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Konkan Railways: A step into the future

Analyzing the development of Konkan Railways amidst controversies as the impetus for growth
Ritendra Sankar Biswas 2010A1PS432P

Konkan Railways: A step into the future

Submitted by Ritendra Sankar Biswas 2010A1PS432P

Under the supervision of Prof. Tathagato Chakraborty


APRIL, 2014



Table of contents


1. Background of the Konkan Railways 1.1The Foundation stone 1.2 The Challenges 1.3 The Controversies 2. Objective and hypothesis 3. Regional growth after economic reforms Konkan Railway Corporation: Analysis of the growth amidst controversies and the impact on the development 3.1 Alignment through Goa 3.2 Controversial issues of the alignment 3.3 Justice Oza Commission 4. Konkan Railways Operations 4.1The reticent years 4.2Ro-Ro Services on Konkan Railway 4.3The recent years 5. Conclusion References

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The case study on Konkan Railways traces the history of Konkan Railways since its conceiving to the completion. The construction of the line through Goa to connect the ports of Mumbai and Mangalore was faced by controversies regarding the alignment of the line which as in the initial stages was disrupting a major part of the Goa ecological system, mangroves, parks and was inherently passing through heritage sites of Old Goa. The garb of protest against the alignment of tracks also caused tensions between the Hindu dominated North Goa and the Christian dominated South Goa. The in juncture held by KRRAC against KRC in the Bombay High Court caused the KRC debts over Rs.100 crores and was repealed by the Bombay High Court citing the claims lacking foundation and minimalizing the damage as the issue of hinterland alignment was to cost the KRC a loss of Rs 100 crores. The court finally under the Oza Commission gave the green signal with some alterations on the route and mostly resettlement of zones. The report traces the reticent years, which forced KRC to imply innovative methods and advertisements to direct a newer traffic from Rajasthan and Gujarat and successful implementation of Ro-Ro services. The miscalculations of the KC in the survey added years to break- even point and added a loan incurred and interest accrued debts of over Rs.3300 crores to the KRC. The table for the freight services and the recorded profits were also traced in for the recent years , which showed that KRC as of in the fiscal year 2012 is running in profits. The recent census did justify the loss of ecology with the aided urban growth and accelerated urbanization with the advent of KRC in the region. The report thus outlines the growth of KRC from a vision to a step in the future by aiding to spread of SEZs in the region.


Background of the Konkan Railways

The Foundation Stone
Before the Konkan Railways were even put up as an idea, the important port cities of Mumbai and Mangalore were connected with only NH 17, built in 1970, which somehow could not cope up with the increasing freight traffic. The economic reasons of forming a railway track on the zone provided an impetus to connect these port cities, the formidable geographical terrain, uneven at a continuous stretch and the unstoppable heavy rains, were an absolute obstacle against the track laying. The engineering challenge was the brainchild of Ratnagiri M.P. Barrister Nath Pai, and was conceived by the support of Madhu Dandavate and George Fernandes. 1966 saw the laying of tracks between Diva and Panvel to serve the industries present in the location. Dandavates tenure saw the line extended till Roha in 1986, but, , but the link between Roha and Mangalore still remained a far-fetched dream. October, 1984, The Ministry of Railways finally takes up the Engineering-cum-traffic survey for the west coastal portion stretching between Mangalore and Madgaon. The survey of omitted length between Roha and Madgaon was given to the Southern Railways in March, 1985. The report was presented under the title of Konkan Railways in 1988. The project was accelerated under George Fernandes as the Railway Minister in 1989.It was decided to constitute a separately incorporated railway company for the construction and operation of the line. Thus, on July 19, 1990, the Konkan Railway Corporation Limited (KRCL) was incorporated as a public limited company under the Companies Act, 1956, with its headquarters at CBD Belapur in Navi Mumbai and E. Sreedharan, a senior railway official, as its first Chairman and Managing Director. Five years was the time allocated for the project completion which was a huge challenge considering the engineering challenges that lay on the way. The foundation stone of the project was laid at Roha on September 15, 1990, and the Corporation had its task cut out.

The Challenges
The team under Mr. Sreedharan had no clue as to what terrain they will be facing, adding onto the formidability. They had no survey for the entire stretch of Maharashtra, which was to cover half the length of the project. A major challenge in the area was land acquisition as circa 43000 landowners had to be negotiated with. But though land related lawsuits are common in the Konkan, when KRCL began persuading people to give up property that had belonged to their


families for generations, many gave it up voluntarily, convinced of the importance of the project. This enabled the entire process to be completed in just a year. The challenges were posed by the terrain and the elements also. Frequent Flash floods, landslides and tunnel collapses affected work at many places on the project. The region was thickly forested, and construction sites were often plagued by wild animals. Despite these problems, work on the project continued, with the effective system of decentralization, which enabled better efficiency. The entire stretch of 740 kilometres was divided into seven sectors Mahad, Ratnagiri north, Ratnagiri south, Kudal, Panaji, Karwar and Udupi - of approximately 100 km each, headed by a Chief Engineer. Contracts for the project were awarded to a few of the biggest and most reputed construction firms, including Larsen and Toubro, Gammon India and AFCONS. Several innovative practices were adopted to enable quicker construction. Piers for major bridges were cast on the riverbanks and launched using cranes mounted on pontoons. This technique of incremental launching of bridge spans was used for the first time in India. Since it would take too long to complete the project using locally available tunneling technology, nine hydraulic tunneling machines were imported from Sweden in order to bore through the hard rock of the Sahayadris. The biggest challenge, however, came from the nine tunnels that had to be bored through soft soil. The work had to be carried out through a painstakingly slow manual process for no technology was built to suffice the process. Excavation was almost impossible due to the clayey soil that was saturated with water owing to a high water table in the region. Several times tunnels collapsed immediately after they had been dug, necessitating the whole work to be redone. Nineteen lives and four years were lost while constructing the soft soil tunnels alone. In all, seventy-four people perished during the construction of the line.

The Controversies
The Konkan Railway also had its share of controversies. The biggest one arose in the state of Goa, concerning the stretch of 105 kilometres (65 mi) of the route, where serious questions were raised against the detrimental environmental and economic impact of the line on the state. The voices against the project were concerned that the proposed alignment, passing through the coastal regions of the state, would cause destruction of ecology on a large scale, damage to historical sites and would possibly disrupt the lifestyles of people on a large scale living in the densely populated coastal region of the state. The voices came together under the umbrella organisation called the Konkan Railway Re-Alignment Committee (KRRAC) in 1991, and they organised protests against the proposed alignment of the railway tracks.

The main points of focus of the KRRAC were that the existing alignment would cause flooding in coastal regions, destroy the fertile Khazan lands, harm the monuments of Old Goa, cause irreparable damage to the marshes and mangrove swamps along the coastline and estuaries of the Mandovi and Zuari rivers, backwater rivers of Goa and result in the large-scale displacement of neighbourhoods along the coastal belt through which it will pass. The KRRAC thus proposed an alternative alignment for the line, known as the Hinterland alignment, to offset the fore raised problems. According to the hinterland alignment, the new line will be passing through the relatively unpopulated regions of the state, which rendered the route longer by about 25 kilometres , but according to the KRRAC, the alignment would significantly minimise the damage caused to the environment.

The hinterland alignment was rejected by the Konkan Railway Corporation on the grounds that it would involve substantial diversion of the line, causing disruption in the deadline, escalating the costs towards the project and most importantly would deny rail access to the major towns of the state. By then, the KRRAC had grown to become a political movement, which was backed by the powerful Church and certain political parties of the region. In March 1992, it filed for public interest litigation in the Bombay High Court, seeking an injunction on the construction work and a diversion of the line through the hinterland alignment. In the complaint, it raised all the issues that had been brought up earlier. The High Court dismissed the litigation in April 1992. The grounds of the rejection were the credibility of the foundation of the claim of the petitioners that the alignment would have devastating and irreversible impact upon the khazan lands. The huge dimensions of the project and the convenience it was to cause after being operationally active was taken as grounds to compare the damage as negligible. The controversy also appeared to be taking the form of a nasty inter-community and interregional fight between the Hindu-dominated regions of North Goa and Christian dominated population of South Goa. The additional costs due to the interruption of the construction work would be at least Rs 10 lakh per day as interest on borrowed loans as per calculated by the authorities. Further, the project completion was most likely to be delayed from the already much touted October 1994 deadline, since the work stoppage was during the summer, the prime working season. The issues regarding the Konkan Railway alignment had got increasingly complicated over a period of time. It was soon deduced as per the problem was not by passing of the Konkan Railways through Goa, but the choice of alignment of the tracks among the many possible alternatives available.

Objectives and hypothesis

The main objective of this case study is to analyze the impact of Konkan Railways on the ecology, development and the growth of the region. The case study also stretches to judge the decisions taken in on by the authorities, the failures and the final relapse of the KRC into profit.

Konkan Railway Corporation: Analysis of the growth amidst controversies and the impact on the development
Alignment through Goa
The Konkan Railway line entered Goa in the north near Pernem and left the state after Loliem, the total route length in Goa being 104.9 km. The location of the stations are listed as follows:


The first survey of the alignment in the Goa sector was done in 1970-71, when the Konkan Railway was first proposed. This alignment was to run through the foothills from the Maharashtra border until Margao, where it would meet the existing metre gauge line. From thereon, it was parallel and was too close to the coast till the Karnataka border. It was to pass through Pernem, Asnoda, Bicholim, Fonda, Shiroda, Raia, Margao, Balli, Canacona and a part of Cotigao wildlife sanctuary. Panaji and Mapusa were not touched in this alignment. Therefore, a branch line taking off from Asnoda through Mapusa to Panaji, stopping on the northern bank of Mandovi river was suggested along with the current line. The prime consideration was to avoid crossing of Zuari and Mandovi rivers near their junctions with the sea. Since substantial developments had taken place after 1972 such as extensive mining in the PaliSankhli belt and building activities along the existing roads and NH17, the Central Railways initial alignment proposal would interfere with the mining operations and would pass through inhabited areas requiring extensive acquisition of houses for construction and displacement of the local population. In 1986- 87, the Southern Railway proposed the Konkan Railway alignment through Mapusa, Panaji, Margao and Canacona, almost all along the coast. Their main aim was to bring the state capital on the main line itself rather than put Panaji on the branch line. The State Government accepted this alignment . In 1990, after the KRC was formally set up, it commenced detailed field surveys to acquire land along the 1986-87 alignment. The field survey resulted in changes to the alignment. The modified alignment was somewhere between the alignments suggested by the Central and Southern Railways. It was felt that an alignment passing through Mapusa and Panaji was not desirable and, therefore, it was shifted through Ponda as originally chosen by the Central Railway. On the southern sector, the alignment was shifted towards the coast to avoid the Cotigao wildlife sanctuary. The alignment was again shifted to the west of Ponda (and closer to Panaji) at the request of the State Government. This was the final KRC proposed alignment.


Source: Vikalpa,Vol. 20, No. 3, July-September 1995


Source: Vikalpa,Vol. 20, No. 3, July-September 1995



Controversial Issues of the Alignment

Out of the total of 105 km in Goa, there was no controversy regarding the sections from Pernem to Mayem (22 km) and from Balli to Loliem (29 km). The controversy had arisen for the portion from Mayem to Balli (55 km) for which representations had been received for a change in the alignment to the hinterland. Opposition to the KRC alignment hinged on issues such as the Khazan lands, the Carambolim lake, mangrove swamps and other wetlands, and the settlements and churches of old Goa, etc. Khazan Lands: A unique coastal estuarine agro eco system, Khazan lands, which comprised of 18,000 hectares of land, played a crucial role in the state's ecology. The term Khazan was said to be derived from the Portuguese "Casana" which meant a big rice field. The Khazan land concept was peculiar to Goa and that too in the estuaries of Mandovi and Zuari rivers due to geological reasons. In these estuaries, lateritic formations had been eroded by the river action creating low lying land, i.e., below the high tide level. These were reclaimed for paddy cultivation by provision of series of bunds and sluice gates allowing rain water to wash the fields, but not permitting saline water to damage the paddy fields. During the first rains, the fresh water washed the fields and paddy was grown. After the paddy was harvested, the tidal waters were allowed through sluice gates and fish farming was carried out. The system of Khazan was basically an engineering feat to reclaim the area for productive use that would otherwise have been colonized by the sea. Carambolim Lake: The Carambolim "lake"-wet land had been in existence since ancient times. It was a low lying marshy land of 72 hectares in the Carambolim village. The depth of the water body varied from 0.75 to 1.25 metre. The lake was host to around 120 species of migratory birds from November to March. The lake was important for local agriculturists as it helped irrigate their field when there were no rains and also helped recharge the water table. The KRC alignment required a part of the lake to be filled up. Environmentalists feared that this would not only alter the ecology of the area but the sound of the high speed trains would scare the birds away. Mangrove Swamps and Other Wet Lands: The inter-tidal mudflat areas of the estuaries of Goa supported about 20 different species of mangrove. Mangrove swamps constituted vital nursery areas for commercially important fishes, prawns, and other crustaceans. The extent of mangroves in Goa was about 2,008 hectares. About 900 hectares were along the Zuari estuary, 700 hectares along Mandovi estuary, 200 hectares along Camburjua canal, and the rest in Chapora, Talapona, Galgibag, and Terekhol rivers. The current alignment passed through 197 hectares of mangrove swamps and other wet lands, though the direct impact of the railway on mangrove ecosystem in coastal Goa was questionable.



Settlements and Churches of Old Goa: The present alignment passed through densely populated areas of Salcete, Margao, and Quepem. This was expected to result in changes in the socio-cultural lifestyles of the residents of various villages. The alignment would cut across road networks and cause vibrations and noise pollution. Fears were also expressed regarding the high probability of slums growing along the tracks. The protest groups also feared possible damage to the churches in old Goa, since the current alignment ran close to many of them. The most notable was the 400 year old 'World Heritage Site' of St. Francis Xavier's church, whose location was 1.5 km from the alignment. Wildlife Sanctuaries: It was feared that wildlife, reptiles, and birds may get affected due to excessive disturbance as a result of human and machinery movements during construction and noise pollution during the operation. However, the present alignment did not pass through any notified sanctuaries.

Justice Oza Commission

Subsequent to the Prime Minister's orders, a one-man commission was constituted by the Central Government, headed by Justice C J Oza. He started his work in June 1993 and submitted his report in December 1993. The report was discussed in the parliament in December 1993 by the Railway Minister. The main recommendations of the report were: * To provide viaducts on Dewar island and Zuari approach wherever the embankment is higher than 10 metres. * The hillock on Dewar island damaged by earthwork should be terraced. * Anti-vibration measures should be taken in the tunnel near the chapel on the hill to prevent any damage. * Additional waterways should be provided in the Khazan lands wherever fishing boats have to pass. * Fencing and boundary wall should be provided where the railway track is passing through settlement areas. Necessary foot overbridge should be provided where school children have to cross. The current alignment was retained but with the above improvements and an extra expenditure of Rs 18 crore was to be incurred. (KRC claimed the actual loss to be Rs. 100 crore including costs due to stoppage of work.) Soon after, the work resumed in the Goa segment of KRC.



The completion date was postponed from October 1994 to March 1995 to account for the duration of the work stoppage. Further, KRC also distinguished between the time of introduction of freight services arid passenger services, the latter requiring more stringent conditions on the track. The March '95 deadline was for freight services while passenger services would be introduced from October 1995. The total project cost was revised to Rs 2,050 crore including Rs 300 crore as interest charges incurred during the construction stage. Of this, the equity contribution of the Central Government and the four participating states would be Rs 600 crore. KRC was expected to pay back loans (of Rs 1450 crore) within ten years of commencement of operation through the profits earned from operations.



Konkan Railways Operations

The reticent years
KRC was structured as a build - operate - transfer (BOT) project, with a concession period of 10 years from start of operations. KRC completed the project at a cost of Rs 3,375 crores (Rs 2,425 crores as investment and Rs 950 crores as capitalized interest) and commenced operations since January 26, 1998. Out of Rs 3,375 crores, Rs 800 crores was equity capital. The cash operating and maintenance expenses were in excess of Rs one crore per day. Given that KRC was expecting of daily earnings of Rs 25 lakhs by way of passenger traffic (seven pairs of trains on the segment), they needed about 10 loaded freight trains to ply over the entire KRC segment daily (at an average contribution of Rs 7.5 lakhs/train in 1998) to break-even. (Each freight train going over the entire KRC segment could bring in arevenue of Rs 9 to 10 lakhs, at the average freight rate inflated by 50%, as per railway board pricing. The average cost payable to IR for wagon and loco hire, fuel and crew was Rs 1.4 to Rs 2.7 lakhs for a train going over the entire segment. This would depend on the number of wagons and locos hired for the train. The contribution figures in 2000 were expected to be Rs 9 lakhs per freight train and Rs 1.3 lakhs per passenger train). KRC also needed to make surpluses to pay back the debt burden of Rs 2,575 crores. At the end of 9 months of operation, only 94 rakes had moved over the KRC segment. Earlier projections of business growth had not materialized. Out of the 94 rakes, 61 either originated or terminated in the KRC segment, while 33 passed through. Even out of this 33, 30 rakes either terminated or originated at stations immediately adjacent to KRC. KRC thus did not really serve the purpose of a via railway bridging the Konkan Gap and offering shorter routes. It was servicing new traffic from/to the KRC segment. One of the major reasons for this was the inflated price on the KRC segment, making it unviable for north south traffic on the IR to be rerouted via KRC. KRC was thus in a financially unhealthy situation. The past years, KRC saw their survival being ensured through budgetary support from the IR and some further debt. In response to the situation, KRC tried to increase its revenues through a marketing approach. They proactively solicited freight traffic from Rajasthan and Gujarat towards the south and from Kerala towards the north. They advertised and distributed promotional material on the benefits of using KRC and offered discounts on the KRC segment of travel. Pushed to the corner, they attempted service innovations like a Ro-Ro service and are proposing other schemes for revenue generation, like leasing their station area for budget hotels ("Railotel"), catering, parcel traffic in break vans etc. They also leveraged their transport



project management and tunneling expertise to bid and construct similar projects like tunnel segments in the Mumbai-Pune Expressway. They have also business plans for the area of urban transportation.

Ro-Ro Services on Konkan Railway

Ro-Ro services were started on 26/01/1999 for carrying trucks on train on the KR section, between Kolad (150 km south of Mumbai) and Verna (Goa), a distance of 420 km. (The total KRC segment is 738 kms). The financial analysis of the project proposal and the actuals are given below. The Ro-Ro service was expected to be financially viable, if reliable and regular services were offered. The customers saw this service as having a definite advantage over road driving, saving fuel and wear and tear of trucks. Assumption: Traffic earning would start on day one, at full utilisation. There was enough traffic potential of trucks on NH 17 running parallel to KR. The third line at Kolad will be in position to deal with two trains daily. The new flats will have 100 km/h speed, with a length of 40 feet to accommodate two trucks. (The flats would be fit to take container traffic also).

On a capital of Rs 1,700 lakhs, the net surplus expected was Rs 2,004 lakhs per annum. In contrast to the above, new wagon flats had not yet been invested in. They were hired from the IR, like the locos. There were also expenses on fixed assets to the tune of Rs 73.31 lakhs. The actual revenue and expenses for the period 26/01/99 to 31/05/00 (16 months) was as




Source: Konkan Railways citations from the Annual report of KRC Ltd, March 1998, posted as in Vikalpa: Jan- Mar, 2000.

The recent years

For the first time since the beginning of its operations, Konkan Railway has earned a record Rs 300 cr alone from freight traffic in 2008-09, which, given the general economic slowdown all over the world, is nothing short of spectacular.The Debt-Equity ratio had also taken a positive swing from the approximate ratio of 7:1 in 2007-08 to 0.55:1 in 2008-09. It was all done by the recent Financial Restructuring of KRCL, thus paving way for the corporation to reach a breakeven point in the near future. The freight earning of Rs 300 crore in 2008-09 is an increment of almost 12% over the previous year. As in other zonal railways, the global recession did affect the freight traffic on Konkan Railway too, albeit only in the last quarter of 2008 and that too only for a certain segment. The traffic in this segment again picked up in January 2009 and made up for the loss of earnings in the last quarter of 2008.



Konkan Railway, which earned Rs 725 crore in 2008-09, has also registered a growth of 8% as compared to the previous year from 2854 million to 3080 million. There was a marginal increase in number of freight trains also. Financial highlights of Konkan Railway Corporation for financial year 2012-13 Total Income Rs.1,136 crore Total expenditure Rs.963 crore Operating profit Rs. 173 crore Net loss Rs. 236 crore Net worth Rs. 1340 crore Accumulated loss Rs. 3546 crore Total outstanding Loan Rs.1667 crore Number of employees 4785 Income per employee Rs.23 lakh

Source: Business Standard, Monday, April 14, 2014.



Cost of the Konkan Railways to the ecology
The advent of Konkan Railways saw the increase in deforestration in the Goa coast by upto 12% in 2007-08 survey by IISc, Bangalore. The anti development stance give to KRRAC by the Bombay High Court paved way to Lavasa city development clearing away 12,500 hectares of Vedant forest cover and the acquisition of 33 SEZ since the 1990-91. The Khazan Land declined by 30 hectares and aided the mining corporations to be invited in a huge bulk and thus aid the loss of fertile lands.

Konkan Railways: the Helping hand

The construction of Konkan Railays aided the higher growth of urban population in 19912001(35.55%) as compared to 32.42% in 1981-1991. The rural population growth has declined as in comparison to the national average(31.39%), while the urban growth in population is estimated at higher than the national average. The rural population growth during 1991-2001 was estimated lower than in 1981-1991. Seventeen villages along the Konakn Railways were granted the own status as per the 2001 Census. The towns located along the Konakn Railways have registered the population growth higher than the national average. The development s aided by the generation of additional opportunities which have resulted in the migration of people to new and existing urban centres along the line. The fact is pretty much verified by the low sex ratio, the towns with the highest development and growth of population have lower sex ratio. The slow growth of the rural population suggests that the Konakn Railways have mobilized the crowd flow from the interior locations towards the brimming urban centres. Increased accessibility also has a definite helping hand. In short, the development of Konkan Railways have aided the acceleration of urbanization, and the price it paid was although less, but, it did open gates for many more industrial development to use the same stance and thereby increasing the ecological impacts.



Vikalpa, Vol. 20, No. 3, July-September 1995 Communication from Konkan Railway, Mumbai, 2000 (Regarding Ro-Ro Services on Konkan Railway Infrastructure Development and Its Environmental Impact: Study of Konkan Railway, Prabha Shastri Ranade Business Standard, Moday , April 14, 2014. Annual report of KRC Ltd. 1/19/2014.