India pledges $137 bn to modernise railways

Jalees Andrabi
 

India said Thursday it would spend $137 billion to modernise its crumbling railways, pledging to restore the "backbone" of the country to its former glory -- 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 ($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.

He said the government would introduce Wi-Fi in stations and train the notoriously surly frontline staff in "soft skills" including yoga, seeking to make travelling on India's railways a more pleasant experience.

But he ruled out fare increases 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," he said.

"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.

- 'Paradigm shift' -

Built by India's former British colonial rulers, the railway system is one of the world's largest, carrying 23 million people daily, and is still the main means 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.

Modi said the rail budget, which comes two days before his government announces its first full budget, marked a "paradigm shift" from discussing coaches and trains to comprehensive reform.

"The Indian railways is not only for going from one place to another, but it is a powerful tool for speeding up India's economy," he said in a televised address.

The government did not spell out how it would fund the rise in investment after it ruled out increasing fares.

Indian trains are 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.

Passenger fares are currently subsidised by freight revenues, but the railways have struggled to win back freight traffic lost to roads, coastal shipping and planes.

Modi's government 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.

Indian Railways is among the world's largest employers with a staff of 1.3 million, who Prabhu said would be trained to make customers feel more welcome.

"Our frontline staff is the first point of contact with the public," said the minister as he announced plans to give them yoga classes.

He also unveiled a pilot scheme to introduce CCTV in carriages to improve the safety of female passengers and said cleanliness was an "utmost priority", promising to build new toilets -- a Modi pet project -- and improve the condition of existing ones.

Shares (Frankfurt: DI6.F - news) in railway companies fell on the budget, with investors disappointed at the lack of big-ticket reforms.

Texmaco Rail & Engineering (BSE: TEXRAIL.BO - news) ended the day down 2.51 percent at 135.70 rupees on the Bombay Stock Exchange, while Kalindee Rail Nirman closed 4.05 percent lower at 135.10 rupees.

However Vikram Dhawan, director of equities at Equentis Capital, said it was a "balanced budget".

"The disappointment due to absence of big ticket reforms has been made up by (a) lack of any outright populist steps," he said.

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