Road map for efficiency: India must rethink its transport strategy

A fragmented approach to transport infrastructure planning is a constraint for economic growth and urbanisation. As this newspaper reported last week, the Union government has proposed to establish an interministerial mechanism for integrated transport planning, which will work in consonance with the Gati Shakti framework and will drive the overall strategy across all modes of transportation, including railways, roads, shipping, and civil aviation. This mechanism is critical to breaking down the silos that currently divide planning and execution across different modes of transport.  Proper transport planning can address infrastructure bottlenecks by facilitating larger-scale, pan-Indian connectivity. Countries like the United States, the United Kingdom, Germany, Australia, and Japan have long benefited from integrated transport planning, which streamlines logistics, optimises infrastructure investment, and improves user experience. India’s possible move towards a similar model signals a shift long overdue.

 

Transport infrastructure is often cited as a binding constraint in raising the country’s growth. Multimodal transport is still evolving and has not matured. Hence roads are by far the most common means of transport. Around 70 per cent of freight transportation is road-based because of its last-mile service, reliability, and consistently improving highway infrastructure. In contrast, the share of freight transported by the railways remains below 30 per cent.  Cross-subsidisation has meant that the railways has high freight tariff rates. Air freight is also expensive, while inland waterways has just started. Port-led cargo movement is largely concentrated on the west coast due to the presence of natural harbours and economically prosperous states such as Maharashtra and Gujarat. In this regard, an integrated transport-planning mechanism, as envisaged by the government, can not only facilitate multimodal transportation but also derisk large-scale investment in transport infrastructure by ensuring smoother coordination and project execution. Apart from interministerial cooperation, coordination with states on different projects will remain the key to its success.

 

Multimodal transportation can cut logistics costs, have a large multiplier effect, and, if done right, crowd in private investment.  Logistics costs in India are estimated to be at 14-18 per cent of gross domestic product, significantly higher than the global benchmark of 8 per cent. Notably, the completion of the Eastern and Western Dedicated Freight Corridors (DFCs) has not only increased average freight speed but is also set to enhance the share of rail freight in the country. Moreover, the proposed mechanism may facilitate the construction of roads that feed into railway lines, which in turn connect with ports, efficiently moving goods from the hinterlands to the ports. For instance, cargo is being transported through Kandla port via the Western DFC, to be aggregated in Palwal and then distributed via road across northern regions of the country. Another example of multimodal transport is a freight village being developed along the river near Varanasi to enhance the potential of the Eastern DFC and to augment traffic capacity along the National Waterway 1 (NW-1). Cargo movement on inland waterways has also started on NW-1 from Kolkata to Varanasi. Thus, a coordinated approach towards transport planning can tackle connectivity problems faced by economic zones, industrial parks, and logistics hubs.