Transport infrastructure: A tough road ahead

What is the state of play in India’s transport infrastructure and services?
Where are we going? A snapshot of the sector and some contemporary issues

by Manoj Singh

Transport-infrastructure-june2016TRANSPORT is an important part of the infrastructure required for a country’s growth. It brings mobility to people and goods. Transport is intimately connected to the geography of a country as well as its demography. There are many ways of looking at transport: through various modes—road, rail, waterways and airways; through the areas it serves—intra-city and inter-city transport; rural transport; and depending on what is transported—goods and passenger transport. An extension of transport is logistics, which adds dimensions of connectivity, intermodality and integration of physical modes and the processes related to transport activity. Another way of looking at transport is from the perspective of infrastructure and services as two different parts of the overall transport provision.

First, let us talk of the bedrock over which the transport services are produced i.e. the infrastructure part. India has a road length of 4.7 million km, one of the highest in the world, of which surfaced roads are 2.5 million km (NTDPC 2014, p 49). The road network, like anywhere else in the world, is hierarchical with around 90,000 km of National Highways (NH) constituting only 1.5 per cent of the network, but carrying 40 per cent of the traffic. NHs are followed by State Highways and major district roads, aggregating around 1.2 million km (25 per cent of the network), and the last tier comprises the rural road network, which is 60 per cent of the total network. The balance 15 per cent or so of the network is formed by urban roads (9 per cent) and project roads (6 per cent).

The road network expansion has benefitted from structured investments, the two most important being the National Highway Development Programme (NHDP) and the Pradhan Mantri Grameen Sadak Yojana (PMGSY). The NHDP was aimed at strengthening and widening high-density corridors of National Highways and the PMGSY was designed to improve the accessibility of habitations in rural areas. Launched in 2000, the NHDP has contributed largely towards improving the capacity and road quality of the NHs. The length of NHs with two lanes increased from 25,395 km in 1996 to 41,518 km in 2012, and those with four lanes and above from 1,170 km to 17,774 km. The PMGSY was launched on December 25, 2000, with an aim to provide connectivity to rural habitations in phases. In the first phase, habitations with a minimum population of 1,000 in plains areas and 500 in tribal, hilly and desert areas were taken up. Till March 31, 2014, 81 per cent of villages in these two categories had been served. By all accounts, the PMGSY programme has been a big success in improving connections to markets, educational institutions and healthcare centres. While NHs and rural roads have received special attention of planners, State Highways and major district roads have been largely left to the individual states for improvement.

By all accounts, the PMGSY programme has been a big success in improving connections to markets, educational institutions and healthcare centres. While NHs and rural roads have received special attention of planners, State Highways and major district roads have been largely left to the individual states for their improvement

Investment in the NHDP has improved the quality of NHs, leading to improvement in journey time, but still nearly 25 per cent of the NHs are single-lane. Since the NHs are not access-controlled, speeds are much below international norms and safety is also endangered. The NHs pass through busy city centres. The solution to that would be access-controlled expressways and NHDP phase 7 does have sanction for developing 1,000 km of expressways at a cost of Rs. 17,000 crore (2006 prices). However, rising cost of land acquisition and physical difficulty in acquiring land is likely to set this programme back.

ON the rail side, the total network length is around 64,600 route kilometres. Railways have had the difficulty of multiple gauges, which is being tackled through the unigauge programme. Nearly 100 per cent of the freight traffic and 98 per cent of the passenger traffic is carried by the broad gauge (BG). Ten per cent of the system is metre gauge, which is getting progressively converted to BG, and 3.6 per cent is narrow gauge catering mainly to hilly and heritage railways. Network expansion of the railways has been at a slow pace although capacity expansion through gauge conversion and doubling/tripling/quadrupling has been faster, though not to the desired level of the capacity required. In fact, lack of capacity of the rail network in stretches where it is badly required has been universally agreed as one of the most critical problems facing the rail sector and, indeed, the transport sector. Historically, the fastest expan-sion of railways took place from its inception in 1853 till 1900 when the total route kilometres increased to 39,835 km. The rate of growth declined during the next 50 years, reaching 53.596 km in 1950-51. In the next 60 years, since the beginning of the Plan era, the route length increased to 64,600 km (NTDPC 2014, pp. 42). Today, there is a great demand for increasing the reach of the rail network to the unaccessed parts of the country as well as to increasing capacity of the railway system through modernisation, speed upgradation and safety enhancement.

ON the aviation side, there has been an explosive growth in civil aviation sector in the last decade which has resulted in the India becoming the world’s ninth largest aviation market. The number of operational airports has increased from 50 in 2000 to 84 in 2012. The Private sector has invested in a big way with the modernisation of Delhi and Mumbai airports and development of greenfield airports at Hyderabad and Bengaluru. This has led to a step up, both in capacity as well as quality of infrastructure, in the airport sector. The State-owned operator, the Airports Authority of India (AAI), has played a key role in modernising airports at Kolkata and Chennai
as well as extending the reach to many small parts of the country through its network of airports in all the state capitals and vital tourist, commercial and administrative centres. Airports at some locations are enclaves in the facilities owned by the Indian Air Force.

Ninty-eight per cent of the energy needs of transportation are met through petroleum products, and nearly half of the total consumption of petroleum products in India occurs on account of transport activities. Energy security and low carbon growth model considerations therefore demand a shift to rail and water based transport modes

The water-based transportation system comprises ports and inland waterways. While ports are the main gateways for international trade, catering to 95 per cent of India’s external trade, inland waterways have a good, but hitherto untapped, potential for cargo as well as passenger movement. There are 13 major ports and 200 non-major ports along the coastline and islands. Since 1950-51, when there were six major ports, seven more have been added and numerous non-major ports have been developed, mainly by Gujarat followed by Andhra Pradesh, Goa and Maharashtra. Over the years, capacity in the port sector in India has been increasing, especially with capacity addition in the non-major sector increasing at a faster rate. In 1984-85, capacity utilisation in the major port sector was 81 per cent, which increased to 95 per cent in 1990-91 (NTDPC 2014), indicating that during this period cargo growth was higher as compared to the growth in capacity. Capacity utilisation remained high during the 1990s but came down to about 80 per cent in 2011-12 and, more recently, to 70 per cent in 2013-14 as a result of the commissioning of various capacity addition projects in the recent past.

In the case of inland waterways, India has 14,500 km of navigable waterways, including rivers, backwaters and canals, of which 5,200 km of rivers and 485 km of canals are suitable for mechanised transportation. Inland Water Transport (IWT) has received focused attention since the creation of the Inland Waterways Authority of India (IWAI) in 1986. There are five National Waterways— NW1, River Ganga (1,620 km); NW2, River Brahmaputra (891 km); NW3, West Coast Canal (205 km); NW4, Kakinada to Puducherry Canal System along with rivers Godavari and Krishna; and NW 5, the Brahmani and Mahanadi delta along with the East Coast Canal (623 km). The Barak river is likely to be declared the sixth NW. More cargo is carried by Goa and Mumbai waterways than the NWs, the former’s contribution being around 68 per cent in 2011-12. Overall the IWT system carries a minuscule 1.5 per cent of the total traffic.

train-coach-june16Urban transport is another important aspect of the sector. According to the 2011 census, 32 per cent of India’s population is urban, which although lower than its international peers (China is 45 per cent, Mexico is 78 per cent and Brazil is 87 per cent), is sufficiently large to require a well-functioning public transport system. There are 53 million-plus cities included in the 468 class I (lakh plus) urban agglomeration/cities, which have 70 per cent of the urban population. In terms of urban infrastructure, the urban road length has increased from 46,361 km in 1961 to 411,840 km in 2011; the Mumbai suburban rail system has benefited from the World Bank-funded Mumbai Rail Vikas Corporation through additional track capacity; many cities have invested in Bus Rapid Transport infrastructure and rail-based metro systems have come up in Delhi, Mumbai, Bengaluru and are being extended in these cities and many more cities are in the course of constructing or planning a metro. Suburban railway systems have not proliferated much beyond the cities where they originally had a presence—Mumbai, Delhi, Kolkata and Chennai—although it is considered to be a much cheaper alternative to the metro.

railway-platform-june16LET us look at the trend in the traffic for which the infrastructure is built. Road and rail dominate India’s transport usage, contributing to 87 per cent of the transport output. It is useful to look at the passenger and freight transport separately and even intercity and intra-city differentiation is useful. Rail dominates the long-distance bulk cargo market (coal, ores, cement, aggregates and so) over which it has a cost advantage. Many commodities, such as fruits and vegetables, FMCG and white goods and automobiles, even over long distances are carried almost exclusively by road. Indian Railways have recently entered the billion tonne club whose railways carry more than 1 billion tonne of originating traffic, a rather exclusive collection of four countries (US, China, Russia being the other three) and are expected to carry 1,105 million tonnes of originating traffic and 688 billion ntkm (net tonne kilometre). But freight carried by railways is only around 30 per cent of total traffic. This share is steadily declining while the freight carried by road is increasing to around 65 per cent. The balance is being contributed by coastal shipping (domestic cargo moved between Indian ports) and IWT.

There is unanimity amongst experts that modal rebalancing or shifting of existing distribution of freight in favour of rail and waterways is one of the big public policy challenges in view of the energy and environmental sustainability of these modes. In this context, it is generally pointed out that comparable countries, US and China, have not only a larger share of rail at around 50 per cent, they also have a significant contribution of water-borne transport of around 15 per cent. While talking of freight, ports account for 95 per cent of exim cargo by volume. In terms of capacity, this sector is the least stressed with capacity utilisation almost nearing international norms. In 2013-14, 973 mt (million tonnes) was handled at Indian ports, of which 555 mt was at major ports and 417 mt at non-major ports. The long-term trend, from 1990-91 to 2011-12, is that the overall port traffic increased at a CAGR of 8.6 per cent, but the traffic at non-major ports increased by 18 per cent and that at major ports by 6.4 per cent. It is expected that in the near future the non-major ports will equalise and even overtake the major ports in cargo handling.

Airports cater to only 5 per cent freight traffic by volume, but nearly 30 per cent by value. In 2011-12, Indian airports had a cargo throughput of 2.28 million tonnes. The ‘open skies’ policy for air cargo started in the early 1990s, under which Indian and foreign carriers were allowed to operate scheduled and non-scheduled cargo services to/from any airport in India. This helped air cargo traffic increase from 0.9 mt at a CAGR of 9.2 per cent.

PASSENGER transport has dynamics different from freight. In a country as large as India, which is not only urbanising fast but also has a high degree of internal migration, there is an increasing need for fast and safe intercity mobility. Air transport is increasingly filling this gap although rail transport remains the choice of not only the lower income but even the middle and upper middle class travellers. The scale of rail and air passenger traffic in India is not comparable yet, with Railways carrying 25 million passengers per day as compared to around 0.5 million by airlines. In 2013-14, Indian Railways carried nearly 9 billion passengers whereas the Indian airports handled 170 million passengers, 47 million international and 123 million domestic. In the case of Railways, one less known aspect is that nearly 50 per cent of the traffic is the suburban passengers carried in the likes of the Mumbai suburban system. The second important point is that in 2013-14, rail passenger traffic showed a slight decline. In comparison, the air traffic grew at 6 per cent in 2013-14 and in recent months the domestic air traffic has increased in double digits (16 per cent in November 2014 against the same month of the previous year). Between 2001-02 and 2011-11, the domestic air traffic increased at a CAGR of 14.3 per cent and the international segment at 10.2 per cent. During the same period, the numbers of air operators increased from 5 to 13 and the fleet size from 132 to 340 aircrafts (NTDPC 2014).

There has been an explosive growth in the civil aviation sector in the last decade which has resulted in India becoming the world’s ninth largest aviation market. The number of operational airports has increased from 50 in 2000 to 84 in 2012

Rail passenger demand suffers from supply side constraints with most popular trains not able to meet the demand in full. During peak seasons, especially involving travel of the migrant labour during the Chhat festival from North India to Bihar, the demand goes up by 4 or 5 times the normal traffic. Apart from capacity, intercity rail travel also needs higher average speeds since people are moving over longer distances—the job market in fast growing cities such as Delhi and Bengaluru being served by people from as far as the North-East—besides travelling for education and health facilities. A proper strategy for enhancement of speed through semi-high speed routes i.e. upgradation of maximum speeds up to 160 kmph or high speed on
dedicated track is needed.

Road transport, however, remains the dominant mode of inter-urban travel with its share being nearly 90 per cent in BTKM (billion tonne kilometres) terms as compared to 10 per cent share for Railways. Buses and private vehicles, including cars, are a popular choice especially in the relatively shorter distance band up to 300 km. Increasingly long distances, such as Bengaluru to Mumbai or Bengaluru to Hyderabad trips, are being undertaken by buses. This trend is gaining momentum due to lack of capacity in rail and introduction of superior services in buses such as online booking. For example, offers 67,000 routes and 1,800 bus operators. While the growth of buses is a positive development, especially when viewed in the context of increasing use of private vehicles, planners also lament the increasing share of road vis-à-vis rail in passenger traffic, which was around 10 per cent in 2011-12 as compared to 90 per cent by road, given the ready market for rail-based transport in India.

airindia-aeroplane-june16URBAN transport is an area where the supply deficit is the most. This has led to increasing dependence on private vehicles for intra-city travel. Since 1991, the total number of registered motor vehicles has gone up from 21.4 million to 141.8 million in 2011, a more than six-fold increase (NTDPC 2014, pp. 57). Of this, the growth in two-wheeler private transport has been particularly high, having gone up from 14.2 million to 101.8 million, a rise of more than 13 times. During the last decade, the annual growth rate of the motor vehicle population in India has been around 10 per cent. However, the share of buses has declined to 1.1 per cent of all registered vehicles in 2011 from 11.1 per cent in 1951. This decline has been more severe in the last decade. For example, the number of cars in Delhi increased at an annual rate of 9 per cent whereas the number of buses grew at only 1 per cent during 2000-09 (NTDPC 2014, pp. 58). The result of this growth, while quite in line with other developing countries and having a positive impact on the manufacturing sector in the country, has had a baneful influence on the environment, safety and energy use in cities, especially the metropolitan cities. Delhi’s air quality is amongst the worst of all cities in the world according to recent media reports and, in 2011, many Indian cities featured in the World Health Organisation’s (WHO) list of the world’s 100 most polluted cities. Pollution in cities is a complex affair and fuelled by multiple sources such as vehicle exhaust, road dust, industrial fumes, construction dust and so on. A recent study of six cities—Delhi, Kanpur, Bengaluru, Pune, Chennai and Mumbai—shows that the transport sector is responsible for a majority of NOx and 30-35 per cent of the particulate matter (PM) emissions in these cities (NTDPC 2014, pp. 313).

cagr-june16THIS indicates the social burden of transport and its negative externalities. At an aggregate level, the transport sector in India is the second-largest contributor to CO2 emissions and, in 2007, generated 142 MtCO2 equivalents. Within the transport sector, road contributes 87 per cent of the total CO2 emissions, aviation 7 per cent and rail 5 per cent. In the business-as-usual scenario, a CO2 emission from transport is expected to go up to 900 million in 2030. From the energy consumption point of view, the transport sector accounts for 18 per cent of the total energy needs of transportation in the country. Ninty-eight per cent of the energy needs of transportation are met through petroleum products, and nearly half of the total consumption of petroleum products in India occurs on account of transport activities. The other 2 per cent of energy consumption in transport comes from electricity and gas. Energy security and low carbon growth model considerations therefore demand a shift to rail and water-based transport modes.

Urban transport is an area where the supply deficit is the most. This has led to increasing dependence on private vehicles for intra-city travel. Since 1991, the total number of registered motor vehicles has gone up from 21.4 million to 141.8 million in 2011, a more than six-fold increase

If modal rebalancing has to take place as a desirable goal of the transport policy in years to come, the National Transport Development Policy Committee (NTDPC), which has provided 20-year perspective planning for the period 2012-32, has given an ambitious plan for rail freight share to be 50 per cent by 2031-32, with the respective rail and road shares moving in the following trajectory: 35:65 in the 12th Plan, 39:61 in the 13th, 45:55 in the 14th and 50:50 in the 15th Plan. For this to happen, rail freight growth has to be 11 to 12 per cent per annum and road freight growth 7 to 8 per cent per annum. The enormity of this task can be appreciated from the fact that long-term growth of rail freight in the past has been 4 per cent per annum. At the current rate, the rail share would be reduced to 25 per cent by 2020. One of the principal reasons for this, according to NTDPC, is the underinvestment in railways. This is borne out by recent experience. The annual investment in Railways in India in the recent past has been about $8 billion per annum, which pales into comparison when compared to China which invested nearly $100 billion per annum for the past decade or so. The 12th Five Year Plan had a target of 5.19 lakh crore for rail investment. But, at the current trend, it is not likely to be more than half this amount unless there is a major change from the first three years of the Plan. Apart from under-investment, another reason for low rate of growth of rail freight is the low growth in the segments which provide the rail freight, that is, coal, steel, iron ore, and so on. The strong cross-subsidisation of passenger charges by freight is another reason, but it may also be that if rail freight charges are reduced whether there would be the carrying capacity to cater to the additional demand. For this reason, the line of argument of the
NTDPC that there needs to be a multi-year investment plan fully supported by a credible funding plan is a very sound suggestion which should be incorporated in the government agenda for the transport sector. The positive aspect about investment in the rail sector is that there is a great capacity to absorb the funding, a point which has been proven by the acceleration of Railway projects in the North-East.

It is known that Railways have a huge shelf of on-going projects of new lines (excluding the two dedicated freight corridor projects), gauge conversion and doubling numbering around 370, which require Rs. 180,000 crore for completion. Such a large shelf was definitely a result of the politically directed choice of projects, but it must also be said that there is a strong demand for rail connectivity from the people at large which gets manifested in articulation for these projects through elected representatives.

traffic-jam-delhi-june2016Under such a scenario and in the face of funding constraints, prioritisation of projects is a good way forward. As a result of such a comprehensive exercise undertaken for North-East infrastructure by the Planning Commission in July 2013, and followed up in January 2014 by a conference of the Chief Ministers of the North-East states convened by the then PM, there has been a step up in funding of the ongoing national projects in the North-East which has led to marked increase in their progress. Small but politically significant projects, such as bringing the states of Arunachal Pradesh and Meghalaya on the rail map, have been accomplished in April 2014 and August 2014, respectively. In 2014-15, Rs. 5,700 crore has been allocated to projects in the North-East and commissioning of 460 km is expected to take place, a step up of 60 per cent and 50 per cent, respectively, over 2013-14 levels. Apart from focused funding, a large share of the credit would go to the leadership and team of professionals who were involved in execution of the projects as well as the support of the State governments in settling land acquisition, environmental clearances and law and order machinery. Such successful implementation provides a template for projects in not only rail but other transport sectors as well.

THE current focus is on execution of ongoing projects. In the road sector, for the period April to October 2014, 3,419 km of roads were awarded and 1,984 km constructed, as against 907 km awarded and 787 km constructed during April to September 2013. The major issue in the road sector is the lack of response from the private sector to the BOT projects. Ten BOT (Toll) projects put up for bidding in the first 6 months have not found any response. The lack of investor response is mainly on account of banks having reached lending limits in their exposure to the infrastructure sector. Due to the institutionalised mechanism of the NHDP programme and executing agency in the form of NHAI, the road sector is able to plan a change in the implementation plan from BOT to funding based on NHAI borrowing and budgetary support. However, due to resource limitations, revival of the PPP programme would still be an important part of the government’s efforts. Attracting long-term financing, such as pension funds and sovereign funds, into India’s infrastructure sector would be an important policy imperative. The recent opening up of the FDI and domestic investment in Indian Railways is a timely decision in this regard. While the NTDPC has recommended a funding pattern for the transport sector up to 2031-32, which goes up to 3.3 per cent of GDP in the 12th Plan and further stabilising at 3.7 per cent of the GDP in the subsequent plans (NTDPC 2014, pp. 124), the real challenge would be in realising this level of investment.

The demand for transport will continue to grow; the real challenge is to meet the supply in a way which is sustainable and cost-effective for the users. The past trend shows that the direction of growth needs to be more balanced than has been till now, with a greater emphasis on rail and water-based transport modes. Urban transport also requires focused attention. The institutional challenges are the maximum in urban transport, but finding the level of investment that is required is also not easy. Capacity in executing the projects and running operations is also vital in providing a modern, efficient and safe transport infrastructure and services.

VOL. 10, ISSUE 3 | JUNE, 2016

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