World Bank Document - Mumbai Railway Vikas Corporation Ltd ...

Indian Railways’ Development Strategy
90. Indian Railways, with 63,221 route-km of network and 1.42 million employees, is one of
the largest rail networks of the world. It constitutes the lifeline and the mainstay of the country’s
transport infrastructure. Over the last few years, IR has achieved a dramatic re-invention of its
business and is presently witnessing one of the most impressive and unprecedented expansions in
its history. During the last few years the freight traffic on IR has been growing at 9.4 percent and
passenger traffic at 7.4 percent, and revenue has grown even faster. This is in sharp contrast to
the historical trend rates of growth at 3-4 percent per year. In the passenger segment, while
affordability continues to underpin the pricing for second-class passengers, there has been
reduction in fares for passengers in air-conditioned class and those traveling short distance.
These measures have redefined the transport scene in the country and transformed the railways
as a competitive and viable alternative to road transport. By 2012, IR is projected to handle 25
percent more passengers than handled in 2008.
91. During the past five years, IR has achieved commendable results by substantially
increasing the volume of traffic carried and its profits. However, it now faces several new
challenges. The recent increase in the wage bill, accompanied by a downturn in economic growth
in 2009, have already affected IR’s bottom line adversely. In addition, the planned large
investment in Dedicated Freight Corridors (DFC) in the medium term will create excess capacity
in its start-up years that will reduce IR’s profits unless it develops marketing strategies to rapidly
attract new traffic to the existing corridors (mainly passengers), as well as to the new dedicated
freight corridors.
92. Going forward, the expected continued economic growth of India over the next 20 years
at eight percent or more will impose new challenges on IR in respect of capacity, transportation
and logistic products and service quality to be expected by rail customers in freight as well as
passenger services. It is foreseen that the customer’s profile will undergo a significant change, as
an average rail customer is expected to experience a four-to-five fold increase in income and at
the same time will demand more comfortable and faster travel. Customers will be willing to pay
higher fares for these improved services. These challenges can be addressed effectively by
implementing Vision 2020 for IR. An immediate next step would be to develop a credible
financing plan to effectively underpin IR’s developmental plans.
93. Another important step is to develop an action plan (road map) that lays out specific
strategies and measures to be implemented to overcome the present constraints and, more
importantly, to enable IR to satisfactorily support the growing economy by increasing capacity
and improving service quality. IR needs to prioritize actions and investments over the next ten
years and set out an implementation schedule. It will also attempt to identify funding sources for
the recommended investments.
Management of MMR
94. Responsibilities for the general direction of urban development and urban transport rest
with the State Government of Maharashtra (GOM) through the Mumbai Metropolitan Region
Development Authority (MMRDA), a regional developmental agency under the Department of
Urban Development. To enable the Mumbai Suburban Railway to meet the demands of the ever-
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