Indian Railways – Modernization and Persistent Challenges

Indian Railways – Modernization and Persistent Challenges

Indian Railways (IR), the world’s fourth-largest railway network, has expanded enormously in recent years – electrifying almost the entire broad-gauge system and breaking freight-loading records. Yet it still falls short of its potential due to deep‐rooted financial, technical and operational constraints. For example, IR’s operating ratio (expenses as percentage of traffic earnings) remains extremely high – about 98–99% in 2023–24 meaning the railways spends nearly ₹98.3 to earn ₹100. This leaves almost no surplus for investment: net revenue was only a few thousand crore rupees annually. High fixed costs (salaries, pensions), under-priced passenger fares (cross-subsidized by freight), and inadequate non-fare revenue all contribute to this strain. A recent parliamentary analysis noted IR’s chronic issues: “high operating costs due to salaries and pensions, losses from its passenger business, under-investment in capacity (from poor surplus generation and limited private participation), and network congestion with cross-subsidy for passenger services reducing its freight competitiveness”. In short, financial health is weak and constrains every other modernization effort.

Infrastructure and Technical Modernization

Electrification and Power

In recent years IR has aggressively electrified its network: by March 2025 about 98.8% of broad-gauge route-km (≈68,700 km) were electrified. This places IR on track to be the world’s largest “green” railway. Nonetheless, full electrification slipped its original targets due to delays in remote regions (e.g. Assam), with ~811 km still pending as of FY2024–25. The pace had exceeded 6,000 km/year before FY2024–25 but slowed recently. Still, electrification reduces fuel costs (saving over ₹15,000 crore annually) and meets IR’s goal of net-zero carbon emissions by 2030. Upgraded electrical systems and newer high-horsepower electric locomotives are being introduced, and Indian Railways has invested heavily to achieve “industrial electrification” (completing most routes and key freight corridors). By comparison, IR now has far more electric (≈10,238) than diesel (≈4,543) locomotives (Dec 2023).

Safety and Signaling Systems

Safety has improved markedly, but legacy systems still pose challenges. Consequential train accidents have plummeted – from 473 in 2000–01 to just 48 in 2022–23. Derailments likewise dropped from 350 to 36 in the same period. This dramatic decline reflects years of investment in technology and infrastructure: over the last decade IR spent more on safety (e.g. on track renewals, level-crossing upgrades, modern signaling) than ever before. For example, Rashtriya Rail Sanraksha Kosh (RRSK) – a ₹1 lakh crore safety fund launched in 2017–18 – has replaced and upgraded critical assets nationwide.

In tandem, IR has overhauled its signaling by early 2025, over 6,600 stations had electronic interlocking (centralized signal control), and more than 11,000 level crossings were upgraded. New systems like the indigenous Kavach (Automatic Train Protection) are being rolled out on major routes. As of late 2024, Kavach covered about 1,548 route‐km on South Central and North Central Railways, with plans underway for ~3,000 km more and 10,000 locomotives. Such systems automatically halt trains that pass signals at danger, significantly reducing human-error accidents. Nevertheless, these high-tech upgrades take time and money – full network-wide implementation of Kavach is still several years away.

Tracks, Stations and Rolling Stock

In track expansion, IR has made progress: it commissioned 31,180 km of new or upgraded track from 2014–24 (averaging ~14.5 km/day in 2023–24, up from just 4 km/day in 2014–15). Under the PM Gati Shakti program, IR identified dozens of high-traffic and freight corridors (including 192 projects for energy/mineral routes and 42 port-connectivity links) aimed at capacity enhancement. Over the last decade IR also ordered modern passenger trains (e.g. ~164 Vande Bharat EMUs are now in service) and fast diesel/electric engines. It is gradually phasing out old ICF coaches for modern LHB designs, and adding central power-supply (“Head-On Generation”) locos to cut fuel use.

Yet bottlenecks remain: many lines still operate single-tracked, and geometric constraints (curves, old bridges) limit speeds. IR’s national average train speed is low (often ≤ 50 kmph), far below global norms. The recent Vision 2030 plan envisages 160 kmph running on select corridors, but rolling out high-speed capable tracks (and procuring requisite rolling stock) is an enormous task. For example, the high-speed Mumbai–Ahmedabad “Bullet Train” project has faced repeated delays; though its budget was increased to ₹25,000 crore in 2024, the line is not yet operational.

Freight Operations and Modal Share

Freight has long been IR’s cash cow, but its modal share of India’s goods traffic has eroded as road transport boomed. In 1951 rail carried ~85% of freight, but by 2022 this had fallen to ≈27%. Improved capacity (notably the Dedicated Freight Corridors) is helping: freight loading hit an all-time high of 1,588 million tonnes in 2023–24 (up from 1,095 MT in 2014–15). In 2022–23 alone, IR moved 1,512 MT, a ~7% increase year-on-year. Even so, rail’s share of India’s freight “pie” is only rebounding slowly – from a nadir of 27% in 2022 to ~29% in late 2024 – with a government target of >35% by 2030.

Freight revenues (about 68–70% of IR’s traffic receipts) have grown solidly, but IR still loses cargo to trucking due to door-to-door convenience and faster transit. Key reasons include the legacy mixed-traffic network (passenger trains often get priority on shared lines), limited last-mile port and warehouse connections, and a relatively inflexible tariff structure. Experts note that inadequate container handling and multiple loading/unloading steps also deter shippers. The government is responding: two 1,340 km Dedicated Freight Corridors (Eastern and Western) are now over 96% complete. These segregate freight traffic, allowing double-stack containers and heavier loads at higher speeds. By early 2025, average trains on the DFCs jumped from ~247/day to ~352/day. (The new East–Coast and North–South corridors are in DPR stage.) Additionally, IR has streamlined tariff classifications and cut rates for short-haul wagons to recapture traffic.

Despite these gains, logistics costs in India remain relatively high, and IR faces stiff competition from subsidized trucks and a vast road network. Achieving its goal of tripling freight to 3,000 MT by 2030 will require not only more infrastructure (track-doubling, higher axle loads) but also institutional reforms to improve asset utilization and service predictability.

Operational and Systemic Constraints

Aside from infrastructure gaps, organizational factors limit IR’s performance. IR is a government department and its decision-making is centrally controlled by the Railway Board. Proposals to corporatize certain functions or establish an independent regulator have been debated, but not fully realized. The 2024 Railways Amendment Bill (which merged the 1905 Railway Board Act into the 1989 Act) retained the existing structure. Critics point out that zonal railways have limited autonomy over budgets, investments and staffing.

Staffing and costs: IR employs over 1.2 million people, making it one of India’s largest employers. Labor costs (wages, pensions) consume a huge share of revenue – IR estimates over 60% of revenue expenditure. These fixed charges cannot easily be reduced and make it hard to free up funds for new projects. Moreover, unstaffed or “de-reserved” passenger segments (e.g. general and suburban trains) often run at a loss, yet are socially mandated. The vast network also means high maintenance overhead: tracks, bridges, tunnels and rolling stock across India require constant upkeep, further straining resources.

Congestion and Priority: The mixed passenger–freight system leads to inherent conflicts. With billions of passengers carried annually, IR frequently schedules slower or more frequent passenger trains (and caters to political demands for connectivity) at the expense of freight slots. This limits the average speed and punctuality of goods trains. Urban corridors (e.g. Delhi–Mumbai, Delhi–Howrah) are especially congested, which is why a ₹4.2 lakh crore plan has been announced for multi-tracking seven key routes. Until such measures complete, freight trains must often slow or wait on shared lines.

Institutional Rigidity: IR’s monopoly position means it cannot easily innovate like private-sector peers. Tariff changes or new services (e.g. container trains, private rakes) require lengthy bureaucratic clearance. Recently, reforms have aimed to loosen this: IR now permits private train operators and public–private partnerships (e.g. 151 passenger trains were opened to bids in 2023). Plans are underway for station redevelopment (1,309 stations by 2030) and private operation of terminals and rakes. However, these changes are early-stage and face implementation hurdles, such as coordinating with state governments and matching private investment to national standards.

Modernization Plans and Projects

The current government has launched a slew of initiatives under the vision of a “future-ready” railway. Key projects include:

• Capital Investment: The Budget has consistently raised capex: a record ₹2.62 lakh crore was allocated for 2024–25. This influx is financing new lines, track upgrades, and rolling stock. Notably, IR set all-time highs in freight (1,588 MT) and earnings (₹2.56 lakh crore) in 2023–24 thanks to this spending.

• Dedicated Freight Corridors (DFC): EDFC and WDFC together span 2,843 km; over 96% is commissioned and operational. These allow nonstop long-haul freight at higher speeds and axle loads. New DFCs on the east and north–south are being planned via DPRs.

• Regional Rapid Transit (RRTS): High-speed suburban corridors like Delhi–Meerut (NEC project) are under construction. Once completed, RRTS trains will run at up to 180 km/h, decongesting commuter traffic.

• High-Speed Rail (Bullet Trains): The Mumbai–Ahmedabad corridor has cleared land acquisition and built a test track, with central funding (upgraded to ₹25,000 crore). If on schedule, it could enter service mid-decade, cutting travel time between Mumbai and A’bad to ~3 hours.

• Vande Bharat and Trains: Indigenous semi-high-speed trains (Vande Bharat) are being rolled out rapidly (over 80 units in service as of early 2024). The government envisions 4,500 such trains by 2047. New conventional sets (“Amrit Bharat”) are also being built (50 in FY2024–25, out of 1,000 planned) with better amenities.

• Station Redevelopment: The Amrit Bharat scheme targets modernization of 1,309 stations by 2030 (cleanliness, lifts/escalators, waiting halls, Wi-Fi, etc.). Some stations have been redeveloped as world-class hubs via PPP (e.g. Gandhinagar, Habibganj).

• Track and Signaling Upgrades: IR plans to add 3,000 new trains over five years and double or triple-track 7 high-density corridors. As noted, nearly all mainlines will be double-tracked. Simultaneously, IR is implementing 4,000+ km of advanced Signaling (e.g. Automatic Block Signaling on 5,221 km by Feb 2025).

• Rolling Stock Modernization: Over the next decade, IR aims to replace thousands of old coaches and locomotives. A ₹1 lakh crore fund is allocated to acquire 7,000–8,000 new train sets. Technology steps include 12,000 HP freight locos, 3-phase EMUs, and regenerative braking systems.

Implementation Status: Progress has been mixed. While freight performance and electrification have indeed hit record levels, several flagship projects are delayed. For instance, though DFCs are almost done, some suburban and high-speed corridors await land transfers or environmental clearances. The Railway budget (2024–25) notes that dozens of projects (e.g. 58 “supercritical” and 68 “critical” lines totaling 10,663 km) were identified to be completed by 2024, but many have slipped. The Railways (Amendment) Act 2024 aims to ease reforms, but actual gains depend on execution on the ground.

Conclusion

In sum, Indian Railways today embodies a paradox: it has unprecedented investment and modernization plans, yet still struggles with fundamental inefficiencies. Its full potential is hampered by a combination of factors: a perilously high operating ratio that starves capital funds, an ageing infrastructure that requires constant renewal, and an operational model that struggles to balance public service with commercial viability. The government’s modernization agenda (electrification, DFCs, high-speed corridors, private participation, etc.) is ambitiously addressing these issues. If implemented effectively — closing capacity gaps, improving technology and safety, and reforming institutional constraints — India’s rail network could transform into a faster, greener, and more profitable system. Until then, its legacy burdens and the scale of needed reform mean the full promise of the “Lifeline of the Nation” remains a work in progress.