Chapter 47 The Transport Sector – Indian Economy


The Transport Sector


Transport virtually constitutes the nervous system of an economy, carrying raw materials to the production centres and moving out the finished goods to the markets, thus energizing every economic unit into activity, and perpetuating the flow of goods. It broadens the market, fosters optimum factor utilization, promotes greater division of labour and facilitates labour movement towards better and more gainful employment. It breaks geographical barriers and opens up new vistas, reserves and potentialities of production. Transport gives accessibility to remote region, provides them with vital links with centres of activity and direct beams of the new light of progress on backward areas. The development of an efficient transport system is therefore a sine qua non to the development of an economy.

Transport Planning in India

The bulk passenger as well as freight traffic, in India is carried on by rail and road transport while the airways, coastal shipping and inland water transport account only for a small proportion of the total traffic.

The Indian planners have adopted in integrated planning approach for the future. Balanced attention is being given to various and sometimes competing segments of transport such as freight and passenger traffic, industrial and agricultural needs, rural and urban requirements, and so on. The planners’ policy is to give special emphasis to provision of transport facilities at reasonable cost to remote and isolated areas such as the North Eastern region, Andaman and Nicobar Islands, etc. Priority is generally given to freight traffic in situations of scarcity, while at the same time minimum requirements of passenger traffic are catered to for avoiding serious inconveniences to the travelling public.

Urban Transport

Over the years, problems relating to urban transport have tended to become more and more complex due to massive increase in needs consequent on faster urbanization and migration of villages to towns and cities as well as the growing shortage of resources. Due to the growth in population and migration from rural to urban areas for employment purposes, the pressure on metropolitan transport has been extremely heavy.

It is felt that experiences in the western world of providing rapid, heavy-cost suburban transport has not been entirely successful in our country having resulted in the creation of satellite towns with an ever increasing traffic in commuters, travelling in vast numbers during peak period from the suburbs to the central business districts and back. During the Sixth Plan period the policy contemplated was to pursue the question of the development of ‘counter magnets’ beyond commutable distance in the shape of self-contained residence and business complex through suitable incentives. The urban transport policy therefore, was to keep this in view and avoid schemes that would encourage further growth of existing, or development of new, dormitory type of satellite towns. Subject to these, urban transport facilities are planned to be augmented to the maximum feasible extent.

However, there are several lacunars in India’s urban planning. Several critics have pointed out the deficiencies and loop holes in our urban infrastructure, for example. Deepak Parekh, Chairman of HDFC, has pointed out that although 43 per cent of the country’s wealth is generated by the country’s top 100 cities India spends barely 0.1 per cent of GD’F on urban development. According to him ‘A comparison of BRIC nations reveals that India’s pace of urbanization ranks the lowest. India spends barely 0.1 per cent of its GDP on urban development, whereas the minimum requirement is 0.25 per cent GDP per year.’1

Increasing urbanization has its own strength. It creates better jobs, increased incomes and higher standard of living. It is estimated the India’s urban population would increase for the present 31  per cent to 40 per cent by 2030 and 65 per cent by 2050. This being the case ‘It is certainly not enough to say that the PPP (public–private partnership) model will take care of all funding needs. Even municipal and urban local bodies have not been provided with a conducive environment to make them financially autonomous and raise their own resources.’2

Our planners have evolved certain priorities and promotional programmes. Accordingly, development of the transport sector is to be along the following lines. (1) To remove transport bottlenecks hampering the movement of industrial and agricultural goods and the promotion of international trade; (2) To create additional capacity to meet anticipated traffic requirements; (3) To develop transport system that would enable maximum conservation of energy; (4) To evolve a high degree of coordination within the transport section and with the user organizations, to make optimum use of available capacity; (5) To give priority to the completion of on-going schemes; (6) To evolve a rational pricing structure in the public sector transport undertakings so as to make them viable; and (7) To give special attention to the transport need of remote and isolated areas.


The Indian road network is now one of the largest in the world aggregating to more than 33 lakh  kilometres. Initially our road system developed mainly around four main trunk roads connecting Khyber with Calcutta through Delhi, Calcutta with Chennai, Chennai with Mumbai and Mumbai with Delhi. These were used mainly for military movement, and road building otherwise suffered general negligence due to paucity of funds, building materials and official apathy. The total road length comprising national highways, state highways and other roads increased from 397,620 km in 1950–51 to 33,000,00 km at present.

National Highways

The Central Government is directly responsible for the national highway system. In accordance with the decision taken at the conference of chief engineers convened in 1943 at Nagpur, the Government of India assumed since April 1947, complete financial responsibility for the development and maintenance of certain roads provisionally approved by them or inclusion in a system of national highways.

The main object behind this was to develop the major truck roads of the country and to give relief to the states so that they could concentrate more on the development of other categories of roads. Thereafter in 1956, the Government enacted the National Highway Act and statutorily took over the roads classified as National Highways.

India has one of the largest road networks in the world, aggregating to about 4.1  million  kilometres at present. India’s road networks consists of national highways and express highways (70,934 km) state highways (1,54,622 km), major district roads (4,70,000 km), other district roads and village roads (26,50,000 km). In 1947, at the time of Independence we had only 21,440 km of roads. Approximately 86.7 per cent of passenger traffic and 65 per cent of fright are carried by the roads. Although National Highways constitute only about 2 per cent of the road network, it carries 40 per cent of the road traffic. The rapid expansion and strengthening of road transport is an urgent necessity in order to provide for both present and future traffic and for improving accessibility to the hinterland. In addition road transport needs to be regulated for better energy efficiency, less pollution and enhanced road safety.3

National Highways Development Project (NHDP)

In the National Highways sector, about 22 per cent is single lane/intermediate lane, about 53 per cent is two lane standard and the remaining 25 per cent is four lane standard or more. In 2011–12, the achievement under various phases of the National Highways Development Project (NHDP) up to December 2011 has been about 1250 km and projects have been awarded for a total length of about 4375 km.4

Special Accelerated Road Development Programme for North–East Region (SARDP-NE)

The SARDP–NE Programme aims at improving road connectivity to state capitals, district headquarters and remote places of the North east region. The programme envisages two four laning of improvement of about 53,431 km of state roads. It will ensure connectivity of 88  district headquarters in the north eastern states. Consisting of 40,999 km of improved roads. It covers (i) Phase A (ii) Phase B and the (iii) Arunachal Pradesh Package of highways that together would constitute 2319 km stretch of roads.

Initiatives for Development of the Entire NH Network to Minimum Acceptable Two Standards

The 11th Five Year Plan had envisaged enhanced efforts to bring the NH network up to a minimum two lane standard by the end of the 12th Plan and for removing prevalent deficiencies. The concerned Ministry of Road Transport and Highways (MORTH) has proposed a World Bank loan and the required budgetary allocation to achieve this goal by December 2014. Consultants have already been engaged for preparation of DPR (Detailed Project Report) for about 3800 km road length proposed for World Bank assistance. ‘The MORTH has also initiated action for improvement of the remaining 2500 km of single–inter mediate lane.

Nhs Through Budgetary Resources

In order to make a visible impact the work would be taken up for gradation of corridor concept. These corridors would include strengthening (in adjoining reaches) in addition to widening to lane/two lane with paved shoulder standards in order to have better facilities over long continued stretches’5

Under the programme, the larger stretches costing more than Rs 150 crores have been taken up with loans from the World Bank under the National Highways Inter connectivity Improvement Programme (NHIP). The small stretches of roads costing less than Rs 150 crores have been taken up through budgetary support. In this category, 50 projects covering 2200 km and costing Rs 6000 crores have been taken up. Another 34 projects with a length of 1564 km costing Rs 4196 crore has been sanctioned. Projects with a length of 1516 km, costing Rs 4.071 crores have already been awarded. The remaining projects are likely to be executed in due course of time.

Development of Roads in Left Wing Extremism (LWE) – Affected Areas

In February 2009, government has approved the Roads Requirement Plan (RRP) for the two lane development of 1126 km NHS and 4351 km State roads costing Rs 7300 crores in 34 LWE–affected district in the states of AP, Bihar, Chhattisgarh, MP, UP, Odisha and Maharashtra. Development in 848 km length as so far has been completed up to December 2011 with a cumulative expenditure of Rs 1363 crore.

Prime Ministers’ Reconstruction Plan (PMRP) for Jammu and Kashmir was started in November 2004 and incorporates a total of seven works a amounting to Rs 3300 crores. Likewise, construction of rural roads under the Pradhan Mantri Gram Sadak Yojra (PMGSY) was launched to provide single all-weather road connectivity to eligible unconnected habitations having a population of 500 persons and above in plains and 250 persons in hill states, tribal areas and deserts. Until March 2012, 3,41,257 km road length has been completed covering over 82,019 habitations while work on a road length of about 98,400 km is on full swing Rural roads have also been identified as one of the six components of Bharat Nirman which aims at providing an all-weather road connectivity to all villages in the case of hilly or tribal areas) Bharat Nirman proposes to provide new connectivity to a total of 54,648 habitations, involving construction of 1,46,184 km rural roads, apart from up gradation rural roads. During 2011–12, over 15,566 km all weather roads have been completed the programme providing connections to 2579 habitations at an estimated cost of Rs 8380 crores, as given below.

Table 47.1 NHDP Projects as on December 2012

Box 47.1 Initiatives taken by the Government to Expedite Projects Under NHDP
  • The NHAI Board has approved formation of a High Level Expert Settlement Advisory Committee for one-time settlement of old cases pending in courts. The claims shall be resolved as one-time settlement and strategy would vary based on commonality of issues across contracts or could be based on optimum settlement with firms or groups with significant stakes collectively through appraisal of merits, risks, and settlement through stages of negotiations.
  • As a new initiative for promoting highway development, the mode of engineering procurement and construction (EPC) contracts is being brought in. Projects that are not viable under BOT (toll) mode, such as those in far-flung areas, would have to be undertaken under EPC mode. To overcome the economic slowdown in this sector, the MoRT&H has finalized a proposal for awarding projects under new modified turnkey EPC mode under 100 per cent government funding in cases where there are no takers under BOT (toll) mode. This mode of delivery will also take care of cost and time overruns.
  • In order to remove the bottlenecks and ensure seamless movement of traffic and collection of toll as per the notified rates, the government had decided to introduce passive radio frequency identification (RFID) based on electronic toll collection.
  • In order to relax the condition of mandatory environment clearance (EC) for areas less than 5 hectare, the Ministry of Environment and Forests (MoEF) has been requested not to insist on EC for the earth/soil because all highways projects commence only after obtaining necessary environment clearance for the project whereby the conditions stipulated by the MoEF for borrow areas are adhered to by the concessionaires.
  • The NHAI has recently taken up award of select highway projects to private-sector players under an operate, maintain, and transfer (OMT) concession. Till recently the tasks of toll collection and highway maintenance were entrusted to tolling agents/operators and subcontractors, respectively.
  • State governments have been requested to constitute high-level committees under their Chief Secretaries (as Nodal Officers) with the NHAI’s Regional Officer as Member-Secretary, for monitoring pre-construction activities for NHAI projects. Most states have constituted the committees.

In order to speed up the implementation of projects mandated to the NHAI by the government and for ensuring better and closer liaison with the state governments for expediting the pre-construction activities of the projects, it was decided to establish 17 Regional Offices headed by Chief General Managers CGMs at various locations in the country. Substantial financial powers have been delegated to Regional Officers for facilitating speedy processing/approvals for acquisition of land.

Source: Reproduced from the Economic Survey 2012–13, Ministry of Finance, Government of India.

Public–Private Participation

Government participation in road construction and development takes place mainly because of the huge amount of resources required for the purpose, long gestation uncertain and lesser returns. Recently, the heavy investments and the need for managerial efficiency as well as consumer responsiveness have called for private sector involvement. To encourage private sector participation government has announced several incentives such as tax exemptions, duty-free import of road building machinery and equipment. It is now the policy of the government that all such projects in NADP phase III and IV would be taken up mainly on Public–Private Participation (PPP) route following either Build Operate and Transfer (BOT) toll mode or BOT Annuity mode.

Central Road Fund

The Government of India has created a dedicated fund collected Central Road Fund (CRF) for collection of cess on petrol and high-speed diesel (HSD) oil which is presently Rs 2 per litre. The fund is distributed for development and maintenance of roads of all types, railway bridges and other safety features. So far an allocation of Rs 18,500 has been earmarked under CRF for 2011–12.

Railroad Co-ordination

An important issue, to be given attention while building roads, is the effective coordination between railways and roadways. Regrettably, however, in the case of a substantial section of our transport system, roads run parallel to the railway thereby duplicating services and creating conditions of competition. Our planners are now prompted to ensure that these two primary systems of transport supplement each other. Roads should cater preferably to short and middle distances and remote areas inaccessible to railways and serve in connecting production centres while Railways should take over from them on for long distance transportation. A co- ordinate perspective planning is necessary in rail and road building in view of the fuel economy and other advantages of mass transpiration.

Express Highways

Four express highways have been built in India for faster movement of traffic. Two are in Bombay—the Eastern and Western Express High ways. The third runs between Calcutta and Dum Dum airport and the fourth between Sukinda mines to Paradip port. The fifth express highway which is approximately 100 km in length connects Durgapur and Calcutta.

International Highways

There are two categories of International highways. The first are the main arterial routes linking the capitals of the countries and the second are routes joining main cities, ports etc., with the arterial network.

The main arterial highway links India with Lahore in Pakistan and Mandalay in Burma running through Amritsar–Delhi–Agra–Calcutta–Golaghat–Imphal. The two link highways are one through Agra–Gwalior–Hyderabad–Bangalore to Danushkodi and the other from Barhi to Katmandu. The other links will be Agra–Bombay; Delhi Multan; Bangalore–Madras–Golaghat–Zedo.

World’s Highest Road

The world’s highest road from Manali in Himachal Pradesh to Leh in Kashmir runs at an average altitude of 4267 m (12,000 ft) and negotiates four very high passes varying from 16,000 to 18,000 feet.

Border Roads

The Border Roads Organization (BRO) was created in 1980 to accelerate the economic development of the north and north-eastern border areas by making them accessible through the development of arterial routes. The BRO has provided an arterial network of roads in difficult and inhospitable border areas and scaled many heights. It has to its credit and in its present programme construction/improvement of over 17,000 km roads and has 14,000 km of roads under its charges for maintenance.

The BRO has steadily increased its area of operations from eight States and Union Territories in the early Sixties to seventeen at present. It has also diversified its activities into related areas of construction.

Road Transport in India

Road Transport is now undertaken by State Governments, private operators and cooperative agencies. Since independence, most State Governments have entered the field of road transport and have nationalized the bus transport and have nationalized the bus transport either completely or partially. Goods transport, however, continues to be almost exclusively in the hands of the private sector. Taking all States together, nationalized bus services now account for about 41 per cent.

National Permit Scheme

Constraints on movement of vehicle have been innumerable. For removal of these constraints and for the sake of better efficiency, a system of national permits was introduced. Under the system, the Union Government specified the number of national permits each State or Union Territory can issue. About 5300 permits were issued initially. The national permit scheme makes the long distance movement of goods vehicles from one zone to another smooth and free of hold-ups. The Interstate Transport Commission, responsible for the development, coordination and regulation of road transport services on inter-state routes has helped the states in making reciprocal arrangements for operation of goods and passenger services on inter-state routes. It has introduced zonal permit scheme for the unhindered movement of a limited number of public goods carriers over national and state highways on payment of tax at a single point. The National permit scheme will carry this process considerably further.

The problem connected with the roads result in both underutilization of the roads and slower movement of goods. They also significantly bring down the productivity of the road transport sector and waste of energy. According to an estimate about 12–15 per cent savings in the energy consumed in the transport sector could be possible if only the roads are properly maintained. The resultant speed in road movement could also bring down the cost of road transport and thus enhance the overall productivity level in the economy.

It may be said that there is more bus travel than train travel in India but as regards goods traffic haulage in railway wagons is twice as much as in truck. However, transportation by road is utilized more for the movement of merchandise than passenger traffic. Trucks plying on our roads number thrice as many as buses. Also since 1950–51, the number of trucks has increased by 600 per cent whereas buses have increased only by 400 per cent. Within the field of passenger transportation, excluding private carts and taxis, the public sector has been major operator, the state undertakings accounting for 58 per cent of the national bus fleet.

Most of these undertakings are in financial and operating difficulties. It is unfortunate that the objectives for which nationalization measure were adopted in 1950, viz. the provision of an efficient, adequate, economical and properly coordinated system of road transport services have not been achieved and the public transport undertakings have been plagued by widening deficits and generally inadequate fleets in view of the mounting costs of operation and the necessity for low-pricing in public utility systems.

Another important factor affecting the finances of transport operators is the high incidence of indirect taxes which pose too heavy a burden for their slender operating margins. According to the National Council of Applied Economic Research (NCAER), the tax on road transportation is so high, that it constitutes by itself the major factor stifling the growth of the industry. The taxes are heavy and innumerable; import duty, sales tax, registration fee, vehicles tax, sales tax on spare parts, tolls and octroi together make for an insufferable burden. The tax content in the operation costs of a truck is as high as 43 per cent. Excessive taxation had led to the vicious circle of overloading gratification in the industry. Small operators, who form 99.4 per cent of the operators in the country, are able to avoid losses only by overloading and thus the tax element becomes a definite disincentive to the healthy development of road transport. The very high cost of operation is also due to the bad road conditions prevalent in India. Bad roads are responsible for accidents, heavy wear and tear of tiers and other parts as also high fuel consumptions.

Some transport corporations have been forced to diversify in order to overcome financial difficulties, though the measure means going beyond the role visualized when passenger transport was nationalized. Also they are faced with the problem of escalating costs. Cost problems not only relate to acquisition of fleet and inflation but to inventory also—the inventory of spare parts carried is said be of the order of Rs 7500 per vehicle. Another regrettable aspect is that handling of labour has become difficult. Most Corporations are over staffed and are faced with hefty wage bills, compounded by strikes and political interference.

All these make a strong case for a restructuring of the organizations to give the management’s greater autonomy. It is desirable than an element of competition be introduced, even if it means that the proportion of Government run scheduled services is reduced and that of private services increased.

Road Accidents

One of the most worrying features of road transport in India is the ever increasing road facilities, notwithstanding governments’ efforts to curb them. To cite their own statistics, ‘at least 1.42 lakh people died in road accidents in 2011, an increase of over 7,000 from 2012.’ Uttar Pradesh and the Punjab lead the pack of states where higher accident rates have been reported. In U.P, deaths increased by at least 30 per cent. Over all road deaths throughout the country were 1.25 lakh in 2009, 1.34 lakh in 2010 and 1.42 lakh in 2011. The notable fact in this context is the fast that ‘India is a signatory to the Decade for Action Declaration by the United Nations to reduce deaths by 50 per cent by 2020’ These alarming number of deaths can of course, be greatly reduced by simple measures such as strict enforcement of traffic rules, preventing over loading of vehicles, ensuring that all highways have dividers separating the two carriageways providing adequate space for pedestrians and penalizing jay walkers. State governments have started creating awareness among the youth on measures of road safety. It was reported that the deaths due to road accidents amounted 17 per hour.6


The Indian Railways are the nation’s lifeline and the principal mode of transport of the country. From a modest beginning in April 16, 1853, when the first railway train steamed off from Bombay to Thana a stretch of 34 kilometres, the Indian Railways have grown to gigantic railway system with a route of 64.4 million km. The Indian Railways are the largest in Asia and the World’s second largest State owned railway system under a single management. Indian Railways is now one of the world’s largest transportation system with 64.4 million km network route and 1.54 million employees. It has a vast network of 7025 stations a fleet of 8330 locomotives, 43,375 passenger service vehicles, 6180 on the coaching vehicles and 2,004,034 wagons. In 2010–11, passengers originating has touched 7651.1  million. Indian Railways have played an important part in the economic, social and political life of the country. Railways have abridged distances and have brought the producers in distant and previously inaccessible areas into close contact with the great consuming centres. The Railways have helped in the industrial and agricultural growth of the country. Indian Railways thus epitomize the nation’s economic development. It is thus the greatest integrating force of people and resources in the country.

Poor Maintenance of Railway Stations

Many railway stations overcrowded are in the state of disrepair, especially when compared to stations in the Western Countries our trains are always overcrowded. Often passengers are seen on trains hanging out windows and even on the roof creating safety problems. The interior of many train compartments are poorly maintained and dirty. Although accidents such as derailment and collisions are less common in recent times, many are run over by trains, especially in crowded areas and in unmanned crossings.

Human error is the major reason, for accidents leading to 83 per cent of all train accidents in India. While accident rates are low at 0.55 accidents per million train kilometre, the absolute number of fatalities is high because of the large number of passengers travelling at any point of time. While strengthening and modernization of railway infrastructure is going on, much of the network still uses old signalling system and has work-out bridges. Lack of resources is a major constraint for speedy modernization of the network, which is further complicated by the diversion of funds meant for infrastructure to lower-prioritized purposes due to political compulsion. The Ministry of Railways in 2001 had created a committee safety fund of Rs 17,000 crore exclusively for the renewal of overaged tracks, bridges, rolling stock and signalling gear. In 2003, the Ministry also prepared a Corporate Safety Plan for the next ten years with the objective of realizing the objective of an accident-free and casualty-free railway system. The plan, with an outlay of 31,835 crore, also envisaged creation of appropriate technology for higher level of safety in train operation.

Indian Railways are a multigauge system and operate on three gauges–the broad gauge (1.676 metres) consisting of 96,851 km, the metre gauge (1,000 metre) covering 11,676 km and the narrow gauge (0.762 metre and 0.610 metre) covering 3072 km as on 31 March 2011.

Organization and Management

The responsibility for the administration and management of the Indian Railways rests with the Railway Board under the overall superintendence of the Union Cabinet Minister for Railways. The  Railway Board functions at the top level for administration, technical supervision and direction of the Railways. It is at the same time responsible for planning and development, construction, maintenance and operation of the Railways and acts in consultation with the planning commission and other user Ministries in line with the planned and coordinated development of the country. The Railway Board presently consists of Chairman, the Financial Commissioner for Railways and four Members. The Chairman of Railway Board is ex-officio Principal Secretary to the Government of India in the Ministry of Transport Department of Railways. He is responsible to the Minister for Railway Transport for arriving at decisions on technical and non-technical problems and advising on matters of Railways policy.

All policy and other important matters are put up to the Ministers through the Chairman. The Financial Commissioner for Railways is vested with full powers of Government of India, in the Ministry of Transport, Department of Railways in financial matters. The other four Members of the Railway Board are separately in charge of matters relating to Staff, Civil Engineering, Traffic, and Mechanical Engineering. They function as ex-officio Secretaries to the Government of India in their respective spheres. The Board is assisted by three advisers, one each for Industrial Relations, Electrical Engineering and Finance. These three Advisers exercise the powers of the Board Members in their respective spheres except in matters of policy which require specific and collective considerations.

The Indian Railway system is divided into 17 zones, each of which is under the control of a General Manager. Each Zonal Railway is further divided into a number of divisions headed by a Divisional Railways Manager (DRM). Besides these, there is also the Metro Railway division.

The Zones with their respective headquarters are as under:

There are also production units, viz. the Chitaranjan Locomotives Works, Chittaranjan, manufacturing Electric locomotives; Diesel Locomotive Works, Varanasi, producing Diesel locomotives; Integral Coach Factory, Perambur, Chennai, manufacturing coaching stock and wheel; and Axle Plant, Bangalore, producing Wheels and Axles. Besides these, a factory has been set up at Patiala for the production of diesel loco components and a factory in Kaputhala, Punjab, to manufacture Coaching Stock.

The Design and Standards Organization, Lucknow is headed by a Director General and functions as technical adviser and consultant to the Board, the zonal railways, production units and also the public and private sector undertakings in respect of designs and standardization of railway equipment.

Rolling Stock: In order to meet the growing need of Railway transport, it is very essential that modernization of the Rolling Stock keeps pace with the latest developments and new innovations. The Indian Railways have added Rolling Stock and sophisticated equipment to its fleet year after year in replacement of the old and obsolete items. The program is perpetual.

Diesel and electric locos with increased hauling capacity and less maintenance problems are progressively replacing steam locomotives. New types of coaching stock with better passenger amenities and increased safety features are continuously being added to the fleet. Goods Wagon with increased loading potential fitted with rods bearings and centre buffer couples and special type wagons catering to particular bulk commodities are increasingly being pressed into service.

Addition of new rolling stock involved heavy capital expenditure and therefore, procurement has necessarily to be done in a phased manner within the available funds. Over 40 per cent of the annual plan expenditure from 1951 to date has been procurement of rolling stock.

Rolling Stock Fleet: The motive power fleet of the Indian Railways as on 31 March 2011 comprised 43 steam 5137 diesel and 4033 electric locos. Presently, the Railways are in the process of inducting new designs of fuel-efficient locomotives of higher horse power high speed coaches and modern bogies for freight traffic. Modern signalling such as panel inter-locking, route relay inter-locking, centralized traffic control, automatic signalling and multi-aspect colour signalling are being progressively introduced. The Indian Railways have made impressive progress regarding indigenous production of rolling stock and a variety of other equipment over the years and is now self-sufficient in most of the items.

Research, Design and Standards Organization (RDSO)

The Research, Designs and Standards Organization (RDSO) is a separate functional unit of the Indian Railways responsible for research and technological development in all facets of railways working. The Central Standards Organization (CSO) set up in 1930 was responsible for standardization of designs and specifications for all types of materials, equipment and assets used by the Railways. Towards the indigenization of the need to develop technology suited to over needs the Railways Testing and Research Centre (RTRC) was set up at Lucknow in 1952. In 1957, the two organizations viz., CSO and RTRC were merged to form the present Research, Design and Standards Organization (RDSO) having experts from all disciplines of Railway Working.

RDSO functions as adviser and consultant to the Railway Board, the Zonal Railways, Railways Production units and industry and trade. Its principal aim is to promote progressively standardization of rolling stock, track, bridges and structures and all equipment used on the Railways. The other important function of this organization is to undertake research pertaining to all spheres of railway working.

The Central Board of Railway Research (CBRR) consisting of eminent scientists, technologists, engineers and senior executives guides the RDSO in carrying out research and development activities. Chairman, Railway Board is the Chairman of CBRR and Director Research RDSO functions as Member Secretary.

The Directorate of Civil Aviation is the regulatory body in the sphere of civil aviation. It  overseas and regulates the following connected with air transport: (i) Regulation of air transport services as per the provisions of the Aircraft Rules 1937; (ii) Licensing of pilots, aircraft maintenance engineers and maintaining of flight standards; (iii) Registration of civil aircraft (iv) Laying down civil airworthiness requirements for civil aircraft registered in India and grant of certificate of airworthiness to such aircraft; (v) coordination of the work concerning International Civil Aviation Organization (ICAO); (vi) Investigation of minor air accidents and incidents and rendering technical assistance to the committees/courts of Inquiry; (vii) Licensing of aerodromes and air carriers; (ix) Rendering advice to government on matters pertaining to air transport including bilateral air services agreements with foreign governments and so on.

Air Transportation

The Airport Authority of India (AAI) the nodal organization manages 12 airports including 15 international 87 domestic airport and 25 civil enclaves at defence airfields. It controls and manages the entire Indian airspace—2.8 million nautical miles square on land and 1.75 million nautical oceanic area and restricted land area 0.37 million nautical mile square.

In 1994, the Air Corporation Act of 1953 repealed with the objective of removing monopoly of air corporations on schedule services, enabling private airlines to opera scheduled service, converting Indian Airlines and Air India to limited company format and paving the way for private participation in the national carriers. From 1990 private airline companies were permitted to run air taxi services that helped the launch of Jet Airways and Air Sahara. These policy charges resulted in the increase of the share of private airline operators in domestic passenger carriage to 68.5 per cent in 2005 from 0.4 per cent in 1991. Domestic air carriers carried 25.81 million passengers during January–May 2012. The aviation sector in India is on the verge of a huge take off and is poised to emerge as the third large aviation market in the world soon.

The air transport has attacked FDI worth US$ 433.42 million from April 2000 to March 2012.

Moreover huge investments in airport infrastructure especially in Mumbai and Delhi have resulted in them becoming the symbol of India’s growth story.


Shipping plays a crucial role in the transport sector of India’s economy. Almost 95 per cent of the country’s trade volume and 78 per cent in terms of value of transported by sea. India has one of the largest merchant shipping fleets among the developing countries and ranks 16th amongst the countries with the largest cargo carrying fleet with 10.67 million GT as on 1 June 2011. The  average age of the fleet is 18.03 years. The Indian maritime sector facilitates not only transpiration of national and international cargoes, but also a variety of other services such as cargo landing services, ship building and ship repairing, freight forwarding, light house facilities and training of marine personnel. The salient features of India’s shipping policy are the promotion of national shipping to increase self-reliance of the country’s overseas trade and protection of stake holders interest in EXIM trade. India’s national flagships provide an essential means of transport for crude oil and petroleum products imports. National shipping makes significant contribution to the foreign exchange earnings of the country.

The vision of the Ministry of Shipping is to ensure vibrant, efficient and safe ports and shipping services, shipping and ship building industry, promote the development of major ports with a view to attaining global standards and promote increased inland water transportation in India.

Indian Shipping Tonnage

It was only 1.92 lakh GT on the eve of independence, now stands at 8.83 million GT and 14.85  million DWI. The fleet consists of 872 vessels.

The Government of India nationalized the fiscal for Indian Shipping Industry by introducing Tonnage Tax system from the financial year 2004–05 in order to provide the Indian Shipping industry level playing field vis-à-vis international shipping companies and also facilitate the growth of Indian tonnage. Indian tonnage has steadily grown over the last four years. Indian tonnage, as on 1 June 2004 was 7.05 million gross tonnage (GT) which has increased to 10.76 GT on 30 June 2011. India has allowed 100 per cent FDI in the shipping sector.


India has a 7617 km long coastline. Approximately 95 per cent of India’s foreign trade by volume and 70 per cent by value is handled by these ports. India has 12 major ports these are Kolkata (including Haldia, Paradip, Visakhapatnam, Chennai, Ennore and Tuticorin on the East Coast, and Cochin, New Mangalore, Mormugao, JNPT, Mumbai and Kandle on the West coast.

Inland Waterways

India has approximately 14,500 km of navigable water ways which comprise rivers, canals, backwaters, creeks, etc. Approximately 44 million tons of cargo is being transported annually by Inland Water Transport (IWT) which is environment-friendly and fuel efficient.

The Inland Waterways Authority of India was established on 27 October 1986 for development and regulation of inland waterways for shipping and navigation. The head office is located at Noida with its regional offices at Patna, Kolkata, Guwahati, and Cochin and sub-offices at Allahabad, Varanasi Bhagalpur, Farakka and Kollam.

Three inland waterways have been declared as National Waterways; They are

  1. 1. NW-1 Allahabad–Haldia stretch (1620 km) of the Ganga–Bhagirathi Hooghly river system:
  2. NW-2 Sadiya–Dhuleri stretch (895 km) of the Brahmaputra river; and
  3. NW-3: Kottapuram–Kollam stretch of the west coast canal along with chamakara and Udyogmandal canals (205 km).

National Maritime Development Programme

The National Maritime Development Programme (NMDP) has been formulated by the Government of India with an investment of Rs 1,00,390 crores consisting of 276 projects covering all major ports with a view to taking up activities such as construction/upgradation of berths, deepening of channels, rail road connectivity projects, etc., at a cost of Rs 55,804 crores and projects covering tonnage acquisition, maritime training coastal shipping gifts to navigation, ship building and building up of IWT infrastructure at a cost of Rs 44,535 crores.

Coastal Shipping is an energy efficient environmental friendly and cost effective mode of transport and a crucial component for the development of domestic industry and trade. India, with her 7517 km of coastline and hinterland of about 380,000 km covering 9 maritime states form part of the vast hinterland. This long coast lines dotted with 13 major ports and 200 smaller ports provide favourable conditions for the development of this alternate mode of transport. India’s coastal shipping tonnage as on June 2011 is 732 vessels with 10,35,821 GRT and 10,24718 DWT. The  Government of India has already prepared an action plan with a view to promoting coastal shipping and sailing vessel industry.

Indian Maritime University

The Ministry of Shipping has set up in November 2008 the Indian Maritime University (IMU) as central university in Chennai with campuses in Chennai, Kolkata, Mumbai and Vizag. The existing 7 government and government-aided maritime training and research institutes have been merged with IMU.

Other Related Projects

The Government of India has established the Cochin shipyard in Kochi in 1972, Hooghly Dock and Port Engineers Ltd (HDPEL) in Kolkata in 1984, shipbuilding and ship repairing in the country. Government has also been promoting cruise shipping in Mumbai, Goa, Chennai, Mangalore, and Cochin with a view to promoting tourism. Development of Container Terminals at Chennai, Capital Dredging projects are some other projects that are worth mentioning.

Discussion Questions

47.1. What is the importance of the transport sector to the economic development of India? To what extent India enjoys the benefits of the transport industry?

47.2. Discuss the growth of roads in India after independence.

47.3. Why is there a need for rail-road co- ordination in our country? What were the initiatives of the Indian government in that direction?

47.4. Why are these two many road accidents in India? What are your suggestions to minimize them?

47.5. Why are inland waterways important for a country like India? Suggest ways and means of improving them to realize their full potential in the economic life of the country.


1 Times News Network (2012), ‘Urban Infra: Parekh blasts govt. The Times of India, Chennai, 12 June.

2 Ibid.

3 Manorama Year Book 2011, Kottayam, Kerala, India.

4 NHDP projects as on December 2012.

5 (p. 264, Economic Survey 2011–12).

6 Extracts from Dipak Kumar Dash from Times of India (Chennai), dated 8 June 2012. Seventeen deaths per hour were reported due to road accident in 2011, Dipak Kumar Dash, Times of India (Chennai), 8 June 2011.