Prime Minister
Narendra Modi was probably impressed enough by railway minister Suresh Prabhu’s performance to not move him in last week’s Cabinet reshuffle, but more than that, the railways are critical for both India’s GDP as well as its carbon future. Just how critical, was reinforced by former
RBI deputy governor Rakesh Mohan at a Brookings India seminar last fortnight—Mohan chaired a committee on India’s transport needs till 2032 and the seminar built upon the work it did over four years.
Just a few numbers on India’s transport needs highlight how critical it is to get the railways piece right. If India was to grow at 7% a year, freight transport demand will quadruple by the mid-2030s—if the rate goes up to 8-9%, demand could rise by a factor of six. For passenger traffic, we’re talking of a 15-fold rise—if you think India’s roads and trains are crowded today, think of what this will do. Mohan’s committee’s simulations showed energy demand rising by a factor of four over the next 20 years, steel by eight times … Though a lot of traffic has shifted to road over the past few decades, neither the current network nor what is planned can deal with such volumes. Till 15 years ago, both road and railway networks, Mohan points out, were growing at relatively similar rates, but prime minister Atal Bihari Vajpayee’s Golden Quadrilateral and then the rural roads programme put the roads network on a dramatically different trajectory. While the railways have made a recovery with the two dedicated freight corridors, what is needed is to complete the other corridors that Prabhu mentioned in his last budget speech—while a bullet train may be desirable, its costs have to be seen in comparison with what such corridors can achieve.
Not being able to do this implies a serious infrastructure constraint to further GDP growth since, to take the most obvious example, if coal does not move, there can be no electricity supply to power India’s industrial/services growth. In absolute terms, transport investment needs to rise seven-fold from the 11th Plan to the 15th Plan (2027-32), or from 2.6% of GDP right now to 3.7% in another few years and then be sustained at that level. Apart from the fact that a one percentage point step up is a big one, much of the investment will have to come from the public sector—in the original simulations, the private share was expected to rise to around 25-30% over a decade but the sad state of private infrastructure firm balance sheets shows this was way too optimistic. More than the money which is a big challenge, it is clear the present Railway Board-led governance structure cannot pull off this transformation. Apart from the criticality of building the railway network for GDP growth, India’s Paris goals depend upon increasing the railways’ share in local transport from 36% right now to 45% by 2030—the six freight corridors will lower India’s cumulative railway emissions from 1.26 billion tonnes between 2016-2046 to 0.29 billion tonnes, and to 0.09 billion in a low-carbon scenario. India can’t afford to slip up on widening its tracks.
