INDIAN RAILWAYS’ DEFT BALANCING ACT
Fixing the contradiction between future revenue growth and current affordability is a tough job
Railway Board issued a circular (CC-70/2022) increasing the composition of such trains from eight-nine AC coaches to 15, and reducing the number of non-AC passenger coaches from 11-12 to just five (with the remaining coaches being pantry cars or generator vans). Thus, even in these so-called ‘long distance, non-premium’ type trains, a bulk of passenger coaches are now for AC-class travel only. Remember, AC passengers are charged higher fares.
While the availability of second-class berths has increased in absolute terms between 2016 and 2022, due to more trains being added, that increase conceals wide disparities across different regions (see chart). The railways are divided into 16 regional zones. Just three of these account for about a third of second-class berths: southern zone (covering Tamil Nadu and Kerala), western zone (covering Gujarat and parts of northern Maharashtra, Rajasthan and Madhya Pradesh), and the northern zone (covering North India).
Four zones actually saw a decline in the number of second-class seats and berths between 2016 and 2022: central zone (covering a large part of Maharashtra), the north east frontier zone (covering north east India), and the east central and south east central zones (together covering east Madhya Pradesh, parts of Jharkhand and Bihar). Second-class passengers in the north east were particularly hard hit, with second-class berths available to them declining at a rate of over 6% per annum between the two years. At the other extreme, the western zone, covering the entire state of Gujarat, saw a huge bump in the availability of second-class berths, growing at almost 8% per annum.
FUTURE PLANS
In 2022, Indian Railways issued its National Rail Plan (NRP) for India2030, in an attempt to “create a future ready railway system by 2030”. The aim was to forecast both goods and passenger growth and demand, and hence aim to build out rail infrastructure—both lines and rolling stock—to meet that new demand in the decades to come.
To do this, the NRP split passengers into two broad categories: long distance AC (LDAC) and long-distance non-AC passengers (LDNA), with the latter including second-class passengers. The NRP
then computed average annual passenger growth rates in these two categories between 2008 and 2018. Between 2008 and 2018, the LDAC category of passengers grew at 9.1% per annum, while the LDNA category grew at a rate of just 1.4% per annum.
It then computed the ratio between each of these growth rates, and the overall population growth rate (at 1.1%). Assuming these ratios would hold in the future, it then applied the ratios to projected population growth rates in future years (up to 2041-51) and computed the increase in passengers in these two categories for each future year. Based on these passenger demand forecasts, the estimates for the future need for rolling stock was prepared.
While it’s quite likely that AC class passengers will likely grow at a faster rate than non-AC passengers, for no other reason than the low base, it’s unclear why the railways chose to use its
Revenue from AC classes is a large multiple of non-AC classes
AC classes existing passenger statistics for forecasting future demand.
By doing this, the railways effectively determines the outcome it is trying to estimate, since actual passenger numbers don’t take into account unmet demand, which often exceeds the actual supply of coaches, as indicated by the huge number of passengers who get on to a waitlist only to be disappointed.
Put another way, if the railways chose to make available second-class coaches at a much slower rate than AC coaches, it would show up in the final statistics as a slow growth in the number of secondclass passengers, relative to that of AC passengers.
It was precisely this disparity in growth rates that was built into the passenger forecast model used by the NRP. The NRP’s authors themselves acknowledge this, saying: “Reason for stagnation in the growth of the unreserved/non-AC category may be due to stagnation in supply.
Non-AC classes
Since the seats in the unreserved category are limited, a meagre growth witnessed in this category.”
In 2020, the Railway Board chairperson had told press persons that in the longer term, as part of its policy to increase the speed of trains, the railways was looking to phase out non-AC sleeper class altogether on trains running at higher speeds (130 kmph and above). This along with the introduction of newer classes of trains (like Vande Bharat), and the ‘premiumization’ of even ‘non-premium’ trains by increasing the share of AC coaches (thus implying higher revenue per train), are all aimed at a fixing the contradiction that the railways have faced for years, of resolving its social service obligations, with the need to be profitable. It remains to be seen whether these changes will resolve this contradiction, or only make it worse.
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