Insight: Life and death on India's slow train to prosperity

KANPUR, India Thu Mar 22, 2012 4:02pm EDT

1 of 25. A passenger train moves through heavy fog in the northern Indian city of Chandigarh in this January 9, 2012 file photograph.

Credit: Reuters/Ajay Verma

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KANPUR, India (Reuters) - As the Kalka Mail train pulls into Delhi railway station at dawn, it is every man, woman and child for themselves.

Before the train has stopped, crowds elbow and jostle into packed compartments destined for Kolkata, 1,500 km (930 miles) and 25 hours away on one of the largest, most decrepit and dangerous rail networks in the world.

Bare-footed women with children shout to be let into carriages while an old woman in an orange saree shuffles along the platform, bent over a walking frame. Above the melee, suitcases glide toward the train, borne aloft on the heads of porters.

Some passengers pause to brush their teeth on the platform, which stinks of excrement. Near a "No Spitting" sign, an infant squats in the open, defecating as her mother watches over her.

Another day on Indian Railways has begun - another day on which the nation's aspirations to become a wealthy economy risk being derailed by a neglected asset whose potential remains to be unlocked by bold political leadership and fresh capital.

Indeed, if that potential was unleashed, estimates suggest it could add as much as 2 percent to India's flagging economic growth.

By the end of the day, about 40 people on average will have died somewhere on the network of 64,000 km (39,800 miles) of track. Many will be slum-dwellers and poor villagers who live near the lines and use them as places to wash and as open toilets. Some will have fallen off overcrowded commuter trains.

Of the 20 million people who travel daily on the network, many will arrive hours, even a day, behind schedule, having clattered along tracks and been guided by signaling systems built before India gained independence from Britain in 1947.

Businesses, including foreign firms and exporters, will be exasperated, as their freight is obliged to give way to the slow-running and congested passenger services. Country-wide, trains hauling goods and raw materials such as coal will have to wait in sidings for hours until given the all-clear.

Last week, after many false dawns, India appeared to have finally found the political will to tackle the problem head-on, announcing the first rise in rail fares in eight years as part of a plan to improve network safety and efficiency.

The government's resolve did not last long - Railway Minister Dinesh Trivedi was forced to quit within days because of opposition to the move within the ruling coalition, raising expectations his decision on fares will soon be reversed.

"I'm worried about safety. I did what I did because of safety," Trivedi said almost apologetically in announcing his resignation.

In a paradox familiar to reform-minded Indians and foreign investors, the most hostile reaction to the planned fare hike came from Trivedi's own party boss, Mamata Banerjee, who only three years earlier had called for bold action when she was railways minister.

Banerjee is now chief minister of West Bengal, one of India's poorest states and whose 90 million people rely on Indian Railways' extraordinarily cheap tickets to find work in more affluent regions. She opposes higher fares for the masses.

Another of Banerjee's West Bengal politicians, Mukul Roy, was installed as railways minister on Tuesday and within two days had rolled back most of the planned fare increases, telling parliament on Thursday that fares for first and second class passengers in air-conditioned carriages would go up, but there would be no increases for other travel classes more commonly used by the poor.

NOT A HOPELESS CASE

The Kalka Mail is crowded with poor people from across the sweep of northern India's Gangetic plains, including Minar, a 30-year-old cycle-rickshaw driver who works in the old part of New Delhi and heads home every three months to Kolkata, the 19th century colonial capital also known as Calcutta.

His face framed by a shock of black hair and a moustache, Minar wears a cream shirt and dirty brown trousers and sits hunched on the floor inside a hot and crowded general-class carriage where a fare costs just 200 rupees ($4).

Although his ticket is among the cheapest in the world, thanks to heavy cross-subsidies from the network's freight operations, it is still worth at least half of the 300 to 400 rupees he has saved from pedaling people around the capital.

"What can I do if they raise the fares?" Minar said, as nearby six people crammed onto a hard wooden bench meant to accommodate three or four. "I want them to go down."

But even here, in a cramped carriage cut off from the other classes of travel by iron shutters, there is some support for a hike, provided the money is invested in a safer network.

"Dinesh Trivedi is a good man," West Bengali fish trader M.B. Zia ul-Haq says of the ex-railway minister who is his local member of federal parliament.

"He raised prices for the sake of the railways."

Arvinder Agnihotri, who owns an electronics business in Kanpur, a faded industrial city in Uttar Pradesh state about halfway along the route to Kolkata, is like-minded: "Why shouldn't they increase fares, if they improve the services?"

In second class, which ferries more than 90 percent of Indian Railways' passengers at prices that are also unprofitable for the state-owned network, the view is even more supportive - offering hope to the few optimists who believe India will soon be forced to drag its railway into the 21st century.

"The railways need money," says J.N. Shukla, a portly, bespectacled India Railways official who is travelling as a passenger this day. He is one of some 1.36 million employees of Indian Railways, a number that makes it one of the top 10 employers in the world.

"Every year they are increasing the number of trains, but not the number of tracks. That's why there are so many accidents and why the trains take so long."

SHOCKING CRASH

In July last year, the Kalka Mail never made it to its final destination. Its engine suddenly stopped, derailing more than a dozen carriages, killing 71 people. It shocked an increasingly affluent India, though it had followed a long list of rail disasters, including several more deadly ones, since the 1980s.

For many Indians, who have seen their nation develop rapidly since the late 1990s to become Asia's third-largest economy with sophisticated high-tech, drugs and telecoms industries, the ramshackle state of Indian Railways has become an embarrassment.

That is felt especially keenly when comparisons are made with neighboring China, where bullet trains zip across the country at around 300 km (186 miles) per hour and safety concerns stem from overly rapid development rather than too little. By contrast, India's fastest train runs - on just one stretch - at a top speed of 161 km (100 miles) per hour.

Critics regard Indian Railways as emblematic of the nation's problems overall: stifling bureaucracy, inefficiency and most importantly a lack of public funding and a political unwillingness to open up to abundant private capital.

A recent report submitted to the government concluded that modernizing the rail system could potentially add 1.5-2.0 percent to economic growth, creating new jobs, saving energy, improving the environment and moving people and goods more efficiently around the country.

India's Congress party-led government has not stood completely idle - it has announced a $90 billion freight corridor between New Delhi and Mumbai - but critics say policy implementation is slow to non-existent, even though local and foreign investors are quietly queued up, waiting for a signal.

"India hasn't gone fast enough," says Pratyush Kumar, head of the India transportation business of General Electric, maker of diesel-electric locomotives and signaling systems.

"If you look at the track record of what has been implemented from what has been talked about, that's not a very pretty picture. They have to move away from talking to doing."

WANTED: $20-30 BLN A YEAR

At least $200 billion will need to be spent on Indian rail over the next decade alone, according to consultancy McKinsey, though it suggests closer to $300 billion should be spent, including the creation of five high-density freight corridors.

With India heading for a budget deficit of 5 percent of gross domestic product in 2012/13, and economic growth slowing, investors hope New Delhi will have no choice but to fully embrace public-private partnerships and open the network wider to foreign capital - or risk the economy decelerating further.

Indian media have speculated that wily U.S. investor Warren Buffett - whose penchant for railroad investments led his Berkshire Hathaway Inc. to pay $26.5 billion for Burlington Northern Santa Fe Corp in 2010 - may be interested in buying Indian railway investment bonds.

Buffett's office has so far declined to comment on the reports, though it is more likely that foreign capital will come from infrastructure firms in the form of direct investment.

British private-equity firm 3i Group Plc has already launched a $1.2 billion India infrastructure fund, though railways is not listed for now as one of its major focuses.

"There is a lot of scope to come in and a huge amount of investments can come in from the private sector but the railways have to open up. Till now the Indian railways had been very closed," says Hemant Kanoria, chairman and managing director of India's Srei Infrastructure Finance Ltd.

Opening up, though, may require a new mindset among ruling classes - a matter of politicians no longer treating rail as a crowd-pleasing form of ultra-cheap state transport, and of lifelong railway bureaucrats giving way to the private sector.

"The bureaucracy of the organization is lacking business sense," a senior civil servant in the railways ministry said on condition of anonymity, just before minister Trivedi quit.

"The political leadership has (also) not taken a business-like outlook. That is why the railways are suffering."

Many Indians are fed up with Prime Minister Manmohan Singh's coalition, so fragile it is unable to push through critical reforms before the next election due in 2014.

Indeed, speculation is mounting the government will collapse before its term is up.

As if to underline the sense of paralysis, hours before Roy was installed as the new railways minister on Tuesday, a train crashed into a van at a level crossing in Uttar Pradesh state, killing 15 people.

The clock is ticking for the railway network, a vital but broken asset that could yet help put the Indian economy back on track - if only there was the political will.

But there is little sign of that inside Delhi's old railway station, a red fort-like building built by the British at the turn of the last century, whose overcrowded platforms now reek of multiple odors.

A train returning from Kolkata is running five hours late. "The inconvenience caused is deeply regretted," announces a voice from loudspeakers.

(Additional reporting by Annie Banerji in NEW DELHI and Ben Berkowitz in BOSTON; Writing by Mark Bendeich; Editing by John Chalmers and Ian Geoghegan)

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