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The article provides a detailed analysis on the growth of Indian railway from prior to Independence to modern times, the effects of reforms and the future prospects for the railways.

Indian Railways

Prior To Independence
The first proposal for a rail system was initiated in 1832 in Madras, but due to financial constraint it never saw the daylight. The East India Company then decided to assist private entrepreneurs who wished to establish a railway system in India, even if it was not commercially feasible. In 1845, two companies the East Indian Railway Company operating from Calcutta and the Great Indian Peninsular Railway (GIPR) operating from Bombay were formed. The first train to be commissioned to service was on December 22, 1851 for hauling of construction material in Rourkee. But the first passenger train started operations on April 16, 1853 between Bori Bunder, Bombay and Thana covering a distance of 34 km. It marked the beginning of railways in India. The British government then inspired private entrepreneurs to set up rail link under a plan that would provide them with an assured return of 5% during the initial years of operation. But once the rail link was completed, the ownership would pass on to the government, though the concerned company could operate the rail link.

In 1901 the British constituted the Railway Board. It worked under the department of Commerce and Industry. For the first time after the railway board was constituted the railway started making profit. By 1907 all the railway company was taken over by the Government. By 1920 the network of Indian railway had increased to 61,220 km. Realizing a need for a central management, the government took over the functioning of the railways and detached the finances of the railways from other governmental revenues. Between1920 to 1929 the railways witnessed enormous growth, but were severely crippled afterwards by the great depression and Second World War. By 1946 all rail links were taken over by the government.

After Independence
In the initial years after Independence, India faced a huge challenge in terms of rail network. It received a dilapidated rail network. Around 40 per cent of the rail link went to Pakistan, a large no of rail lines had to be rerouted through Indian territory. A majority of the rail line available today were laid by the British. Insufficient investment and inefficient management and maintenance have greatly restricted growth in route length. The former Indian princely states had a total of forty two separate railway systems, including thirty two lines amounting to 55,000 km. They were brought under the purview of the Indian Railways.

In 1951 the government mooted the idea of forming zones and a total of six zones were initiated. As the Indian economy developed, railway production took place within the country. By 1985 steam locomotives were phased out. In 1987, computerisation of reservation was carried out starting with Bombay.

Railways Post Reforms
Post reforms in the 1990's the progress of the railways was not satisfactory. The Rakesh Mohan Committee report suggested that the railways needed a complete overhaul if any progress had to be made. Since it was not that easy from a political point of view, it was not given due importance by the inner circle in the railways. But with the appointment of Mr. Lalu Prasad in 2004 as railway minister, things changed dramatically. In the next five years the minister and his team worked out a strategy to bring about a complete turnaround in the working of the railway.

The turnaround was possible due to
  • Higher freight volumes.
  • Increased occupancy in passenger trains.
  • Monitor costs and reduce tariffs.
The railways have managed to improve their market share and operating margins. The government has been credited with pursuing inclusive reforms, without comprising on the social obligation. The railways have been applauded for improved customer service and for reducing passenger fares.

Some of the salient features of the reform are:
  • A well planned strategy to build around capacity generation through optimization of the existing infrastructure and assets.
  • Adopting a different approach to the social and commercial segment of the traffic.
  • Increasing the passenger carrying capacity of important trains. Improved operational efficiency meant the unit cost of operation reduced.
  • Dynamic and market driven tariff policy linked to seasonality and price elasticity of demand.
  • The policy of overhaul increase in freight rates has been replaced by a system of differential tariff based on market conditions.
  • Tremendous growth in traffic volumes, revenues and surpluses has proven the fact that the process of globalization has brought positive results for everyone concerned.
Growth In The Future
  • The railways have devised a planned strategy to remove bottlenecks and increase capacity to meet the demand. The key areas of focus would be up gradation of infrastructure, modernization of wagons technology, advanced signaling and telecommunication, induction of high horse power locomotives, grade separation and usage of information technology to decrease transit times and reduce unit operational cost. The railways also propose to construct state of the art passenger and freight terminals bench.
  • Over the next 5 to 10 year the government plans to give utmost priority to low cost, rapid pay back and high return investments with the view of speeding up works on doubling railway line, port connectivity, gauge conversion, signaling and telecom, renewal of assets and modernization of passenger terminals.
  • The government has initiated private investments in major stations to create world class passenger amenities and services.
  • There is an increase in demand for coaches. The government has proposed to meet the increase in demand partly through increase in the capacity in the existing production units and partly by setting up a new manufacturing unit through a joint venture under Public Private Partnership (PPP).
  • The railways are also planning to build a super specialty hospital in Patna. If successful, the concept would be extended to other parts of the country.

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