India Pledges US$137 Billion To Modernise Railways

February 26, 2015 – India said it would spend US$137 billion to modernise its crumbling railways, pledging to end a vicious cycle of under-investment – and introduce yoga lessons for stressed-out staff.

Railways Minister Suresh Prabhu said the network was crucial to India’s economic development as he signalled investment totalling more than 8.5 trillion rupees (US$137 billion) over the next five years.

Prabhu promised to make India’s railways safer after a deadly crash earlier this month, build more lines and increase the speed of journeys on nine major routes, and improve the experience of travelling with Wi-Fi in stations.

But he said the government would not increase fares after a steep hike last year sparked an angry public response.

“Railways facilities have not improved substantially for the past few decades, which is the result of under-investment that affects capacity, leading to poor morale,” Prabhu told parliament as he delivered the annual rail budget.

“This fed into a vicious cycle of chronic under-investment for a long time. We must restore the strength of Bhartiya (India) Rail as the backbone of our country’s transportation infrastructure.”

Rail modernisation is seen as key to achieving pledges by the right-wing government of Prime Minister Narendra Modi to revive growth after a long period of economic stagnation under the previous administration.

Analysts say poor transport infrastructure has held back the growth of Asia’s third-largest economy, a key campaign issue at last year’s general election.

The Indian railway system, which as one of the world’s largest carries 23 million people daily, is still the main form of long-distance travel in the huge country. But years of financial neglect and a populist policy of subsidising fares have hit the network hard.

Indian fares are still among the world’s cheapest, and last year’s steep rise was a break from the past in which successive governments have shied away from hiking tariffs for fear of alienating voters.

Prabhu did not say how the government would fund the increase in investment. India has made it easier for overseas companies to invest in its railways, but has not so far managed to attract significant levels of foreign investment.

Other initiatives announced include a special training programme including the staff yoga classes and a pilot scheme to introduce CCTV in carriages to improve the safety of female passengers.

Staff will be trained in “soft skills” to make customers feel more welcome. “Our frontline staff is the first point of contact with the public,” said Prabhu.

Prabhu also said cleanliness was an “utmost priority”, promising to build new toilets – a Modi pet project – and improve the condition of existing ones.

Shares in railway companies fell on the budget, with investors disappointed at the lack of big-ticket reforms. Texmaco Rail & Engineering was down 6.90 per cent to 129.60 rupees on the Bombay Stock Exchange, while Kalindee Rail Nirman fell 6.32 per cent to 131.90 rupees.