Brookings India hosted a panel discussion on “Indian Railways and Coal: An Unsustainable Interdependency“. This panel focussed on the upcoming future for the fraught relationship between Indian Railways and coal, and what options there are to either tweak this equilibrium, or examine the larger changes required.

Abstract: Coal is a key part of the equilibrium of Indian Railways since passenger fares don’t cover all the costs. Unfortunately, this equilibrium is at risk. Already the average distance of coal travelled has fallen 30 per cent in five years. Raising coal freight fares disproportionately compared to its distance and volume has led to higher cost of coal delivered and therefore to higher electricity costs for consumers – by approximately 10 paise/kWh across India. This is unsustainable.

Even more worryingly for the equilibrium is the rise of renewable energy and improved efficiency of power plants – these will lead to historical growth of coal transport coming down measurably.

Indian Railways business model of “overcharging” coal while keeping passenger fares low could lead to coal (and thus thermal electricity) becoming uncompetitive.

Panellists:           

• Rakesh Mohan: Distinguished Fellow, Brookings India; former Deputy Governor of the Reserve Bank of India; and formerly Chairman, National Transport Development Policy Committee
• Vivek Sahai: Distinguished Fellow, Observer Research Foundation; and former Chairman, Railway Board
• HS Bajwa: Executive Director (Coal), Indian Railways
• Rahul Tongia: Fellow, Brookings India – Moderator