Indian Economy

Port led development is an integrated approach to modernise the ports and to integrate them with SEZs, port-based smart cities, industrial parks, warehouses, and logistics parks and transport corridors in the country.

The Sagarmala project was launched in 2015, with the objective of promoting port-led direct and indirect development and to provide infrastructure for the same. Sagarmala project would be leading to port led development in following ways

• Port modernization and new port development, port connectivity enhancement, port linked industrialization as well as coastal community development.
• Optimizing the multi-modal transport to reduce the cost of domestic cargo.
• Improving export competitiveness by locating discrete manufacturing clusters near ports.

So far, the impact of the Sagarmala project has seen mobilization of over US$ 61.6 billion of infrastructure investment, doubling the share of inland and coastal waterways in the modal mix, boosting the merchandise exports by US$ 110 billion. Owing to India’s extensive coastline of 7,500 kilometres covering 13 states and union territories and a significant portion of India’s trade being moved by sca, port-led development envisaged under Sagarmala project would be beneficial for India in following ways:

• Development of coastal communities: With 42 per cent of India’s population living in the coastal states, the project can promote their wellbeing through skill development, fisheries development and livelihood generation activities.
• Port-linked industrialisation: Currently, India’s logistics cost is around 30% higher than global benchmarked costs, which is an impediment for indigenous manufacturing. The project will help reduce it by developing port-proximate industrial clusters and Coastal Economic Zones (CEZS). It would also augment the ‘Make in India’ program of the government.
• Coastal shipping & Inland waterways: The project can promote movement of cargo through sustainable and environmental-friendly mode of transportation, such as through the development of 111 inland waterways. Also, cost of moving cargo by inland waterways is 60- 70 per cent lower than the road or railway mode.
• Boost to international trade: Indian ports handle more than 90 per cent of India’s total EXIM trade volume. By linking major and non-major ports, industrial clusters and evacuation infrastructure into a single system at a larger regional level, the project will enable seamless and efficient movement of cargo through gateways. This will allow the ports to enhance competitiveness and offer multiple freight options to customers.
• Promote tourism industry: Multiple cruise tourism centres have been launched including Mumbai, Chennai and Cochin. These would provide a significant boost to the tourism industry in India.

However, there are certain issues, which need to be addressed in terms of huge investment needed, projects viability for the private sector, impact on the fragile coastal ecosystem such as erosion and pollution etc. Thus, there is a need to take various steps to sustain the progress through port-led development. Some of which includes establishing a port regulator at all ports to monitor and regulate services and technical and performance standards, undertaking the environmental clearance process seriously for port projects, accommodating coastal communities engaged in traditional fishing and establishing a special purpose vehicle for making investments in ports.

India has the fourth largest railway network in the world that runs almost 21000 trains carrying 23 million passengers and 3 million tonnes of freight per day. It also is the largest public sector employer with around 1.3 million employees. Although Indian Railways (IR) have come a long way in terms of the number of trains or the carrying capacity, there still remain wide gaps across the following areas that need a relook:

• Safety issues: During 2013-2018, for example, an average of around 110 accidents took place every year, with around 890 casualties over the period 2010-18. During 2017-18 alone, Indian Railways reported 73 consequential train accidents. Although the number of accidents has decreased over the years, it still remains a cause of concern.
  • An alarming 85% of these accidents were caused by human failure. Other factors responsible for railway accidents are equipment failure, overaged tracks, wagons, coaches, bridges and poor signalling system etc.
  • The number of accidents at unmanned level crossings in India, still comprise almost 14% of the total number of consequential rail accidents.
  • According to the Khanna Railways Safety Review Committee Report, nearly 25 per cent of the total railway track in India is overaged and is due for replacement.
• Insufficient Financing: Indian Railways has historically been financed mostly through internal accruals and budgetary support.
  • Over the past decade, the Centre’s share in capital receipts has stagnated and the railways own investment is negligible in the wake of no surpluses.
  • External financing in Indian Railways started only from the 7th FYP. However, the share of external budgetary sources has not increased commensurately starting from 17% in 7th FYP to only 27% in 2014-15.
  • Even limited private sector participation has not been fruitful because of lack of adequate involvement with regard to policy-making, operational functions etc.
  • Furthermore, there is a lack of corporate entities like IRCTC, RITES etc. that can borrow on behalf of Indian Railways. This not only limits its market access but also absolves the Indian Railways from a critical investor oversight.
• Infrastructural problems: Infrastructural issues such as outdated wagons, lack of modern infrastructure, wearing of railway tracks, lack of passenger facilities including cleanliness at the railway stations, lack of security arrangement on the railways resulting in theft and dacoities, etc., are other issues that mire the Indian Railways.
  • This has an impact on the operational efficiency and safety of railway operations. For instance, adherence to schedules is often disturbed during winters owing to lack of portable GPS-based fog safe devices, and other technologies, especially in the Northern Railways.

In this context, a slew of reforms to improve the functioning and redefine the role of Indian Railways must be in order. The government must implement all the appropriate recommendations of the Bibek Debroy Committee, execute safety action plans and other reforms to reinvigorate railway infrastructure in India. Many reforms are already underway such as elimination of all manned level crossings, setting up a Special Purpose Vehicle (SPV), Indian Railway Station Development Corporation (IRSDC), Swachh Rail Swachh Bharat, and modernisation of railway stations and the recent proposal to merge railway services from 2021.