Modal Split between Rail and Road Modes of Transport in India

Abstract

In the 1950s, the rail mode occupied a dominant position in transport within India. Since then, however, the transport sector in the country has been characterized by a secular decline in the share of rail mode. Internalization of the external costs of transport may not be sufficient for the achievement of a socially optimal modal split unless account is taken of the factors behind the current modal split. This paper attempts an investigation of these issues on the basis of data relating to eight representative sections in the country where the two modes are in competition. India became a decidedly road-dominant economy in the beginning of the eighties with the railways losing out in respect of freight traffic in addition to its already declining share in passenger traffic. The dominance of road over rail has since continued unabated till the present and is likely to continue into the future. This paper reviews the trends in transport and modal split in India from the fifties onwards and looks at the factors likely to influence modal choice. In the literature, an individual's choice of mode is divided into two main categories: personal characteristics of the individual (income, tastes, auto ownership, competing family needs for the car) characteristics of transportation alternatives available (relative time, cost, and comfort). Based on time-series including user costs, per capita domestic product, and consumption expenditure, an econometric analysis of inter-modal competition in the eight sections selected for the current study reveals the following: In the case of passenger traffic, increases in the user cost difference and the user cost ratio between road and rail have an upward impact on the relative traffic volume of rail. Income (as represented by per capita gross state domestic product) seems to play a part in determining choice between travel by car on road and first-class/air-conditioned travel on rail. The relationship between modal split and user cost difference/cost ratio in the case of competition between bus on road and second-class/sleeper-class travel on rail appears to be a non-linear one. In the case of freight competition, the modal share of rail does not go up with increase in the user cost difference or cost ratio between road and rail. It is the income variable that appears to influence modal choice in freight transport in the expected manner with shippers patronizing the qualitatively superior road mode when per capita state domestic product goes up. To arrive at a socially optimal modal split, therefore, it is necessary to concentrate on improvements in the quality of service on rail while at the same time devising measures to internalize the external costs of transport.