for every rupee earned, due to operating expenses.
  • It cannot self finance infrastructure building.
  • Hurdles to land acquisition – Due to environmental activism and fear of displacement, e.g. Mumbai-Ahmedabad high speed rail is facing delays due to these reasons.
  • Delayed approval of infrastructure projects.
  • During to social welfare role of Railways, scope for private investment is limited.

Steps taken by the government:

  1. Monetization of railway assets like vacant land, to raise funds.
  2. National Infrastructure Pipeline will mobilize investments of Rs. 111 lakh crore (2019-2024).
  3. Railways will get a significant chunk of this.
  4. Disinvestment of non profitable railway PSUs, e.g. IRCON, Railtel. It will augment funding for infrastructure creation.
  5. Eastern and western dedicated freight corridors are being funded partly by for Japan and multilateral development banks like World Bank.
  6. Reforms to make Railways more profitable
  • Restructuring Railway Board into functional areas, e.g. finance, operations and Human Resource.
  • This enables efficient functioning.
  1. Allowing private train operators on selected routes, with Railways receiving a fee.

A well developed Railway network is crucial for economic growth. The steps taken by the Government of India in this regard are praiseworthy.


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