9th Five Year Plan (Vol-2)

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Tariff Policy

7.1.52 The tariff policy of the railways has traditionally been one of restraint with regard to increase in passenger fares and periodical increases in case of freight rates. This has been necessitated by the dual role of the railways as a public utility acting as a catalyst of development and as a commercial organisation running on business principles. Therefore, over the years, the railways have resorted to cross subsidisation in order to offset the losses incurred in passenger and other coaching services through additional revenues from freight movement. The policy has, however, resulted in several distortions. While the bulk of the rail output is consumed by the passenger segment, its contribution to revenue is relatively small. In 1994-95, passenger transport accounted for 60% of the total output, while its share in the revenues was only 28%.


  • In spite of the recommendations of successive fare and freight rate committees that price of each of the services offered by the railways should be cost based, the tariff policy followed by the Railways continues to involve heavy cross – subsidisation of the passenger business. Passenger fares in India are one of the lowest in the world. In 1991 the average revenue per passenger km in India was half the level of China. Within the freight category also, there is underpricing of freight for items of mass consumption such as foodgrains and sugar.
  • The subsidy in passenger fares has been increasing over the years and the fare/freight ratio has fallen from 0.5 in 1951-52 to 0.32 in 1996-97. This ratio is one of the lowest in the world. The policy of cross subsidisation has resulted in the freight rates on several commodity groups reaching unreasonably high levels, resulting in diversion of traffic to other modes, especially road transport with attendant social costs in terms of higher energy consumption and environmental damage. The continually increasing level of subsidisation in passenger fares is also generating excessive demand leading to extreme congestion and deterioration of services. Excessive demand for passenger traffic displaces freight and reduces the speed at which freight can be transported by the railways. The benefit of the subsidised services also does not always accrue to genuine passenger but is appropriated as "rent" by intermediaries.
  • The system of cross subsidisation has clearly gone too far. The overall fare structure does not generate sufficient resources to generate the surplus necessary for capacity expansion. Additional resources cannot be raised by increasing freight rates at the upper end where they are already too high. It is necessary to adjust passenger fares and fares on items of mass consumption to levels closer to the real cost of providing these services. A phased adjustment over a three year period is essential.

7.1.53 It has, therefore, become imperative to rationalise the tariff policy. While on the one hand, there is a need for sufficient flexibility in the freight rates to deal with the market fluctuations, there is a clear need for recovery of the full distributed cost from all categories of freight. This will lead to greater allocative efficiency. If certain essential goods have to be carried below cost, the same will be subsidised directly through the budget so that the benefit is clearly targetted and the cost becomes transparent.

7.1.54 More importantly, the passenger fares also need to be aligned more with cost and regular periodic increases of fares to absorb cost-escalation based on pre-determined productivity norms will generate resources, which can then be ploughed into the system for extending the services as well as improving their quality. A certain measure of flexibility in the fare schedule will also help in managing the demand in the peak season on the congested corridors and will reduce the incidence of rent-collection and other anti-social practices. Substantial fare revisions are called for in the suburban services where the subsidies are most pronounced, both in relation to costs of operation and the prices for alternative services. But the increased revenue must be used primarily for relieving the congestion and improving the services in these areas.

7.1.55 With the reduction of implicit subsidies on passenger travel, the bias against passenger transport should also go and the railways must plan for meeting the transport requirement of both passengers and freight on the basis of commercial principles. The increase in short distance passenger traffic particularly on high density corridors is, however, a matter of concern. Apart from the heavy losses suffered by the railways in their operations, the situation has become critical because of the saturation in these corridors. It may not be possible to introduce additional long distance passenger and freight services unless restraint is exercised in the growth of such short distance services.

7.1.56 In order to generate resources for the development plan, the railways may also have to explore other innovative non-tarrif avenues like exploitation of railway land and air space, particularly in metro cities for the development of the system in the concerned areas. This, however, will have to be done in a transparent manner with the concurrence of all the concerned authorities including the local bodies, who have a stake in the development of the area, the region and the railway system.

7.1.57 The budget for the year 1998-99 reflects the direction Indian Railways intends to take to reduce the extent of cross-subsidisation and making passenger traffic self-sustaining except in cases of targetted subsidies. Steps have been taken to provide scheduled deliveries to customers on contractual terms with a premium/penalty clause. This is likely to be the scenario for future also.

7.1.58 Simultaneously, attempts have been made to grant freight concessions to attract investments by customers in terminals - an area of heavy detention of rolling stock. The current year's budget has provided for a reduction in the classification of steel, limestone, dolomite and gypsum. Similarly, the taper of rates for coal, cement and iron and steel has also been made more attractive over middle and long distances. Railways are also examining the scheme of discounts on substantial offer of assured additional traffic.

Investment Strategy

7.1.59 Considering the availability of resources and a large number of ongoing projects, it is essential to prioritise the existing portfolio in the Ninth Plan for better project management.

7.1.60 For taking up new projects, generally, the highest priority must be given to projects which augment the capacity of the railway system in the high density corridors, apart from investments needed for ensuring safety and reliability of the services. In this regard, the first priority needs to be accorded to multi-plexing and electrification of the system around the "golden quadrilateral", where it is under maximum strain. The gauge conversion policy must also be geared to the operational requirements of the system at this juncture. Broadly speaking, gauge conversion may be accorded lower priority vis-a-vis new lines which either directly add to capacity or open up new areas.

7.1.61 The new line projects do pose a difficult choice. The bulk of the network was laid prior to Independence and its configuration was largely determined by the strategic and commercial interests of the colonial power. After Independence, attempts were made to remove the weaknesses of the system. But only about 9500 route kms could be added due to the meagre funds available for expanding the network. Many areas have still not seen a railway line. Strategic considerations also demand the extension of the network in several areas, as do the infrastructural considerations in respect of the North-East, J and K and similar areas. Since very few new lines bring in adequate returns over the time horizon relevant to commercial decision making, the railways can take up only such of the new line projects which have either demonstrated the operational need or appear viable in a reasonable time frame. Other projects should be taken up only with financial support provided from the public exchequer or from the concerned State Governments and others who are to be regarded as common stake holders in the development of the concerned regions. The same consideration should also apply to the operational losses which too must be shared by the beneficiary States or sectors until the railway line gains viability.

7.1.62 These considerations apply particularly to metropolitan transport projects. Because of the exponential growth of the metropolitan areas there is an increasing reliance on personalised transport leading to high social costs viz. congestion, pollution, high accident rates and conspicuously inequitous sharing of public utility of the road system. There is an urgent need for introducing/improving mass rapid transit systems in the major metro cities. The railways have a major role in providing such safe and clean system for these areas. The concerned State Governments and local bodies need to be involved in providing resources and associating themselves in the operations in order to ensure proper coordination between different modes in the matter of route planning and fare structures. The Maharashtra Urban Transport Project (MUTP-II), which takes an integrated view of both rail and non-rail components of the city’s transport needs and envisages Centre-State collaboration in addressing the complex metropolitan problem, is a case in point. Since the transport projects in the metropolitan cities require very large investment, external assistance could also be mobilised for completing the work in a reasonable period.

7.1.63 Since the railway construction projects - new lines or gauge conversion -involve considerable manual labour, it may be possible to improve the viability of some of the projects if the labour component of these projects is linked with the rural employment programme of either the Central or the State Governments. Necessary modalities will have to be worked out for integrating the demand-based approach of employment programmes with the need for quality work on a steady basis which has to characterise the major railway projects.


7.1.64 Capacity building in the railways is as much a matter of investment in new assets as of making the best use of existing assets. The railways have recorded a gradual improvement in assets utilisation but there is ample scope for improvements in productivity when comparisons are made with the achievements of some of the other broadly comparable railway systems elsewhere. The wagon utilisation, in terms of NTKms per wagon per day, has recorded considerable improvement but even higher levels of performance are possible if the average running speed and the efficiency of terminal handling are improved. The speed of the freight trains is still very low, leading to long turn around time. This needs to be tackled by a proper utilisation of the latest technology and by operational improvements, besides the provision of dedicated corridors for through movement in busy sections.

7.1.65 The utilisation of the rolling stock depends upon the reliability of the rolling stock as well as fixed assets. The success of the operational strategies to meet the traffic demand is considerably affected by the incidence of engine failures, hot box detachments, spring breakages, rail fracture and other track failures, failures of signalling and telecommunication equipment etc. Although some steps have been taken to improve the reliability of the rolling stock, there is a long way to go in controlling the adverse impact of the various types of failures. Therefore, in the Ninth Plan improvement in the reliability of assets would be closely monitored. Measures will be taken to reduce the operational costs by a change in the practices and systems which would result in improving the overall mobility of the rolling stock, less detention at terminals and better output in the workshops.

7.1.66 A whole range of cost control measures ranging from employment restraint to proper inventory management is also necessary to improve the operating results. These will be rigorously pursued.


7.1.67 Safety of rail operations will be a prime objective during the Ninth Plan. In both operational and investment programmes safety will be accorded high priority. The need for upgrading the safety infrastructure through induction of technical aids to support the human element, enhancing the asset reliability and improving the work culture and ethos cannot be over-emphasised. Strengthening the technical and human based safety systems would be given priority in the Ninth Plan. In order to improve the safety and the security of the railway property and the passengers, efforts will be made to modernise the railway protection force by providing them modern equipment and weaponry as also through better training facilities and upgrading the information system. The major train accidents are mostly due to human failure and the impacts of such accidents are more severe in the superfast trains. The probability of human failure should be reduced considerably by enhancing the accountability of the operational staff. This alongwith adequate safety measures would reduce their occurrence. Another area of concern is the unmanned level crossings. It is necessary to generate awareness especially in rural areas on the precautionary measures in using such unmanned level crossings.

Private Sector Participation

7.1.68 The scope for private sector participation in providing rail infrastructure and services is limited. Attempts have, however, been made to involve the private sector in augmenting the capacity of the railway system in a number of ways. The "Own Your Wagon Scheme (OYWS)" was launched in the Eighth Plan in order to tap the private sector resources for augmenting the supply of wagons. The private sector firms would procure the wagons, own them and lease them to the railways with or without preferential claim on allotment of capacity for the firms’ own use. With the revision made in the scheme in February, 1994, the response has been encouraging during the period 1994-95 to 1996-97. The actual procurement under the scheme has been of the order of 9000 i.e. about 77% of the target. It has also been decided to undertake some of the projects through investment by the private sector under "Build-Own-Lease-Transfer (BOLT)" scheme whereby the private entrepreneures and the financial institutions would build/manufacture/finance the assets for lease to the railways. It is proposed to offer projects like gauge conversion, supply of rolling stock, electrification, doubling of existing single lines, telecom projects etc. under this scheme.

7.1.69 However, the experience during the Eighth Plan has underlined the difficulty of enlisting private participation in such infrastructural areas on affordable terms. In order to attract increasing amount of private sector investment in the Railways and maximise the efficiency and gain arising out of the synergestic effect of the private and public sector investment, restructuring of Indian Railways becomes inevitable.


  • Indian Railways currently operate as a vertically integrated monolithic organisation, responsible for all aspects of railway operation including development and maintenance of the track network, operation of freight and passenger trains and operation of several railway production units. The large size of Indian Railways is a source of strength in some respects but the rationale of continuing with the present structure into the 21st century needs to be re-examined.
  • The trend across the world is to "unbundle" single entity infrastructure organisations and create separate organisations responsible for each distinct unbundled component. This enables appropriate costing and pricing of the individual components of the bundled service, making it possible to measure efficiency in the production of each component, and also to introduce competition at each stage as appropriate. Unbundling integrated monopolies is particularly helpful in introducing private investment into infrastructure since the private sector can be allowed relatively easy entry into those segments which are potentially competitive.
  • Applying these principles to the structure of Indian Railways suggest a number of possibilities which need to be explored. An obvious possibility is to spin off the manufacturing units of the Railways into separate companies and start determining their costing and pricing on commercial principles. This would in the long run help to create pressures for efficiency and would also encourage the Railways to develop a more competitive procurement policy.
  • In principle one can go further and distinguish between the provision of track services, which is a "natural monopoly" because of economies of scale, and the use of these services by individual freight or passenger rail operating companies which need not be a monopoly. Operation of the track network would have to remain in the public sector for the forseeable future. Railway services on the other hand could be provided by separate corporations which may specialise in freight or passenger traffic. A public sector presence would be essential in this area also but the area could be opened to private companies on a competitive basis. Private operators could be allowed to operate in different segments of the network depending upon demand conditions. The presence of suppliers would introduce competition and improve service availability and quality to users.
  • The restructuring proposed above will raise a number of problems relating to valuation of assets, staff and personnel status, incidence of excise duties and taxation and corporatised enterprises etc. However, these problems can be suitably resolved and must be viewed in the context of the potential advantages from the proposed restructuring.

7.1.70 Efficiency of terminal operations constitutes one of the most important parameters of asset utilisation of railways. It has been estimated that the terminal detention constitute nearly 1/3rd of the total detention of rolling stock. Productivity of terminals is likely to become more and more critical as the volume of traffic carried by the railways increases. In order to increase efficiency, reduce manpower costs and improve services to the customers, franchising the terminal operations to the private sector particularly at new project sites would be considered during the Ninth Plan.

7.1.71 Other areas of rail operation where the private sector would be involved include running of tourist trains, operation of cloak rooms and marketing of special freight trains which will have guaranteed transit time and shall run on time table paths etc. Railways have already made a beginning in private sector investment in rolling stock, awarding contracts of tourist trains and cloak room operations.

Export of Expertise

7.1.72 The Indian Railways and other organisations working under its umbrella have expertise in the field of rail services and manufacture of rail equipment. The Indian Railways and its organisations particularly RITES and IRCON have been providing expert services to various countries particularly in Africa. They are gearing up for bigger strides in the construction of infrastructure projects in the field of railways as well as other areas, besides exporting rolling stock.

Traffic Projections


7.1.73 The freight projections of the Ninth Plan have been made on the basis of the analysis of the past performance of the users, the present status of their expansion programme as also the estimation of the likely time frame of new plans coming on stream, the railways’ capacity to augment its fixed infrastructure and production capacity of its units engaged in the manufacture of locomotives/coaches etc. Particular note has been taken of the higher tempo of growth in the economy and the need for building a base for a higher share for the railways in the economy’s transport mix in the years to come. Accordingly, a growth rate of 5% is being assumed for the Ninth Plan period and even higher growth rates will have to be achieved in the Tenth and Eleventh Plan in order to reverse the trends in modal split. The projections are given in Table-7.1.6

                  Projected Freight Traffic at the end of Ninth Plan
                                                   Actual           Projected 
                                                  1996-97            2001-02
          Originating Revenue earning   traffic     409                525  
          (million  tonnes)
          Traffic Output  (billion tonne kms)       278                353 

7.1.74 The task of lifting additional freight traffic and meeting the requirements of different user sectors requires both short-term and long-term strategies. In the short-term, the capacity would be augmented through acquisition of additional rolling stock, improvement in terminal operations and speed of goods trains, encouraging private sector participation in the acquisition of rolling stock etc. In the long run, the capacity would be augmented through improvement in the handling systems at terminals in close coordination with the users, improvement in wagon designs, development of high horse power locomotives and introduction of heavier trains, construction and operation of heavy haul freight routes etc. Sharing of cost between the Railways and the user sectors for introducing mechanical handling devices to reduce wagon detention time will also be considered.

Passenger Traffic

7.1.75 Non-suburban and suburban traffic are estimated to grow to 313 and 87 million PKMs respectively at the terminal year of 9th Plan as indicated in Table-7.1.7.


          Projected Passenger Traffic at the end of Ninth Plan
                  Actual  1996-97         Projected 2001-02
                 -------------------   ------------------------
                  Passenger     PKMs     Passenger   PKMs    
                 (million)     (billion) (million) (billion) 
 Non-Suburban      1575         280.50     1793     313.00   
 Suburban          2578          76.50     2989      87.00      

7.1.76 To deal with the requirement of the growth and changing pattern of passenger traffic, high capacity mail and express trains, on traditional high density corridors and modern design of coaches, lighter in weight and longer in length, would be introduced.


Physical Targets

7.1.77 The main thrust of the Indian Railways at this juncture is to operationalise its strategy to launch the railway network into a higher trajectory especially in respect of higher growth rate in the freight traffic. For that besides productivity improvement, investment in capacity enhancement and technological upgradation of Indian Railways would be a necessary pre-condition.

7.1.78 It is proposed that the Railways may set a target of 525 million tonnes of freight traffic and 353 billion tonne kms. to be achieved during the period 1997-2002. The following targets are proposed to be achieved by the year 2002 in respect of various programmes.

Track Renewals

7.1.79 It is proposed to go for track renewal of current arising on the A,B and C routes to the extent of 13,922 kilometres during the period 1997-98 to 2002.


7.1.80 A total of 2,334 route kilometres of electrification is planned during the period 1997-2002. This will complete the ongoing works and start electrification of the remaining part of the unelectrified sections of the `golden quadrilateral’.

New Lines

7.1.81 Construction of about 819 kms of new lines is planned during the period 1997-2002, Udhampur-Srinagar-Baramulla is being taken up as a national project at a cost of Rs.2500 crores.


7.1.82 In all about 2,500 kms. of doubling are planned to be commissioned during the period 1997-2002, as against over 1,100 kms. during the VIII Plan period.

Acquisition of Rolling Stock

7.1.83 The acquisition of rolling stock depends on the quantum of traffic to be moved, the mix of traction and norms of asset utilisation. Following are the targets for the rolling stock acquisition during the period 1997-2002:

a). Wagons : It is proposed to acquire 1,36000 wagons during Ninth Five Year Plan period. It may be mentioned that the indigenous wagon manufacturing capacity is about 36,000 wagons per annum, the industry has not been able to supply more than 26,000 wagons in a year. The industry has to gear up their production to the rated capacity. Besides, it is also required that railways should phase out its 4-wheeler stock and replace them with higher capacity, roller bearing 8-wheeler stock. Increase in pay-load-to-tare-ratio of wagons by increasing axle loads is also needed.

b). Locomotives : The requirement of locomotives for the period 1997-2002 has been assessed as 785 diesels and 851 electric. This takes into account the requirement of locomotives by Konkan Railway. Indigenous manufacturing capacity of Diesel Locomotive Works (DLW) and Chittaranjan Locomotive Works (CLW) will have to be extended by providing marginal inputs. It is required that railways should go for technology upgradation by induction of high horse power ABB and GM locos. Introduction of high capacity light weight LHB coaches is also needed.

c). EMUs/DMUs/MEMUs: It is proposed to acquire 1973 EMUs/DMUs/MEMUs coaches during 1997-2002. Besides, the target for conventional coaches during the Ninth Plan is 10,909.

7.1.84 The proposed physical targets to be achieved by the Railways during the period 1997-2002 in respect of major developmental activities are summarised as under:

                                    Table 7.1.8
                     Physical targets  -- Ninth Plan - Railways
	Plan head                           Target for 1997-2002
Track renewal                                   13922 kms.
Railway Electrification                          2334 kms.
New lines                                         819 kms.
Doubling                                         2500 kms.
Gauge Conversion                                 3710 kms.
Rolling Stock Acquisition
Locomotive (No.)
Electric                                          851
Diesel                                            785
Wagon procurement (No.)                        136000
EMUs/MEMUs/DMUs (No.                             1973
Other Conventional
Coaches  (No.)                                  10909
The year-wise break up of the above mentioned physical targets are given at Annexure 7.1.6.

Container Traffic

7.1.85 The traffic carried by CONCOR has registered a very impressive growth. Presently, the entire container traffic moved on the Railways is handled by CONCOR, which caters to both the international and domestic containers. The international container traffic is expected to increase from 4 lakh TEUs in 1996-97 to 10.5 lakh in 2001-02 and the domestic container traffic is expected to grow from 3.0 lakh TEUs to 4.0 lakh TEUs.

7.1.86 While bulk long distance freight will continue to be the mainstay, thrust has been given to winning back non-bulk, less than train load traffic back to rail from road by the multi-modal route. Container Corporation of India (CONCOR) has been strengthened with a new Domestic Division in this effort to reverse the trend of declining market share of freight traffic.

Railway Research and Development

7.1.87 Some of the important research projects completed by the Research Design and Standard Organisation during the Eighth Plan include the design and manufacture of 2300 HP and 3100 HP diesel locomotives, design of BG rail bus, development of AC-3 tier coach etc. In the Ninth Plan, the emphasis of the research efforts would be on increasing the productivity of assets, reducing energy consumption, enhancing the safety of rail transport and increasing quality consciousness. The important research projects proposed in the Ninth Plan are introduction of disk brake on coaches, design of EMU with air suspension, design and development of continuous train control for increasing throughput, developing technology for high speed operation, development of fuel efficient Diesel Engine, etc.


7.1.88 During the Eighth Plan, for improving manpower productivity of the railway employees a number of initiatives were taken to upgrade the quality of training programmes offered to railway personnel. The training needs are periodically analysed and the training modules revised/updated. Simulators for training of drivers and other modern training aids have been provided.

7.1.89 New initiatives, like granting incentives for acquiring higher qualification by the staff have been taken. All these, clubbed with the overall improvements in infrastructure contributed towards increasing manpower productivity. During the first three years of the Eighth Plan period, the staff productivity increased by 5.5 per cent.

7.1.90 The Indian Railways have a regular work force of over 16 lakh employees. It is the single largest employer in the country. In the recent years there has been an increase in the expenditure on staff. The staff cost which was about 50% of the working expenditure at the end of the Eighth Plan has now gone upto 56%. In order to ensure that the trend of high wage cost does not make Railways a losing entity, focussed measures would be required.

7.1.91 During the Ninth Plan, in order to make the Indian Railways a dynamic growth oriented and successful enterprise in the fast changing environment, the human resource development strategy would aim at further improving the work culture of the organisation. A customer oriented approach must be adopted by all departments and at all levels of this huge organisation. At the same time, the entire human resource development effort would aim at instilling in the railwayman a pride in the grand enterprise, that is Indian Railways. Suitable programmes to boost the morale, enhance the productivity and promote the welfare of railwaymen will be devised to imbue them with a sense of commitment to the vision of the Indian Railways regaining their position as the prime-mover of national economy and as one of the leading railway systems in the world, and, in the process, improving their own rewards and prospects.


7.1.92 Roads have traditionally been the principal mode of connectivity between places and in hilly areas they are often the only mode available for the transportation of men and material. Apart from carrying traffic independently from point to point our road system is the main feeder to the railway system, ports and harbours and thus forms a part of an integrated transport network. India’s road network measured 3,319,644 kms. at the end of 1995-96, comprising National Highways (NH) (34,508 kms.), State Highways (SH) (135,187 kms.) and other roads including Major District Roads (MDR), Other District Roads (ODR), Village Roads (VR), Urban Roads and Project Roads having a length of 3,144,949 kms. This includes 916,010 kms. of road length constructed under the Central Government employment programmes like Jawahar Rozgar Yojana (JRY) and Employment Assurance Scheme (EAS). The development and maintenance of the National Highways is the responsibility of the Central Government, which is normally carried out through the agency of the State Governments. The rest of the network i.e. State Highways, Major District Roads, Other District Roads and Village Roads is with the State Governments and Panchayat Raj Institutions. The Border Road Development Organisation is entrusted with the construction and maintenance of strategic roads in the hilly and difficult terrain areas.

7.1.93 The National Highways are the major arterial roads which run through the length and breadth of the country connecting State capitals, industrial and business centres, ports, tourist centres and provide links with neighbouring countries. The State Highways are the secondary road system for inter-district movement in the State. They connect State capitals with district headquarters, important towns and cities within the State and link up with the National Highways and the adjacent State Highways. The Major District Roads and Other District Roads serve as a road system both for inter and intra-district movement. They traverse throughout the district linking areas of production and marketing in the district and connect with the nearest State Highways. The Village Roads serve as the feeder roads to this network for movement of agricultural and horticultural produce to the nearest urban consumer centres.


7.1.94 India’s road network is seemingly very large, at a little over 3 million kms. The figure has swelled recently because of the inclusion, for the first time, of village roads constructed under various employment programmes. But even this network cannot meet the requirements of accessibility and mobility for a country of India’s size and population. The table in Annexure 7.1.2 gives road availability State-wise in relation to area and population. The all-India figure of 73.0 kms per 100 sq. km of area comes out as fairly large in international comparisons. But the picture varies widely across the country. Many areas like North-East and J and K are inadequately served by the road network. Similarly, around three fifths of India’s 6 lakh villages are connected, by all-weather roads with nearby market towns, while many habitations remain to be connected although successive Plans have focussed on the problem of rural connectivity.

7.1.95 The total road kilometerage has not been growing adequately to meet the demand for speedy and efficient transportation of human and material traffic. The vehicle population in the country has grown from 0.3 million in 1951 to 33.56 million in 1996 thus registering a growth rate of over 11% per annum. Table-7.1.9 shows the growth of traffic carried by roads since 1951:

                          Growth of Traffic
   Cagtegory          1951                       1995 
   Freight (BTK)       6                          398
   Passenger (BPK) *  23                         1314

* Estimated

Road freight and passenger traffic have thus expanded at the rate of about 10% per annum.

7.1.96 In comparison with the growth of vehicular population as well as freight and passenger traffic, the road network has registered an annual growth rate of over 4% i.e. from 0.4 million kms in 1951 to over 3 million kms in 1995. Further, the network has a large proportion of village roads which are generally of limited value from the point of view of heavy vehicular traffic. The main arterial network comprising the National Highways and the State Highways is just over 5.0% of the total road system, while it carries more than 75% of the road based traffic. This trunk route system has grown even more sluggishly than the road system as a whole. Table-7.1.10 indicates that most of the growth has occurred in the rural road sector, while the National and State Highways have expanded at the rate of 1.24 and 1.82 per cent per annum respectively.

                                      Growth of Road Network
(ooo Kms.)
Category                          1951                 1996                         % age
                                                                                 change p.a. 
National Highways               19.8 (5%)          34.5  (1.04%)                    1.24
State Highways                  60.0 (15%)        135.1  (4.07%)                    1.82
Other Roads                    318.0 (80%)       3150.0  (94.89%)                   5.23
Total                          400.0 (100%)      3319.6  (100%)                     4.81

Note: Figures in parentheses are in percentages of total road network. 

7.1.97 The capacity of the highway system in terms of carpet width is also not adequate. In spite of heavy congestion on most of the National Highways and State Highways only 3.41% of the National Highways and 0.57% of the State Highways are standard multi-lane, as is evident from Table-7.1.11.

                Table -7.1.11
Capacity of Highway system in terms of  number of lanes

                                                (length in Kms.) (1996)
Category of road          National       %age       State         %age
  (Surfaced)                   Highways                  Highway  
1. Below standard          3,458       10.08        47,635       35.85
   single lane                                      
2. Single Standard         4,268      12.45           56,214      42.31
3. Standard double lane 25,395   74.06          28,265     21.27
4. Standard Multi-lane    1,170      3,41              748        0.57     
    Total                          34,291     100.0       132,862  100.0

7.1.98 In the case of National Highways about 74% of the network is double lane, while about 78% of State Highways is either single standard lane or below in spite of the fact that the volume of traffic on some of the State Highways is comparable to that plying on the National Highways.

7.1.99 The differential growth rates in capacity augmentation on the arterial network and traffic demand has led to the present situation in which large sections of the National Highways and some sections of the State Highways are used well over 100% of their intended economic capacity. The result of this mis-match between traffic growth and capacity is slow speeds, high vehicle operating costs, environmental pollution and high incidence of accidents. Further the road assets deteriorate fast because of increased traffic and heavier loads. Poor maintenance of assets also results in a much larger proportion of the network becoming unserviceable. It has been estimated that only 20% of the paved roads are in good condition in India compared to 70% in South Korea and 50% in Thailand.

Review of the Eighth Plan

7.1.100 During the Eighth Plan the thrust of the road development programme remained on a phased removal of existing deficiencies in NH network. Construction of missing links, 4-laning and 2-laning of single lane stretches and construction of bridges and bypasses received greater attention. A statement showing the targets /achievements of central sector road programmes during the Seventh and Eighth Plan is at Annexure-7.1.7.

7.1.101 The general approach of the Eighth Plan was to speed up the completion of the ongoing works with a special emphasis on externally aided projects in order to contain the cost and time over runs and their spillover to the next Plan. The overall limitation of funds consequently meant insufficient provision for other highway works. Only about 600 kms were added to the National Highway network during the Eighth Plan. Similar constraints affected most of the State level programmes as well. The rural roads programme also fell short of the target of 100% connectivity for villages with population of more than one thousand.

7.1.102 The details of the Central sector outlay and the expenditure in the Eighth Plan are shown at Annexure-7.1.8.

National Highway Authority of India (NHAI)

7.1.103 The National Highway Authority of India (NHAI), which was set up under the NHAI Act, 1988, was operationalised in February, 1995. The Authority, set up for a gradual assumption of direct responsibility for the development and maintenance of National Highways, has taken up the execution of selected externally aided highway projects and the implementation of privately assisted road projects under Built-Operate-Transfer (BOT) scheme and similar arrangements, as well as the development of passenger oriented wayside amenities along the highways. The Authority has been allowed to raise funds through the issue of non-taxable bonds.

7.1.104 The NH Act, 1956 was amended in June 1995 to encourage private participation in the development and maintenance of National Highway network. Under the amended Act it is now possible for private entrepreneurs to develop and operate road projects, collect and retain the user fee (toll) and regulate the traffic on those roads. NHAI Act would have to be reviewed and suitably amended to provide for strengthening and rationalising the organisational structure, powers and functions of NHAI. The Act would also need to incorporate adequate provision for BOT frame-work as well as creation of an independent regulatory authority in respect of private investements.

7.1.105 Modern road construction technology was adopted to provide longer life to roads. Technically sound specifications like dense bituminous macadam, asphaltic concrete, cement concrete pavements along weak national highway stretches, soil improvement by stabilisation and use of polymers in road construction were adopted. Environmental effects like slope protection and soil erosion control, drainage and dust control, plantations and landscaping were encouraged. New construction equipments and the system of prequalification of contractors were introduced for large sized road packages.

Objectives and Policy Framework for the Ninth Plan

7.1.106 The focus of the road development programme in the Ninth Plan would be on:

Strengthening and improving the crucial sections of the highway network through phased removal of deficiencies and multi-laning of high density corridors;

Improving the road communications in remote areas such as the North-East;

Providing all- weather connectivity to remaining villages; and promoting energy conservation, safety and environment protection.

7.1.107 A well defined plan taking a perspective of 15-20 years would help to address the important issue of capacity constraint being experienced in this sector. An integrated policy for the transport sector would inform the road development programme with accent on gradual modification of the modal mix through a suitable inter-modal coordination mechanism. The road network will be expanded and strengthened keeping in view the traffic density and the need to realise optimal inter-modal mix. While the road network will be expanded and strengthened where traffic density warrants it, the decision on sectoral solution like provision of expressways need to be taken, keeping in view the cost and condition prevailing in our country. In view of budgetary constraints, although private enterprise will be encouraged in funding the construction and maintenance of roads and bridges, the role of budgetary support will remain predominant in view of the crucial role that basic infrastructure like roads play in catalysing development. In mobilising resources for the road sector, the instrumentalities of user charges and dedicated levies will be used to the extent possible for carrying out expansion and improvement works.


  • An expressway is very high quality, high speed, access controlled road which segregates local and cross traffic. The high speed of travel made possible by expressways improves the efficiency of transport services, reduces vehicle operating cost and helps in reducing inventory costs for the industry, thus improving its competitiveness vis--vis international industry operating on JIT (Just-in-Time) inventory principles. As the economy develops the provision of expressways becomes an essential requirement.
  • Heavy investment is required not only for building multi-lane divided roads but also for associated facilities including provision of modern communication and information system. At an estimated cost of Rs. 11 crore per kilometre including land acquisition, a 1000 kms. expressway will require Rs. 11000 crore. An expressway is, therefore, highly capital intensive facility.
  • In most developed countries the construction and maintenance of expressways are financed largely from user charges and tolls. The economics of expressway requires not only a very large volume of high speed traffic but also substantial movement of high value commodities so that the traffic can bear the high cost of construction and maintenance of the expensive facility.
  • Expressways have to be fully fenced to prevent any unauthorised entry including cross traffic. Unless this is done, high speed traffic would be very dangerous. Crossing from one side of the expressway to the other is, therefore, possible only through overpasses and underpasses. In developed countries this arrangement works well because farms are large and movement is motorised. In our situation, where there is need for people and animals to cross from one side to the other to access farm lands and villages and when much of this traffic is pedestrian, it is difficult to envisage people resorting to bridges or underpasses built at intervals of several kilometres. On the other hand, increasing the number of cross over points would be very expensive.
  • Large scale introduction of expressways is, therefore, not feasible in our circumstances. However, there may be some scope, albeit limited, of constructing expressways on some selected stretches where traffic density is exceptionally high, there are alternative routes for slow moving local traffic and the need for cross traffic is low.

7.1.108 Despite its importance, the National Highway network suffers from a large number of deficiencies which are required to be removed gradually. Geomatrics and the riding quality will be improved for all the National Highways in general. The thrust areas include 4-laning of high density traffic corridors, which would ease the mobility issue. strengthening of existing roads, construction of bypasses and ROBs, road development in the North Eastern Region and development of strategic and border area roads which will receive top priority in the action plan. Packages of projects rather than isolated stretches, will be identified for development in order to ensure that highway users reap full benefits of the improvements carried out.

Four- laning

7.1.109 The high density traffic corridors of National Highways network is shown in Annexure 7.1.9. One of the major thrust of the Ninth Plan would be on four laning of National Highways.


  • The Indian National Highway system is excessively congested and physically deficient by international standards. To upgrade and modernise the National highway system, it is necessary that the already identified high density corridors, where the traffic exceeds 35000 passenger car units, are taken up for four laning using mechanical methods and improved technology. Top priority in road sector development is to be accorded to upgradation of National Highways on the Golden Quadrangle, linking Delhi, Mumbai Chennai and Calcutta.
  • The total requirement of funds to complete work on the Golden Quadrangle is estimated at around Rs.20000 crore. Development of North-South and East-West corridors will be incorporated in the existing alignment of the Golden Quadrangle supplemented by additional work to extend the alignment along North-South and East-West extremities. Keeping in view the large requirement of funds on the one hand and the severe constraint of resources, the strengthening of the Golden Qudrangle and of North South – East West extension now have to concentrate on four laning in the first instance extending to six laning where necessary.

7.1.110 A special National Highway Development Project (NHDP) will be undertaken during the Ninth Five Year Plan. The total length of this project is 11860 kms. which include the major highway linking Delhi, Calcutta, Chennai and Mumbai constituting the golden quadrangle and North-South and East-West corridors. The components of NHDP are to be implemented in three phases over a period of 10 years as detailed under:-

			Components of NHDP
	Components				Length	   Time Frame
						(Km)	    (in years)
A.	Golden Quadrangle			5000@		5
B.	Spurs					4000		7
	North (Delhi-Jammu)			
	South (Krishnagiri-Kanyakumari)
	East (Kanpur-Silchar)
	West (Udaipur Porbandar)
C.	Spines					2860		10
North (Jhansi-Delhi)
South (Jhansi-Bangalore)
East (Jhansi-Kanpur)
West (Jhansi-Udaipur)
		Total		               11,860      

@ The total length of the five corridors forming the golden quadrangle is around 6000 kms. of which about 1000 kms. is already four laned or taken up for implementation.

7.1.111 The programme for the Roads Wing of the Ministry of Surface Transport is indicated at Annexure 7.1.10.

Widening to two lanes

7.1.112 The corridors where the density of traffic is less than 20,000 passenger car units per day, widening to two lanes will receive priority. During the Ninth Plan period the widening of 1194 Kms is proposed to be undertaken.

Strengthening and Improvement of Existing Roads

7.1.113 The riding quality of the pavements of National Highways is poor leading to increased vehicle operating costs. The inherent structural weaknesses of the pavements results in their premature failure. Due to the expected deterioration on account of increased volume of traffic and axle load, about 15000 Kms where traffic is 20,000-35,000 PCUS/day have been identified to be in need of strengthening alongwith the provision of paved shoulders. Out of this the Ministry of Surface Transport will take up about 2900 Kms. for strengthening and improvement, during the Ninth Plan period

Construction of By-passes/ROBs and Improvement of Congested Sections

7.1.114 The National Highway links through towns are known to cause delays to traffic as well as inconvenience to the city population. This problem of congestion in and around cities/towns needs to be tackled on an urgent basis. At least 100 by-passes are required as per a recent estimate but during the Ninth Plan, 40 bypass works can be undertaken out of which 20 will be carried by the Ministry of Surface Transport through budgetary funding. There are about 600 level crossings along the National Highways requiring road over bridges. There are also several bridges on NHs whose load carrying capacity is limited. Such weak and distressed bridges would need to be reconstructed. During the Ninth Plan, 266 major bridges/ROBs/Minor bridges will be taken up for construction out of which 234 will be during the remaining four years of the Plan.

Development of Roads in North Eastern Region

7.1.115 As per the decisions taken in the Chief Ministers’ Conference on North Eastern States, 10% of the central budget for the road sector should be allotted for road development in the N.E. Region. About 2700 Kms of the NH length has been entrusted to BRDB for development. Works on newly declared National Highways will also be undertaken during the Ninth Plan period.

State Highways and Major District Roads

7.1.116 The growth of State Highways and Major District Roads (MDR) has remained relatively stagnant both in respect of length as well as traffic carrying capacity. The priority during the Ninth Plan would be to consolidate the existing network rather than to expand its length. A network approach will be preferred while identifying the high density corridors for development. The State Highways and the District Roads would be developed in such a way that the entire State road network would provide a feeder system to the rail network thereby avoiding development of a parallel road network. It is of paramount importance that an integrated strategy to achieve simultaneous development of the three major categories of roads is formulated so as to eliminate existing bottlenecks in the movement of passenger and goods traffic.

7.1.117 During the Ninth Plan Period the following will receive high priority in respect of State Highways and MDRs:

Black-topping the entire length of State Highways and all MDRs with traffic of more than hundred commercial vehicles per day.

Replacement of Railway level crossings with overbridges wherever train vehicle units exceeded 50,000.

Construction of Bypasses with service roads for all district headquarters.

50% of weak and narrow bridges with heavy traffic will be rehabilitated.

20% of the State Highways will be widened and strengthened as per traffic requirements

Construction of all missing links in the State Highway network.

7.1.118 The implementation of the above will be the primary responsibility of the State Governments. They will therefore be requested to proritise their road development programme in line with the above mentioned six imperatives and workout detailed proposals.

Urban Roads

7.1.119 Urban Roads (UR) cater to the traffic requirements within municipal limits, military cantonment areas, ports and railway areas. The urban road length in recent years has registered significant growth. This length has increased from 1.23 lakh kms. in 1980-81 to 2.11 lakh kms. in 1995-96. The existing road capacity is, however, not able to meet the requirements of the ever-growing motor vehicle population. As a result, there are frequent traffic jams, congestion and road accidents. Due to non-availability of adequate funds the needed number of flyovers, underbridges and bypasses could not be constructed. The absence of mass transport system in the metropolitan cities and the unprecedented increase in the number of personal vehicles has resulted in rapid deterioration of the urban road system. The problem of congestion in urban areas can only be solved with rigorous demand management, on one hand, and provision of mass transport system on the other. The construction of flyovers, underbridges and railway over bridges will be taken up wherever necessary but this offers no lasting solution to the problem.

Prevention of Encroachment and Ribbon Development

7.1.120 The concentration of population in cities and towns has been increasing over the last several decades. Rapid urbanisation has resulted in encroachments and ribbon development along NHs and particularly around newly constructed bypasses and bridges. Automobile repair shops, petrol pumps, residential buildings and commercial establishments have also sprung up in an uncontrolled manner. Such establishments have proved to be a hindrance to the smooth flow of traffic, consequently resulting in accidents. These will have to be removed through suitable legislative measures. Their re-emergence will be prevented by suitable institutional coordination between the highway authorities and town planning bodies.

Road Network in Remote and Strategic Areas

7.1.121 The existing road network in these regions is deficient due to inadequate capacity, poor riding quality, weak and distressed bridges/culverts. Many of the semi-permanent timber (SPT) bridges require to be replaced by RCC bridges. Some of the areas in these regions remain isolated or blocked for long periods and need special attention. The development of an efficient road network is an important pre-condition for the overall development of remote, inaccessible and strategic areas like North East and Jammu and Kashmir regions.

7.1.122 The special needs of the North East have been recently examined by a high level Commission which assessed the backlog in basic minimum services, including gaps in rural connectivity and the infrastructural needs of the region. Resources, both financial and organisational, will be mobilised at the Central and State levels to address the problem.

Rural Roads

7.1.123 At the time of independence, the connectivity of villages with roads was rather poor. The development planning process laid special emphasis on rural development of which construction of rural roads has been a special component. The construction of rural roads received a boost with launching of the minimum needs programme in the Fifth Five Year Plan. Under the Minimum Needs Programme (MNP) it was mandated that the villages with a population of 1000 and above would be connected with all-weather roads during the Eighth Plan. A review of the MNP (Rural Roads) has revealed that the connectivity level for this category of villages has reached 85% of the target. The MNP has now been replaced by the Basic Minimum Services (BMS) programme which envisage provision of connectivity to all villages and habitations by the end of 2002 A.D.

7.1.124 According to recent study by Planning Commission more than 40% of Indian villages are yet to be linked by all weather roads. Efficient delivery of social services (health, education and nutrition) and marketing of rural produce is difficult in areas not connected by good roads. This goes on to establish a strong positive correlation between rural connectivity and poverty and therefore, good and bad roads lead to wide disparity in the living conditions of our rural population. While the total cost of providing connectivity to all villages has been estimated at around Rs.50,000 crore, about one tenth would be required to achieve full connectivity for villages with a population of over 1000.

7.1.125 Since resources of this magnitude may not be available in the State Plans, efforts would be made to pool the resources under different rural road programmes like JRY, EAS etc. to supplement the efforts under BMS. One could explore the possibility of taxing agriculture products, market centres and replicating the experience of good rural connectivity States like Haryana, Punjab and Tamil Nadu.

7.1.126 The priority in the Ninth Plan will be to provide connectivity for the villages which have spilled over from the Eighth Plan. Efforts would continue to fulfil the targets of provision of road connectivity to all villages by the end of 2002 A.D. The States which have attained sufficient level of connectivity for villages with a population of 1000 and above will take up connectivity of villages and habitations with a population below 1000. The needs of difficult and remote villages and SC/ST concentrated areas will also be addressed on a priority basis. The State Governments will be encouraged and assisted to prepare and follow comprehensive Master Plan for development of State Highways and other roads in the States.

New sources of funding

7.1.127 The funds for the development and maintenance of National Highways are provided by the Central Government on a yearly allocation basis. Similarly, the funds for development of State Highways, Major District Roads and Village Roads are provided by the respective State Governments. The budgetary allocations for the development of roads, however, have fallen far short of the requirements and there is a need to augment these resources. The road sector generates substantial revenues primarily through motor vehicle tax and taxes on fuel and spares. But the expenditure on the development of roads has remained comparatively low because these revenues go to the Consolidated Fund which is used for financing all developmental and other expenditures. Currently, a small amount equivalent to 3.5 paise per litre out of the proceeds of excise and customs duties levied on motor spirit, is available for development and maintenance of roads. Since very substantial resources are required for expanding and upgrading the road network, various mechanisms for raising resources from road users have been under consideration. Internationally, the commonly used method for raising resources for road development is the levy of user charges in the shape of dedicated surcharges on fuel.

7.1.128 Another source of revenue for road development is tolls which can be collected at fairly low and affordable levels from the users of specific high density traffic sections of roads and bridges. Accruals from such charges would enable viable BOT
concessions as well as projects undertaken directly by NHAI or its subsidiaries (SPVs, joint ventures etc.) through market borrowings. The amended National Highway Act, 1956 has empowered the Government to levy toll on selected sections of the National Highways. The toll revenue can reduce the burden on the Government. Some of the existing 4-lane developed roads, newly constructed roads and bypasses will be taken up as toll roads.

External Aid for Road Projects

7.1.129 Despite higher allocation for Central/ State Road Projects during the Ninth Plan, external assistance will continue to receive priority. Similarly, some State Highway projects including the State road development packages in North Eastern Region and some rural road development networks packages are expected to be posed for foreign funding. The larger external assistance would, however, need to be balanced by higher domestic resources so that counterpart fund requirements of the externally aided projects do not affect local road development programme adversely.

Private Sector Participation

7.1.130 Road sector was declared an ‘industry’ to facilitate commercial borrowings. The National Highway Act 1956 was amended in June, 1995 to provide for a legal framework for private sector participation in road development.

7.1.131 Various fiscal and tax concessions have been offered for undertaking road projects on BOT basis. The Government has also assured help in land acquisition, environmental clearances and simplification of procedures. Some State Governments have also taken significant steps like the setting up of dedicated organisations on the pattern of NHAI to promote road development, financed through user charges on BOT or State toll basis. Some small stretches of roads and bypasses have already been commissioned under these arrangements. The role of this device may become more significant once the policy framework including an independent regulatory system is put in operation and investors are able to overcome their apprehensions with regard to uncertainties of these long-term investments in such infrastructure. The policy framework is sought to be kept flexible to permit allocation of risks on an acceptable basis and sharing of risks between the Government and the private sector through grants or equity sharing.

7.1.132 Projects relating to bypasses, bridges and 4 laning of existing sections of National Highways which on the basis of traffic density are financially viable and bankable would be taken up through private sector participation. 11 projects involving an investment of about Rs. 580 crore have already been initiated under the BOT Schemes. As stated already, viable sections of the four major coridors are also proposed to be taken up under BOT scheme for four laning. NHAI has been given considerable flexibility to financially collaborate with the private or the public sectors and projects which are not viable on the basis of traffic density will be provided equity/loan support from NHAI. Several other ROB/Bypass projects have been proposed under the BOT scheme through State Governments. In addition to the projects taken up through private sector participation under the programme of NHAI, some investment would be available under privatisation programme for non-NHAI roads. Thus, given the risk profile of toll road projects and the relative under development of Indian long-term debt market, private investment in roads is expected to be rather modest. Therefore, the budgetary support will continue to have a large and crucial role to play in road development during the Ninth Plan period.


7.1.133 The road network built at huge cost needs to be maintained properly to prevent disintegration and deterioration. Timely upkeep and maintenance prolongs the life of road assets. Properly maintained roads reduce vehicle operation cost (VOC) by providing good riding quality and add to safety of road users. To keep roads in good condition huge funds are required and these keep increasing in volume as the network to be maintained continues to grow in size.

7.1.134 Over the years, the maintenance of roads had received inadequate attention primarily due to lack of funds.

7.1.135 The Tenth Finance Commission had considered the maintenance issue and evolved a formula based on the norms devised by the Ministry of Surface Transport. The norms were applied to the total road length in each State/UT to assess the requirements during the forecast period. Since the amount worked out was very large, the Commission limited the provision to double the level provided by the Ninth Finance Commission. The State-wise provision for maintenance as estimated by the Commission is shown at Annexure 7.1.11.

7.1.136 It is imperative that these provisions are substantially increased. It is necessary to regard maintenance of roads, at least of highways - National and State - as a committed liability which must be provided for in full on the basis of technical norms before provision is made for meeting the other non-Plan needs. It is also necessary for the maintenance budgets to be allocated on a need-based programme. The establishment budgets under maintenance have tended to grow beyond the prescribed norms. This needs to be restrained because otherwise an ever-increasing proportion of maintenance budget tends to be appropriated by the establishment leaving very little for procurement of material and equipment. Selectively, the maintenance work should be tried out on a contract basis in order to secure the benefits of competitive price and quality.

Highway Safety

7.1.137 The number and severity of road accidents has registered a steady increase in the country. The past record has demonstrated the poor state of safety on our roads. The sharp increase in the volume of road traffic, the growth of vehicle population particularly the operation of heavy and over-loaded commercial vehicles, the spurt in two-wheelers and over-crowded buses have aggravated the problem. To tackle the problem of road safety, it is necessary to adopt measures for the education of road users and the strengthening of enforcement. In the arena of road construction, proper engineering measures can contribute towards promotion of road safety. Apart from proper planning of road transport corridors, provision of medians, railings, lane marking and replacement of level crossing by road over bridges and properly designed grade separators would check occurence of fatal road accidents. Provision of separate bicycle lanes would not only improve the safety of road transport operations, but would also encourage use of environmental friendly non-motorised modes.

Environment Conservation

7.1.138 Road construction causes environmental pollution in diverse ways. It disturbs the natural drainage of land, flow of rivers and streams in its vicinity and adversly affects the physical and natural features of the area. The unplanned dumping of the waste material of construction activities also causes adverse environmental impact.

7.1.139 The environmental impacts of road construction vary from region to region. They are, particularly severe in hilly areas as it causes geological disturbances, loss of forest and vegetation cover and soil erosion, besides triggering flash floods. In order to minimise the adverse impact on environment caused by road construction, it is necessary to adopt newer road construction and maintenance practices. In hilly areas, it is necessary that adequate attention is paid to route alignment to ensure that landslides or erosion-prone areas are avoided. Deforestation during road construction will have to be kept to the minimum, in consultation with the forest authorities. Any cutting of the trees must be replaced by plants of equivalent number.

Research and Development

7.1.140 Expansion, modernisation, upgradation and maintenance of highway network requires research and development(R and D) inputs. These inputs ensure optimum utilisation of resources and help in finding cost-effective solutions for various road engineering problems.

7.1.141 The huge cost of developing road network and the near technological freeze of several decades experienced by the sector on the one hand, and the extension of R and D capability in the country on the other, offer a vast scope for the introduction of improved planning methodology, designs and technologies as also new materials in the road development. The R and D activity will, therefore, be taken up in all areas of road development. The objective will be the development of road planning and the construction technology which result in reduction in construction cost, vehicle operation cost, accident rates, congestion, pollution and pre-mature deterioration of roads. To achieve this objective, it will be necessary to carry out research studies, construct experimental road sections and strengthen the existing capabilities of R and D organisations. Areas like highway planning, management and designing, construction and material management pavement maintenance, bridge designs, road safety and environment studies will receive greater attention. Special attention will be paid to design improvement of non-motorised vehicles to achieve better efficiency and avoidance of drudgery. In addition to the fresh R and D efforts, it is equally important to gainfully utilise the results of research work already carried out in the field of construction, maintenance and rehabilitation of road network in the developed countries. An effective mechanism will be evolved to identify these advanced technologies on selective basis with a view to adopting, introducing and absorbing them in our road development process.

Technology Upgradation

7.1.142 Recent years have witnessed phenomenal growth of road traffic in the country. Heavier vehicles with large volume of traffic ply on our highways. The traffic growth, existing inadequacies and deficiencies in the highway network call for a massive effort in the development of highways in the country. In our endeavour to build quality roads, the adoption of new technology would ensure that roads are constructed to modern standards and specifications.

7.1.143 Road construction technology has not undergone any major change for several decades. Many countries have mechanised road construction by introducing sophisticated and modern equipment. Considering the constraint on financial resources and the availability of abundant labour force, the technologies employed in the developed world cannot be simply imitated. New techniques of construction have to be adapted to the prevailing conditions. Having regard to the magnitude of the task of road construction, it is necessary to adopt those technologies which can minimise the cost of construction and maximise the use of local resources. The introduction of machine-based technology will have to be restricted to high density traffic roads and those sections of highways which are to be commercialised.

Manpower Development

7.1.144 In order to keep pace with the technological development in the field of road construction and maintenance and to improve the quality of road construction by making optimum use of available resources, emphasis will be laid on the development of technological skills of the manpower engaged in road/bridge construction and maintenance by creating awareness of modern construction techniques. This objective would be achieved by strengthening the training programmes, conducted by various organisations including the National Institute for Training of Highway Engineers (NITHE) and the Central Road Research Institute (CRRI) and by holding seminars and workshops. To make effective use of the training facilities available in the country for highway engineers, efforts will be made to coordinate the training programmes of several State level training centres with that of NITHE.

Data Base

7.1.145 Transport planning is a continuous process. In the absence of adequate and reliable data, this process is inhibited. Data on traffic flows and resource cost is necessary to study the aggregate and mode-wise traffic trends, forecast traffic demands, evolve optimal patterns of allocation of traffic amongst different modes, formulate appropriate investment options and conduct cost-benefit appraisal. Of the two principal modes of transport, inadequacies of data pertaining to traffic flows and resource cost are more acutely perceived in relation to road. Considering the crucial importance of information on traffic flows and resource costs of different modes of transport, a mechanism will be set up to collect, update and analyse the data of traffic flows and resource cost on a regular basis.


7.1.146 Road transport is the dominant mode of transport for movement of passengers and freight in India. It is ideally suited for short and medium distances due to its advantages in terms of easy availability, flexibility of operation, adaptability to individual needs, door-to-door service and reliability. It is also the main mechanised means of transport in hilly and remote areas, not served by the railways. Road transport is one of the basic infrastructure for economic development of backward areas. It also provides feeder service to rail traffic, airways, ports and harbours. Road transport has grown at a fast pace since 1950. The vehicle population has grown more than 100-fold during the last 45 years from 1951. The total number of all types of mechanised motor vehicles increased from a mere 3 lakh in 1950 to 336 lakh in 1996. The category-wise number of registered vehicles is given in Annexure-7.1.12.

Review of the Eighth Plan

Outlay and Expenditure

7.1.147 There was a shortfall in the expenditure as compared to the outlay for road transport under the Central Sector in the Eighth Plan. As against the approved outlay of Rs.264 crore, the expenditure was only Rs.80.16 crore . The shortfall was primarily on account of the discontinuation of capital contribution to State Road Transport Corporations from 1993-94 onwards and the transfer of Delhi Transport Corporation to the Government of the National Capital Territory of Delhi (N.C.T.D.) w.e.f. August, 1996. The scheme-wise outlay and expenditure during the Eighth Plan are given in Annexure-7.1.13.

Goods Transport

7.1.148 The goods vehicle fleet grew from 8.63 lakh in 1986 to 17.85 lakh in 1996, registering more than a two-fold increase. Light carriage vehicles exhibited a faster growth than heavy carriage vehicles. For instance, the number of heavy goods vehicles increased by 106 per cent, while that of light carriage vehicles registered an impressive growth of 190% during the last ten years.

7.1.149 The road freight operations are almost wholly owned and operated by the private sector. The State Road Transport Corporations in Jammu and Kashmir, Manipur, Mizoram, Sikkim and Tripura however, provide freight services with a limited number of trucks. A two-tier structure is prevailing in freight transport operations in the country. One of the two tiers is of those transport companies/agencies which secure most of the freight contracts because of their reputation, reliability and dependability in services, the network of branches across the country, recognition by the banks and ability to offer security against the loss/damage. The other tier is of smaller operators having one to three vehicles. About 80- 90% of truck operators are estimated to be of this category.

7.1.150 The commercial vehicle fleet in the country is not utilised optimally because of the high proportion of over-aged vehicles, absence of assured loads owing to individual truck owners being lone operators and poor loading and unloading facilities at the terminals leading to abnormal delay and detention. In order to overcome these constraints, it is necessary to set up loading and unloading facilities, parking areas, provision of space for transport operators’ offices served by banks and post offices in the outskirts of the cities. The setting up of such facilities by the State Governments would facilitate the formation of cooperatives of small truck operators. It would then be possible to coordinate the freight operations carried out at the two levels.

7.1.151 The country presently has outdated truck technology and practice of overloading trucks resulting in severe damage to roads. There is need of modernising truck technology and strengthening of enforcement machinary to check the menace of overloading .

7.1.152 An important feature of the road transport in India is that the bulk traffic on both National and the State highways is moved on two-axle rigid trucks. These vehicles are generally over-loaded and cause excessive damage to the highways.

7.1.153 Road pavements deteriorate under the action of vehicle wheels. The damaging effect of vehicle loads is cumulative in nature. The more the traffic and higher the wheel loads, the more will be the pavement deterioration and earlier the need to strengthen the road crust. It has been established that the damaging effect of an axle load increases exponentially and not linearly in relation to the damage caused by a standard axle of 8.16 tonnes. Multiplier for the damaging effect is fourth power of the ratio of actual axle load to the standard axle. Thus, an axle load of 12 tonnes will cause five times the damage than a standard axle and a 16 tonne axle load will imply damage equal to 16 passes of the standard axle. Since pavement design is based on cumulative number of standard axle loads over the design service life, higher axle loads eventually cause premature distress/failure of the road pavement. In turn this means higher vehicle operating costs and in the long run, need for increased outlays for road improvement and maintenance. While efforts would be made to strengthen the enforcement machinery to check overloading, it will also be necessary to modernise the truck fleet by introducing multi-axle vehicles.

Passenger Transport

7.1.154 The passenger services through road transport are provided both by the public and the private sectors in the country. However, over the years, the share of the public sector in the total fleet of buses has declined. (Annexure – 7.1.14) While in 1980-81 the public sector held 43 per cent of the total number of buses in the country in 1995-96 its share came down to 24.7 per cent.

State Road Transport Undertakings (SRTUs)

7.1.155 There is no uniformity in the organisational set up of the public sector road transport undertakings. Some States have Corporations constituted under the Road Transport Corporation Act, 1950, while some others have registered them under the Companies Act, 1956. Some States have departmental undertakings too.

7.1.156 The total reported fleet strength of the SRTUs as on 31.3.1997 was 1.13 lakhs, with a total capital investment of Rs.8187 crore. These SRTUs covered a length of 1074 crore effective kilometers during 1996-97. In the same year, 2337 crore passengers were carried by them. The SRTUs employ manpower of the order of 8 lakh.

Physical performance of SRTUs

7.1.157 There was an overall improvement in the productivity of SRTUs during Eighth Plan. Vehicle productivity increased from 257 revenue earning kilometers per bus held per day in 1989-90 to 278 km. per bus held per day in 1996-97. Similarly the staff productivity improved from 35.3 revenue earning kilometer per worker per day in 1989-90 to 40.5 km. per worker per day in 1996-97. Fuel efficiency improved considerably from 4.35 kilometres per litre ( kmpl.) to 4.50 kmpl. during the same peroid. The details are in Table-7.1.12.

                                     Table - 7.1.12
                    Performance of State Road Transport Undertakings
         Performance Indicator           Seventh          Eighth
                                         Plan             Plan
                                         ending           ending
                                       (1989-90)        (1996-97)    
    Fleet utilisation                     89                 89
    (% of buses on road)
    Vehicle productivity                 257                278 
    (km.per bus held per day)
    Staff productivity                  35.3               40.5 
    (km.per worker per day)
    Bus staff ratio  (on fleet           7.93               7.6 
    Fuel consumption (kmpl.)             4.35               4.5

7.1.158 There are however, wide differences in the performance, efficiency and productivity of the various SRTUs. While there are examples of efficiently run organisations like the road transport corporations in Tamil Nadu, Andhra Pradesh, Rajasthan, Maharashtra, Karnataka and Haryana Roadways, others are still deficient in many areas. The road transport corporations in Bihar, Assam, Orissa etc., offer considerable scope for improvement. These SRTUs would need to chalk out an action programme for speedy improvement. The SRTU-wise details are in Annexure-7.1.15.

Financial Performance

7.1.159 Most of the SRTUs incurred losses and faced serious financial constraints. As per the latest estimate, the net loss incurred by the SRTUs was Rs.770 crore in 1996-97, compared to Rs.342 crore in 1992-93. The main reasons for the losses incurred by SRTUs were : uneconomic fares, delay in revision of fares which in most of the cases took four to five years, loss on account of concessional travel and operations on uneconomic routes.

Non-motorised Transport

7.1.160 Non-motorised transport modes, powered by human and animal energy meet a substantial segment of the country’s transport needs. The human energy based modes include pedestrians, bicycles, manual rickshaws, cycle rickshaws, hand carts and boats. Animal powered modes include pack animals, animal drawn carts and tongas.

7.1.161 Very little data is available on a number of travel characteristics of the non-motorised modes of transport. A rough estimate puts the number of cycle rickshaws in India at 5 million and of bulluck carts at over 15 million. Similarly, the population of draught animals is estimated at about 85 million which


  • While the physical performance of the State Road Transport Undertakings (SRTUs) has been improving, the financial performance of the undertakings has been deteriorating. A major reason for this is inability of State Government to ensure economic fares, delays in implementing fare increases and numerous fare concessions given to different classes of passengers.
  • There are wide variations in the fares fixed by various State Governments. The fare charged in the plains in Haryana is 35.76 paise per passenger km. against 18.22 paise in Tamil Nadu. In the hills, Himachal Pradesh charges 45.75 paise per passenger km. while Jammu and Kashmir 21.25 paise per passenger km.
  • Another factor which adversely affects the finances of the undertakings is the concession in fares granted by the State Governments. The SRTUs incur loss of Rs.385 crore annually due to concessions to students, physically handicapped, journalists, freedom fighters and other categories of commuters.
  • The SRTUs also carry the social burden of providing services to remote areas where load factors are very low and operations are therefore uneconomic. The loss incurred by SRTUs on this account was estimated at Rs.546 crore in 1996-97. The financial burden borne by SRTUs on account of concessional travel and operation on uneconomic routes is much larger than the total loss of Rs.770 crore incurred by them. Judicious pruning of these concessions, would help to eliminate these losses which are otherwise a burden on State finances.

represents the equivalent of about 40 million horse power or 30,000 MW capacity and makes available 50 billion energy units per year. The non-motorised transport estimated to carry 210 billion passenger kms. and 43 billion tonne kms. as per the details given in Table-7.1.13.

                                              Table - 7.1.13
                                   Non-Mechanised Transport in India
                               Freight   Orig.     Passenger       Orig.
                             Traffic   Freight       Traffic      passenger
                                       Traffic                    (Million)
                             (Billion (Million      (Billion   
                                       Tonne Km.)    Tonne)       (Pass.Km)
      1. Human Transport       6.00      420.00        203.00        17150
      2. Animal Transport     37.17     1922.50          7.2           360
            Total (1 + 2)     43.17     2342.50        210.20        17510

7.1.162 In terms of tonne kms. and passenger kms. the share of non-motorised modes in total traffic is only 5% and 11% respectively. However, in terms of originating traffic these modes carry more than 5 times the freight and 4 times the passenger traffic as compared to the railways. These figures indicate the magnitude of the transport demand met by the non-motorised modes of transport.

7.1.163 The non-motorised modes are relatively inexpensive, environment-friendly, involve simple technology, have large employment potential, and sustain the rural economy. Considering the significance of non-motorised modes of transport, surveys and field studies will be initiated to improve the availability of data on the operation of these modes. The non-motorised modes also represent stagnant technology and drudgery. There is an urgent need for providing simple technological inputs of improved designs and standardisation of spare parts, in order to ensure smooth and safe movements on pathways, improve efficiency and reduce drudgery. Research in this direction will be encouraged so that the non-motorised modes fulfil their niche role in the transportation system.

Policy Framework

7.1.164 The rapid growth of vehicle population, the inadequacy of road infrastructure, the growing concern for environmental degradation and the poliferation of personal modes of transport call for emphasis on the provision of public modes of transport and introduction of mass rapid transit system in the metro cities. The bus technology, which continues to be primitive, needs improvement in various directions including the design of chasis.

7.1.165 In the urban areas, particularly in mega cities, the scope for generating additional capacity to meet the rising traffic demand is limited. On the other hand, private vehicle ownership is increasing at a rapid pace. It is, therefore, necessary to resort to demand management through such measures as parking control, cordon pricing, prohibition of personal cars driving down to central business destinations and enforcement of car pooling, with a view to curbing the inefficient use of private vehicles, conserve fuel, minimise environmental impact and generate revenues for augmentation of capacity on public transport system. In the arena of road freight transport, emphasis will be laid on the upgradation of vehicle technology, particularly shift to multi-axle rigid trucks from two-axle rigid trucks and rationalising Motor Vehicle Tax preferably on annual basis. The administration of the Motor Vehicle Act will be streamlined and simplified. Enforcement will be made more effective. The objective will be to plug the leakages of revenue and reduce harassment of transport operators. In order to improve transparancy and fairplay representatives of the transport operators will be involved in reviewing the operation of the enforcement machinery. The improvement in road safety will receive special attention during the Ninth Plan. The non-motorised modes of transport, which play an important niche role in the transportation system, will be provided with technological inputs to improve their efficiency and reduce drudgery.

7.1.166 The measures taken during the Eighth Plan to improve the productivity of the State Road Transport Undertakings will be continued during the Ninth Plan. These measures include replacement of overaged buses, inservice training to the operational staff, improved management practices and upgradation of vehicle technology. Efforts will also continue to periodically review the fare structure to compensate for the increased cost of operation. As a result of the measures, proposed to be taken, the productivity of SRTCs is likely to be improved. The productivity targets for the Ninth Plan are given in Annexure-7.1.15.

7.1.167 The growing traffic demand cannot be met by the public sector undertakings alone. Supply of transport, therefore, has to be improved through integrated transport service by the public and the private sectors. The private sector is already playing a dominant role in the passenger transport service operation. The private sector own and operate 75% of the total bus fleet in the country. Considering the growth in traffic and the need for replacement of buses in the public sector, the share of the private sector is expected to rise further in the Ninth Plan. In view of the constraint of resources and the need to run the SRTUs efficiently, the SRTUs would give priority to acquisition of buses for replacement. The incremental fleet requirement will, however, be met primarily by the private sector. However, those SRTUs, which have resources may be allowed to acquire fleet for expansion.

Capital Contribution

7.1.168 From 1988 onwards the release of the Centre’s matching capital contribution is limited to those State Road Transport Corporations, which do not incur net loss or run at break-even. Over the years, the SRTCs have been incurring losses on account of concessions to different categories of commuters, delayed and inadequate fare revision, operation on uneconomic routes etc. To minimise the losses, the State Governments have been advised to meet the incremental traffic demands through the private operators. The capital contribution to the SRTCs, in the light of this directive, was practically withdrawn. The SRTCs play a crucial role, particularly in the tribal, remote, hilly and sparsely populated areas. Capital contribution to some SRTCs may enable them to turn around financially. It is, therefore, proposed to review this policy during the Ninth Plan. .

Private Sector Participation

7.1.169 In the recent past, as a result of a deliberate policy of the Government, the private sector increasingly shared the burden of the public sector in providing the passenger traffic services. While this has helped in meeting the passenger traffic requirements in the country, it has also exposed certain weaknesses of the private sector road transport operation. The bulk of passenger road transport services in the private sector are provided by operators who own one or two buses. These operators do not adhere to schedule, neglect maintenance and show scant regard for road safety. The presence of a large number of operators makes the task of the State regulatory bodies in enforcing laws, rules and regulations extremely difficult. The private sector operators, guided by maximisation of profits, opt for remunerative routes, with the result that remote and rural areas where the operation is unremunerative tend to be neglected.

7.1.170 The weaknesses in the private sector road transport operation point to the need for organising transport operation on sound corporate lines. It is necessary that the State Governments formulate suitable guidelines, which inter-alia, lay down the minimum viable size of the fleet, criteria of technical and financial soundness of the operators and a suitable mix of remunerative and un-remunerative routes which the private sector will be called upon to operate. The objective should be to ensure that the operators discharge their social and statutory obligations and provide efficient and reliable road transport services.

Road Safety Programme

7.1.171 The steep increase in the road traffic, the spurt in personalised vehicles, the phenomenal growth in heavy and over-loaded commercial vehicles and the in-adequacies as well as the deficiencies in the road network have aggravated the problem of road safety. About 3 lakh road accidents are reported every year in the country, resulting in a loss of about 60,000 human lives which indicates that, on an average, there is one fatality in every five accidents. The fatality rate on Indian roads is exceptionally high, as compared to that of the world. India’s share in the world vehicle population is only 4.2 per cent, whereas in terms of fatalities it is 9 per cent. The accidents in the metro cities particularly in Delhi are increasing at an alarming rate. The total estimated economic loss as a result of accidents, including damage to the property, is estimated at Rs. 6000 crore per year.

7.1.172 Road safety is a multi-disciplinary area. Engineering, education, enforcement and public awareness play a big role. The focus on safety education provided in the Eighth Plan will be continued in the Ninth Plan. the road safety programmes in the Ninth Plan will also include proper signals, road signs, road markings, introduction of safety devices in manufacturing practices alongwith training/re-training of drivers and instructors, creation of awareness amonst road transport users, upgradation of safety monitoring practices by induction of modern technology, computerisation of traffic licensing system, systemising analaysis of accidents etc. Traffic regulation through stringent enforcement of rules and severe punishment to frequent law breakers cannot be overemphasised.


7.1.173 Pollution caused by the operation of automobiles has assumed an alarming proportion. The increasing number of transport vehicles, particularly personalised motor vehicles in the cities, cause air and noise pollution. The main reasons for the increasing level of pollution in the cities caused by road transport are poor maintenance of vehicles, large proportion of over-aged vehicles, more frequent traffic jams due to lack of traffic planning, extensive over-loading, poor upkeep of roads, crowded highways, ribbon development, prevalance of old technology in heavy motor vehicles and very lax enforcement of rules and regulations pertaining to the pollution emission norms.

7.1.174 While the pollution level caused by the road transport has been increasing in all the cities, the worsening situation in the mega cities deserve special attention. In these cities, the automobiles have the dubious distinction of having the maximum share in total pollution. For example, it is estimated that the automobiles in Delhi contribute to nearly 2/3rd of the total atmospheric pollution. The emission factors of different vehicles indicate that the personalised motor vehicles are the major contributors to pollution and this contribution is increasing at fast rate.

7.1.175 The emission of many of the pollutants in the country has increased rapidly during the past decade because of the rising vehicle pollution and the absence of pollution control. The rate of pollutant emission from vehicles is significantly higher than in the developed countries. Air pollution by the road vehicles, if not controlled now, is likely to increase manifold in the near future. There is, therefore, an urgent need to attend to the problem of pollution caused by road transport.

7.1.176 The Motor Vehicle Rules, 1988 provide for checking pollution. Their implementation, however, has not helped to control the increasing rate of pollution caused by the vehicles, particularly in the urban areas. This problem can be solved only through upgradation of technology in freight carriage, reduction in the number of personalised motor vehicles, awareness among transport users, strict enforcement of the legal provisions and strengthening of the public transport system. At the same time, it is necessary to contain the demand as well as relocate travel by resorting to demand management measures.

7.1.177 The main schemes proposed to be taken up in the Ninth Plan relate to development of infrastructure facilities for the operation of the buses of state road transport undertakings, strengthening of the motor vehicles department, road safety programmes and provision of loading and unloading facilities in the outskirts of major cities.

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