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South Asia

The Sad story of the Indian Railways



The Indian railways’ network is one of the largest in the world and the second largest in Asia, next only to China. To put things into perspective, India is the seventh largest country in the world, a third the physical size of its neighbour, China. The Indian Railways is entirely owned by the Government of India and is operated by the Ministry of Railways. It operates several hundred Express,

Superfast & Passenger trains on a daily basis. It also has the responsibility of operating a number of local and urban trains. Over 22 million people utilize the Indian Railways every-day to commute to their destinations. The Indian Railways network is a mix & Mash of Broad, meter and narrow gauges. At the same time, diesel engines ply alongside electric engines all the while steam powered engines are still being phased out. The world’s eighth largest employer, over 1.4 million Indians get their paychecks from the Indian Railways, which employs more personnel than the Indian Army. In spite of corruption, nepotism, red-tape bureaucracy and political wrangling, the Indian Railways is the link that joins the entire nation. It is the very chain that binds us as a nation, a glue that keeps us together and a welcome sight for the sore eyes of the millions of the improvised folks who have gone to distant places to earn a two-time meal. The railway in India evokes the warm memories of home. All commuters of the Indian Railways are witness to the very thought of unity in diversity, the good old virtues of sharing and caring, the idea of a healthy debate, the nostalgia of cold air hitting the face and the cacophony of the million myriad small worlds that home in a gigantic canvas of our nation. The railways in India evoke the essence of being an Indian.

However, in the recent past, the Indian Railways has started hogging in the news for some very serious accidents. Train derailments, a rarity in the past has become commonplace. Every day, some or the other train is found to derailed or overturned, causing a great loss of time, revenue and sometimes, human lives too. A Railway Minister offered his resignation on successive fatal train derailments. His resignation was rejected but he was transferred to another Ministry in the recent Ministry shuffles. While official investigations are ongoing, sections in the media and common populace have placed the blame on a plethora of factors ranging from a lack of communication between various stakeholders, worn out tracks to even hooligans cutting tracks to instil terror. Not only train derailments, the Indian Railways is plagued by various issues ranging from quality control in food provided on board its trains, the overcharging for standard products by attendant staff to whole scale server crashes while ticket booking. It is often said that booking a Tatkal ticket( an emergency ticket booked in the 24 hours before the train’s departure) has become the 3rd most difficult thing to do in India, the first two obviously being marrying your love and getting yourself selected in the prestigious 3Is (IIT-IIM-IAS).

There is a lot of noise being generated that railways is over-charging or even outright, fleecing its customers. Prima facie, it appears to be the case. Tatkal tickets routinely charge 2-4 times the amount of the conventional fare and dynamic pricing has made some train tickets as expensive as flight tickets. But who is to blame for this? Why are the Railways forced to charge absurd rates for even small routes? Why is there not a rational pricing mechanism in place for the railways?

The blame rests squarely upon successive governments and railway ministers who used the Indian railways as a vote fetching tool and nothing more. Projects and trains were always sanctioned to the home states and districts of the executive and factories set up in constituencies of the crème-la-crème of the administration to sway public opinion, without any consideration being given to profitability or revenue rationalization. The Rail Coach Factories sanctioned at Lalganj in Uttar Pradesh and in Bihar are a testament to this politicking.  Successive governments withheld or withdrew increasing passenger rates (due to public outcry and cement their pro-poor positioning) and increased freight rates (why cares about Industries anyway?). In a way, this was justified. The Indian Railways is a government undertaking meant for the benefit of the Indian Citizens. The passenger fares had to remain low and sustainable so that entire India could rely on the railways for transport. But in a demonstration of very poor political economics, successive governments did not hike the railway passenger fares even when circumstances could have dictated otherwise. In one famous incident, a railway minister was sacked by his party chief who was in a coalition with the ruling dispensation for daring to effect a modest hike in the passenger fares. Yes, even today Indian Railways charges pennies for distances and on most routes, its conventional fares are a fraction of the Roadways and the railways. For examples, on the Lucknow-Delhi route, for the roadways, the fares vary from Rs 550/- (for a general purpose bus) to Rs 1450/- (Applicable for Scania like High-end buses). The conventional railway fare is Rs 185/- (for a second seater- akin to a General purpose bus), Rs 350/- (for a sleeper’s berth where you can comfortably sleep and stretch your legs) to Rs 1300/- (for a cozy 2nd AC coach seat) for the same 640 km stretch. Over and above this, Railways also provides concessions for children and senior citizens. A flight ticket on the same stretch costs around Rs. 1500/- and much more, depending on the demand and the date. Even a Tatkal ticket for the same route costs in the neighbourhood of Rs 2000/- which is comparatively well-priced if you compare the comfort and speed of the railway service. Furthermore, the railways lose a substantial sum on every conventional fare ticket booked. This, along with the massive ticket-less travelling and corruption, forces the Indian Railways to ask for subsidies and dole-outs from the Indian exchequer. Hence, as evident from the above numbers, there is an urgent need to increase the passenger fares or the railways has to come up with alternative ways to increase revenue. Tatkal tickets, dynamic pricing, increasing revenue from advertising are some of the ways the railways can improve the cash flow.

The freight operations, once the cash cow, of the Indian Railways, has now been sucked dry and freight rates, which were earlier competitive with the road transport is now reeling under multiple blows of successive hikes and has been highly uncompetitive. In the fiscal year 2015-2016, Indian Railways posted the lowest revenue growth since 2010-11. The Revenue growth in 2015-16 was just 4.6%, much lower than the 10-19% growth the national carrier registered in the previous four fiscal years and hoped to replicate. These facts will be a dampener for hopes that the railways will buttress the government’s capital expenditure plans and its future expansion plans.

The freight volumes are falling.  This is a major cause of concern as the railways generate three-fifths of its revenues from freight. This is undermining revenue growth. The weak revenue trends reflect the subdued economic activity. Cement, Coal and container traffic, in particular, fell.  The slump in revenue growth is also partly due to the uncompetitive position and impractical mess the railways has got itself into. Successive tariff hikes (courtesy, the earlier budgets) and the rapid & sustained fall in diesel prices has helped the roadways to become competitive, especially in the lucrative short-haul freight traffic. Experts point out that Rail-road freight tariff variation has reached a tipping point now as the fall in diesel prices and improvement in road infrastructure has made rail freight transportation a far less attractive proposition.

While we may find it very convenient to vent out our ire on the Railways for what we believe is the arbitrariness of the pricing mechanisms but the truth remains, the Indian Railways is under-funded, over-staffed and highly essential for our country. Let us not forget that for every Tatkal ticket which we claim is over-priced, many more underpriced tickets are also sold and several more, travel without a ticket, causing a loss of revenue and a dent in the finances of the Indian exchequer. This is the sad story of the often-abused Indian Railways.

South Asia

India’s Military Spending and South Asian Security



Over the past several years, unprecedented military modernization in Pakistan’s immediate neighbour, India, has worsened South Asia’s security environment. India’s heavy military spending and its unstoppable quest for the acquisition of sophisticated weapons have threatened regional stability. Indian desire to acquire global power status through military means has further been intensified as a result of US assistance particularly in former’s defence sector. Within quick span of time, defence trade between India and the US has shot from $1 billion to over $15 billion leaving other regional powers in the state of security consciousness.

India’s obsession with its military build-up doesn’t end here. According to the Stockholm International peace Research Institute (SIPRI) a prestigious international institute dedicated to research into conflict, armaments, arms control and disarmament, India, once again tops the list as world’s largest weapons importer. This is not a new development as previously, India also topped the list for the same reason.

As per SIPRI estimates, Russia remains top arms supplier to India. However, surprisingly arms deliveries from the US increased more than six-fold in the five-year period to the India. This trend in long run will definitely reduce market space for Russian arms and ammunition to India.

Despite the fact that, India’s unbridled military modernization is the primary impetus behind South Asian instability, global power’s economic expediencies in South Asia also undermines delicate conventional parity between India and Pakistan. For instance, Indo-US strategic partnership, which apparently touted as US’ China containment policy, seems more of a Pakistan containment policy. Much of the US provided weapon-tech to India is more useful against Pakistan in a conventional warfare. Almost 70% of Indian military troops and weapon system are deployed against Line of Control, (LOC). Interestingly, peaceful settlement of Docklam issue between China and India as well as sky-rocketing bilateral trade between both countries, which has reached to $84.44 billion last year, makes prospects of conflict almost impossible.

However, in contrast to aforementioned facts, the influx of massive military hardware from western capitals to India continues and in certain cases the flow of arms has gained momentum. There are two primary motives behind India’s overwhelming spending in defence industry.

First, India aspires for greater role in global environment and in certain ways it has been demonstrating its will and capability to influence global dynamics. India’s successful test of Agni-5, a long-range ballistic missile, capable of carrying nuclear weapons with a strike range of more than 3,000 miles, is a practical demonstration of its military capabilities to influence other powers around the globe. For hawkish policy makers in New Delhi, a strong military power can extend India’s global influence.

Secondly, India is following a policy of coercion at regional level primarily, against Pakistan which shares history of hostility and violence due to longstanding territorial disputes such as Kashmir. There is growing perception in New Delhi that militarily strong India can dictate South Asian affairs. That’s why India has been consistently opposing diplomacy and dialogue for peaceful resolution of disputes. Therefore, to meet its foreign policy goals, which are based on coercion and usage of hard power, India spends massive in military build-up.

Ironically, South Asia is called as nuclear flashpoint due to history of animosity and violent conflicts between India and Pakistan. With its mighty military power, India has emerged as the most potent threat for not just Pakistan but also a security challenge for other powers in the region.

Given the advantage it has in terms of nuclear missiles, military hardware and submarine fleet, India has been trying to create an environment conducive to wage limited war against Pakistan. For that, India has not just developed its military doctrine, Cold Start Doctrine, but also initiated and sponsored sub conventional war in Pakistan’s chaotic province, Balochistan.

In such circumstances, Pakistan needs to maintain delicate conventional military balance vis-à-vis India. Despite the fact, Pakistan has been facing number of issues at national, regional and international levels which include on-going military operation in tribal areas to hostile border skirmishes; a robust military modernization plan has become inevitable. A militarily strong Pakistan will be able to maintain its territorial integrity against aggressive yet militarily mighty India.

It’s an open fact that Pakistan has consistently called for peaceful resolution of all outstanding disputes and it has offered to resume diplomacy and dialogue over Kashmir dispute. Unfortunately, India’s cold response has not only restricted Pakistan’s peaceful overtures but also refused to accept third-party mediation in peaceful settlement of Kashmir issue. This clearly shows that, current ruling regime in India is not serious for peaceful settlement, rather more inclined to use of force and coercion. Under such circumstances, Pakistan needs to strengthen its force posture to pre-empt any kind of misadventure from its adversary. However, Pakistan, as it has done in past, must embrace peaceful overtures to bring stability in the region.

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South Asia

US Call for a New Relationship



U.S. Secretary of State Rex Tillerson meets with Pakistan's Foreign Minister Khawaja Muhammad

‘Trust, but verify’ an Old Russian proverb that President Reagan liked to repeat often. Trump is neither the first President nor he is going to be the last to criticize Pakistan of deceit and threaten to cut off American assistance. Notwithstanding, the last six decades of the US support, the US has failed completely in cultivating an ally in Pakistan nor has it meaningfully changed the nature of its relationship with Pakistan, which can be best described as ‘transactional’. A quid-pro-quo relationship between the two has never been established with regards to the assistance they both offered to each other. In truth, United States has never really trusted Pakistan.

President Trump avowed in his New Afghan Strategy that the US has been paying Pakistan ‘billions of billions of dollars at the same time they are housing the very terrorists that we are fighting for’ but the mantra should be put to a halt. Likewise, the US must be conveyed boldly to stop continuing its false claims that Pakistan shelters the ‘agents of chaos’ and be reminded that friends don’t put each other on notices.

Similarly, statements and avowals that India now is a strongest ally to the US, disturbs Pakistan, chiefly because of the irony at Trump administration’s part which only sees the glittering Indian market but pay no heed to the growing Indian cease fire violations across the LoC and the atrocities India commits against the unarmed civilians of the Indian held Kashmir.

The recent visits and statements however by the senior US officials and Trump’s aides reflect the US call for a new relationship between the US and Pakistan, which once used to be close allies in the US led ‘Global War on Terror’.

Pakistan’s foreign policy makers at this point in time must be mindful of the fact that the US is a major trading partner and should adhere to a relationship more than ‘transactional’. Moreover, the risks and fears at the US part of ‘rampant destabilization and civil war in Afghanistan’ increments further the region already devoid of trust. For, nobody actually knows whether the US will stay or eventually leave Afghanistan.

The Afghan war has now become a war of logistics, in words of Sun Tzu ‘the line between order and disorder lies in logistics’, Pakistani supply lines thus provide Islamabad with a leverage in absence of shorter, cheaper and acceptable alternative routes. Given these circumstances, Pakistan should make best use of the US call towards a more robust bilateral relationship.

The move for a ‘new relationship’ and improved ties began last week with senior Trump aide’s visit to Islamabad to hold talks with Pakistani leaders.  Earlier also the impressions that Pakistan and the US were on a collision course were dispelled by a top US general. Likewise, US department’s acting Assistant Secretary for South and Central Asia Alice Wells asserted that the US was not thinking of cutting its ties rather assured that the US still cogitate Pakistan indispensable to the resolve in Afghanistan.

The aforesaid developments clearly indicate that the strained US-Pakistan relations would improve soon and that the suspension in the military aid is also not permanent.

To conclude, achieving long term stability and defeating the insurgency in the region will be difficult without Pakistan’s support and assistance.

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South Asia

Special Economic Zones and CPEC



Economic Expansion, high prices and inflation are the issues on which one can talk for hours. The scarcity of resources, energy crises and lack of industrial modernization are the challenges which Pakistan has been facing for past many decades. Despite the advantages of geographical setting, the country could not sufficiently expand its economy until 20thcentury. However, the China-Pakistan Economic Corridor (CPEC) has brought with it various infrastructural, energy, and industrial projects that show smooth progress in these sectors. One of the most significant developments is the establishment of Special Economic Zones (SEZs) under the Long Term Plan (LTP) of CPEC.SEZ is a physically protected area with definite geographic boundaries under which the investors and the developers enjoy duty free benefits and streamlined procedures, set up by the government.  After the successful completion of the Early Harvest Program (EHP), the governments of China and Pakistan aspire to complete the Long Term Plan (LTP) of CPEC. As a key route to success, the LTP has been divided into three phases and the work on the first phase has already started. SEZs are on the first priority list of the first Phase of LTP. While utilizing the strategic location of Pakistan and the rich resources, the SEZ will contribute a framework for Pakistan’s domestic industries, and local economy.

The government has planned to establish nine Special Economic Zones (SEZs) in all the four provinces, federal areas and Gilgit-Baltistan under the framework of CPEC, which would be completed in a period of three years. Pakistan has conducted feasibilities of 5 SEZs which focuses only on the infrastructure. The three prioritized SEZs to be completed in the first phase of LTP are M3 Industrial City in Faisalabad, Punjab, Chinese SEZ Dhabeji, Sindh and Hattar SEZ in KP province. While the remaining six sites include Rashakai Economic Zone, M-1 Noshera, Bostan Industrial Zone District Pishin, AllamaIqbal Industrial City, Moqpondass SEZ in Gilgit-Baltistan, ICT Model Industrial Zone Islamabad, Development of Industrial Park on Pakistan Steel Mills Land at port Qasim near Karachi, Special Economic Zone at Mirpur AJK, Mohmand Marble city.

Although, there are general misunderstandings regarding the industrial ramifications of the SEZ’s under CPEC due to large number of Chinese firms and the exemption in the tax rates offered to them. However, the LTP of CPEC shows that these SEZ’s will offer the country with a great opportunity to accelerate industrialization because they are beneficial for all the international and domestic investors. So far in the history, SEZs have been the reason of economic boost in countries around the globe. Now this is a matter of concern that either these SEZs will make Pakistan a center of economic modernization and trade ventures or not. The economist and financial experts are optimistic about Pakistan’s emergence as one of the fast growing and promising global economy.

While stepping towards the era of industrialization, Pakistan faces a number of issues that have so far refrain the industries to understand their growth potential. Some of the chief hindrances to investment in Pakistan include poor security; non-availability of infrastructure and power crises, rent-seeking regulators, and cumbersome tax administration, etc. among many others.

Likewise the entrepreneurs in Pakistan have certain reservation with the incentives proposed by the government and SEZs for the investors and enterprises including ten-year exemption from all taxes on imported capital goods and exemption from tax on income accruable from development and operations in SEZs for a period of ten years. Although these incentives will be beneficial for the foreign investors at large but at the same time it will provide Pakistani enterprises with the opportunity to collaborate with the Chinese firms and launch joint ventures of mutual interests and benefits. This will be further beneficial for the annual Gross Domestic Product (GDP) growth of Pakistan. Moreover it will bring Foreign Direct Investment (FDI) in the country thus generating the foreign revenue.

Subsequently it is significant to keep in mind that in Pakistan there are certain security and political factors due to which the SEZ’s may face challenges. Hence forth to conquer these challenges provincial harmony among all the provinces and mutual consensus between the public sector and private sector is needed. SEZs under CPEC will be a life-time opportunity for Pakistani companies to work together with Chinese companies for the development of export-oriented manufacturing industries. Therefore, Pakistan should increase its products in the Chinese market and raise the ratio of its export while decreasing the trade deficit by lowering the imports.

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