Short-term, mid-term and long-term goals of Indian Railways are network decongestion and expansion to move existing traffic efficiently, faster and to take care of additional traffic as well.
The immediate priority is to wipe out accumulated arrears of renewal of assets and traffic facilities, depreciation costs of Rs.58, 903 crores that include rolling stock, signaling, track, bridges, electrical, machinery, plant and other such assets. Of this, Rs.4, 396 crores are for traffic facilities. This has serious implications on rail safety and requires urgent attention.

Besides, railways have a huge shelf of pending projects estimated at Rs.4, 91,510 crores on the basis of originally estimated costs at the current fiscal year (2015-16) prices. Prioritisation of such projects has been done to complete them under a time frame and to prevent the spread of scarce resource.
Chronic under-investment in railways has resulted in inadequate network expansion and modernization leading to erosion of its share in national freight and passenger traffic. Indian Railways, therefore, needs to become operationally and financially sound. To give effect to this, Union Minister of Railways, Suresh Prabhu has outlined four-point goal for sustained and measured improvement in customer experience, to make rail a safer means of travel, expansion of capacity and modernization of infrastructure, and to make the railways financially self-sustainable.

To achieve such objectives, an outlay of Rs.8.5 lakh crores has been proposed during 2015-16-rail budget for the next five years ending 2019-20; whereas an investment proposal of Rs.7.35 lakh crores was made for the 12th Five Year Plan. It is an ambitious investment plan intended to turn around Indian Railways to make it self-sufficient by augmenting its carrying capacity for freight and passenger traffic and providing impetus to growth of national economy.

Roadmap for such investment plan is a mix of internal resource generation of railways, budgetary support from the General Exchequer and Extra Budgetary Resources (EBR). Internal resource of rupees one lakh crores, through improved efficiency in operations, maintenance, tighter control over costs, discipline over project selection and execution, non-operational revenue from land resources, station redevelopment, commercial publicity, tourism, optic fibre cable network along railway track, General Budgetary Support (GBS) of Rs.2.5 to 3 lakh crores, partnership with State Governments and public enterprises interested in critical connectivity for transporting high rated commodities like coal, iron ore, cement and so on, raising through Indian Railways Finance Corporation (IRFC) from market borrowing for financing rolling stock, tapping long term funds through institutional investors including insurance, pension funds, infrastructure funds, bilateral and multi-lateral agencies to fund revenue generation projects have been planned. Agreement with LIC has already been signed for investment of Rs.150, 000 crores over next five years. Added to this, rupees one lakh crores through Public-Private-Partnership (PPP) has been planned.

Funding for Eastern and Western Dedicated Freight Corridors (DFCs) has already been tied up from the World Bank and the Japanese Bank for International Cooperation (JICA). In the circumstances, indications are that costs of introduction of proposed bullet trains will be borne by the Government, as it is a high cost non-viable project and elitist in nature.

Out of the Rs.8.5 lakh crores of investment plan, the railways have planned to utilize around Rs.3.99 lakh crores on network expansion and network decongestion. The five-year investment plan is intended to serve as a stimulus package to assist in the turn around of the railways financial resources. Simultaneously, the railways have decided to match availability of funds by strict financial discipline to ensure effective utilization of resources with targeted achievement of physical targets with no cost escalation or delays.

Be it as it may, challenges of reconciling commercial module of Indian Railways with its prevailing social responsibility in the face of the country’s globalised economy remains in view of stiff public resistance as well as the resistance of railway employees’ unions. Equally daunting task is private participation in both passenger and freight services in view of their wariness because of the fact that law and order is State Government subject in the Constitution of India and the private sector would find it impossible to contend with security and law and order problems, as also with little or no profits. Ensuring that Indian Railways do not fall under debt trap is yet another most important task before the Government.