Essay on Transport Mediums in India

In this essay we will discuss about the transport mediums in India during different periods. After reading this essay you will learn about: 1. Essay on Railways in India 2. Essay on the Development of Roads in India 3. Essay on Indian Shipping 4. Essay on Inland Water Transport in India 5. Essay on Air Transport in India.

List of Essays on Transport Mediums in India, during different Periods

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Essay Contents:

1. Essay on Railways in India
2. Essay on the Development of Roads in India
3. Essay on Indian Shipping
4. Essay on Inland Water Transport in India
5. Essay on Air Transport in India

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1. Essay on Railways in India:

With the growth of political power and expansion of territories, the British administrators in India realised the need for improved means of transport. They, therefore, pushed railway development with vigour, giving it priority over everything else in the country.

The history of railway development in India can be conveniently divided into several well-defined periods:

a. The Old Guarantee System, 1850-1869:

The earliest proposal to build a railway in India seems to have been made in Madras in 1831-32 when a railway line was contemplated between Madras and Bangalore.

At about the same time, another scheme of 150 miles of railway line from Cauveripattam to Caroor, parallel to the embankment of the river Cauvery, was also chalked out. But ‘vehicles were to be drawn by animals’ alone! Steam railways for India were, for the first time, projected in 1843, this time in England.

The Court of Directors of the East India Company was, however, lukewarm in its response to the proposal because it feared that passenger traffic would not be ‘substantial’. But they found it difficult to resist for long the strong political and economic pressure at home exerted by the railway promoters, financiers mercantile houses trading with India and the textile manufacturers of Lancashire.

The Governor-General himself reported, that the plains of Hindustan offered remarkable facilities for building railways which would be a immense value to the commerce, government, and military control of the country. The proposal for the construction of railways was finally accepted in 1845.

A short struggle between the railway promoters and the court of Directors on the question of govt. guarantee of a minimum interest or dividend on the private capital invested in Indian railways also ended in favour of the promoters. And on the 17th of August, 1849 the first contracts for the construction of two small experimental lines, one from Calcutta to Mirzapur and the other, from Bombay to Kalyan, were signed.

The really decisive turn to government policy was given by Lord Dalhousie’s famous Minute of 1853 in which he emphasised the social, political and commercial benefits of railway construction. A further stimulus was provided by the Mutiny in 1857 when movement of troops and materials was seriously obstructed due to inadequate and defective transport.

In accordance with Dalhousie’s preference for private companies, contracts were entered into with eight companies between 1854 and 1860 for constructing and managing railways in different parts of India. The first railway line between Bombay and Thane was opened on the 16th April, 1853, the first part of the East Indian Railway-Calcutta to Raniganj-was completed in 1858 and the line from Madras to Arkonam in 1856.

The main features of the contracts entered into between the government and the railway companies were as follows:

1. The construction and operation of railways in India was to be carried on by private companies.

2. The government was to provide land free of cost, for the construction of railway stations, staff quarters and railway lines.

3. The government guaranteed interest at rates varying between 4½ to 5% on the capital raised by the companies and this interest was payable from the date the capital was subscribed.

4. Surplus profits, above the guaranteed minimum, were to be equally shared by the companies and the government till the past advances by way of guarantee was repaid in full. Thereafter, all profits were to go to the railways companies.

5. All transactions were to be calculated at the rate of the rupee.

6. The route, gauge, construction, gradient etc., were all to be sanctioned by government which also had the right to order alterations.

7. The government reserved to itself the power of supervision and control on the working of the railways, including rates and fares.

8. The contracts were for 99 years at the expiry of which the land and works were to become the property of the government which had to pay only for the plant, machinery and rolling stock.

9. The government had also the right to purchase the lines after 25-50 years at the average market value of the shares in London.

10. A company could, however, hand over its management to the government any time and get the capital invested by it.

11. A government director with the power of the vote on all proceedings was to sit on all Railway Boards.

12. The Government bound itself to promote all necessary legislation.

Although the government held that “a guaranteed interest on the requisite capital was indispensable to induce the public to invest their money………. “, critics found the system both unnecessary and wasteful. It was unnecessary in the sense that even unguaranteed capital would have flown into India.

As Macpherson has pointed out, after the heyday of the Industrial Revolution, safe and profitable outlets for investment in England had greatly narrowed down.

Investments in overseas territories outside Britain’s control had also become risky, especially after several South American countries had defaulted on repayment. England, therefore, had a surplus of capital which desperately sought investment and would have been available to India even without a guarantee.

The typical attitude was:

“I care nothing about what is done with money so long as that is spent to secure 5% to the shareholders.”

A fact worthy of note in this connection is that among the prospective investors, many were friends and relations of the directors of the East India Company. The Directors, therefore, wanted to do all they could to help them.

This led Lord Mayo to complain that “the Secretary of state guaranteed railway development not needed by India under pressure from Board of Directors in England….”. Thus was a great wrong done to the public of India by ‘promoting personal interest at public expense.’

Even if it is accepted that a guaranteed interest was indispensable, it need not have been fixed so high. That abundant capital was available at a much lower rate of interest is borne out by the fact that in 1845, the mere prospect of 3% guarantee drew to the East Indian Railway more capital than could be accom­modated.

This is further confirmed by the later experience of the government when they were able, without much difficulty, to enter into contracts on terms much less favourable to the companies.

The system was wasteful because interest on capital invested being guaranteed, there was neither a fear of loss not an incentive for economy. Money was recklessly squandered.

“The standard of construction was far higher than required for the conditions of the country or for the actual work which the railways were designed to perform. Conveniences were provided which were unnecessary for the safe and efficient operation of railways.” Even experimental lines had double-tracks.

In certain cases, Plans were changed after construction had actually commenced. The result of this extravagance was that the “earnings which might have been sufficient to pay interest charges on a reasonable expenditure, proved inadequate to meet the guarantee on the outlay actually incurred and the government had to make good the loss.”

The deficit, kept increasing in amount, until it reached the large sum of Rs. 166.5 lakhs in 1868-69.

Lord Dalhousie had hoped to ensure a close and vigilant watch on the working of the railway companies. In actual practice, government’s control and supervision failed to check the tendency to extravagance and waste. The system of audit was imperfect while the government’s consulting engineers were not ex­perienced enough in railway construction.

Besides, the fear of causing delay to the progress of work often led them to overlook the negligence of the companies. For example, it was reported to the Select Committee of 1872 that on the G.I.P. Railway, 2,000 masonry works, including bridges and viaducts, had to be repaired soon after their construction. Understandably, the railways were involved in huge losses.

Even these losses might have become tolerable had railways been designed to serve the true interest of India and not that of England. However, “as in other matters of general policy, the commercial interests of the United Kingdom tended somewhat to blind officials to the real needs of India.

Attention was, therefore, directed to the construction of trunk lines only while branch and feeder lines were ignored. Local needs were thus sacrificed for the sake of foreign trade which tended “to develop English rather than Indian industry.”

In addition to these inherent evils of the system, there were several other grave defects which arose chiefly due to the way in which contracts were made. Thornton had rightly remarked that “the contracts were a perfect disgrace to whosoever drew them up.”

Many of their clauses were self-contradictory. For example, while one clause stipulated payment of guaranteed interest only on sums properly spent, a subsequent clause provided payment by the state of a 5% dividend on all capital raised by the companies.

Again, the contracts provided that, at the expiry of the terms of 99 years, railways would become the property of the govern­ment. But another clause provided that, if a company decided to surrender their railway before the expiry of the lease, the government must pay them full amount of the capital which they had expended upon it.

This, in effect, meant that in the 99th year, the government could get the railway for nothing but in the 98th year, if the company so desired, it could get the full value of the railway.

There were instances when, much to the detriment of India’s interests, con­ditions laid down in the contracts were not enforced. In the original contracts, for example, it was provided that the sums, which the government would pay on account of guaranteed interest, would be a loan to the company and that whenever the net receipts exceeded the amount of the guaranteed interest, half of the excess would be utilised for the repayment of the sums previously-paid on account of guaranteed interest.

And yet, in the new arrangements made in 1869, it was arranged to keep no account of guaranteed interest against the companies and to cancel the past debt. Thus, the sum of Rs. 16 crores, which had been advanced by the Indian taxpayer’s up to 1869, disappeared as bad debt.

Again according to the original contracts, if the working expenses were more than the receipts, the companies were responsible for the difference.

This clause was not strictly enforced in certain cases such as those of the Calcutta and South Eastern Railway where the government showed the extraordinary indulgence of paying not only the guaranteed interest but also the excess of working expenses over receipts and ultimately bought a loosing concern returning the whole capital at par !

Dr. Sanyal, rightly concludes that “the Indian guarantee killed effort for economy, promoted recklessness, and involved the contrary in liabilities much beyond what the people could bear or the needs of the time could justify.”

This can be seen from the results. In all, 4255 miles of railway lines were opened up to the end of 1870 ; the average annual addition being 267.8 miles, the lowest addition was 15.5 miles in 1857 and the highest 770 miles in the year 1862. While Lord Dalhousie had expected the average cost of railway to be Rs. 80,000 per mile, it actually came to Rs. 1.80 lakhs per miles without counting the cost of land which was given free.

In contrast, some of the railways in the U.S.A. were built including the cost of land, for as little as Rs. 20,000/- per mile. While the capital costs of Indian Railways were so heavy, the net earnings brought only 0.22%, 1.3%, 1.98% and 2% on the total outlay during the years 1854, 1859, 1864 and 1869 respectively.

The state was thus called upon to pay larger amounts annually on account of guaranteed interest. Total loss to the state for interest, exchange, land, etc., up to the end of the financial year 1869, amounted to Rs. 19.5 crores. This was a heavy burden, more on account of increasing administrative expenditure and a succession of devastating famines.

b. State Construction, 1869-1882:

The extravagance and mismanagement of the private companies, the inability of the government to effectively control their working, the remote possibility of sharing the profits, and the poor financial result of the guarantee system forced the government to reconsider its policy towards railway construction.

While the evils of the guarantee system were under discussion, several attempts were made to form private companies for railway construction without a guarantee. In 1862-63 and 1863-64, The Indian Branch Railway Company and the East Indian Tramway Company were formed for the purpose of con­structing short feeder lines on a narrow gauge.

The only help sought by the com­panies was a free grant of land and some incidental help in the smooth progress of the work. The expectations were, however, not realised and very soon, further government assistance was solicited. The government decided to offer a subsidy in place of a guarantee.

This subsidy took the form of an annual payment for 20 years at the rate not exceeding Rs. 1000/-per mile of line, with an additional amount for bridges costing more than Rs. one lakh.

Even subsidies failed to attract capital so that the two unguaranteed companies had to be later given guarantee of interest. It was now recognised that the unguaranteed companies could not be expected to play any important part in the development of Indian Railways.

This led Sir John Lawrence to propose, in a long and lucid Minute, that the existing system under which the “whole profit went to the companies and the whole loss to the government” should be scrapped. To the presumed incapacity of the government to carry out or manage such undertakings, he gave the reply that “the direct agency of the government would certainly be more economical than that of railway companies.”

In the meantime, Lord Mayo succeeded Lawrence as the Governor-General of India. He regarded “direct action of the state as most likely to bring about generally satisfactory results” and recommended state construction of railways. This time, the proposal was accepted and thus began, in 1870, the era of state construction of railways in India although expenditure on the first state railway had commenced from 1867.

With the adoption of the new policy, large schemes of railways were atonce undertaken with borrowed capital raised directly by the government. This involved the Government of India rather in heavy expenditure for a few years which attracted the attention of the British Parliament.

From 1871-74, a Select Committee on Indian Finance enquired into the question and, in 1874, Lord Salisbury, on the basis of its recommendations, laid down three principles.

These principles were:

1. Only those lines should be constructed out of loans which were expected to repay the interest on the capital invested including interest for the period of construction.

2. All loans for public works including railways should be raised in India and that the government expenditure on railways should be limited to Rs. 2.5 crores a year. The limit was raised to Rs. 4 crores in 1875.

3. Money spent on the construction of lines meant to prevent famines should be met out of the general yearly revenue of the government or borrowed, if necessary.

Although these principals limited government’s expenditure to an annual sum of Rs. 2.5 crores, in actual practice, the government could never keep its expenditure within these limits. Up to 1879-80, the expenditure was never below Rs. 3.5 crores and averaged Rs. 4 crores per year.

No account of railway development would be complete without a reference to Provincial State Railways and Indian (Native) State Railways. The possibility of securing local capital was first demonstrated by the construction, in 1870 and 1871, of two short lines, the Khamgaon and Amroati branches, out of surplus revenues from the assigned territories of Berar.

These lines were built by the State with a view to improving facilities for transportation of cotton. In 1875, the government of North Western Provinces (U.P.) constructed a promising line of 30 miles from Mathura to Hathras. Various other lines of local interest were also pressed for and the need was felt for some well-defined policy for such undertakings.

Accordingly, in 1878 rules were framed under which the construction and working of provincial railways was left to local government subject to general control by the Government of India. Provinces were allowed to raise loans through the issue of debentures. By the end of 1881, no less than 865 miles of State Railways were thus placed under provincial governments.

In the first period of railway development, little effort was made to secure the participation of Indian states in railway construction. In-fact, it was not con­sidered ‘wise’ to invite the native states to participate in railway development. It was only in 1869 and that too after a prolonged consideration of the matter that the desirability of direct state construction of such lines, classified as political, was admitted.

In 1876-77, arrangements were made with the States of Hyderabad and Indore whereby each of these agreed to provide Rs. one crore for certain railway projects located in those states. Similar arrangements were also made with the States of Gwalior, Baroda, Mysore, Bhopal, Bhavnagar etc.

From the Nawab or Rampur also, a loan was secured, at 4%, but it was to be repaid, ‘after one year’s notice to be given on or after 1st December, 1917.’ This led one ex-member of the Viceroy’s Council to remark that India was served by “the most remarkable and most able financiers known to any civilized country.” Under these arrangements, nearly sixty miles of railways were provided.

The adoption of the new policy of state construction of railways was closely related to the question of gauge for Indian railways. According to Lord Dalhousie’s scheme, a gauge of 5 ft. 6 inches had been adopted for the whole railway system in India.

Doubts were, however, raised about the ability of the government to bear the burden of a broad gauge throughout the country. Narrow gauge, on the other hand, appeared to be more economical and practicable.

Mounting general expenses and the fall in the value of the silver rupee led the government to divide the railways, especially in less productive areas, into two; the trunk lines of the broad gauge and the feeder lines of the narrow gauge.

Thus the policy of state construction and the adoption of the Metre-gauge went hand in hand. Whatever might have been the other-evils of this policy of having different gauges, it un­doubtedly led to saving in costs.

As Horace Bell puts it, without it “many a district would have seen its produce still carried by bullock carts over cross country tracks, or would have given up the attempt to compete with more favoured localities.” The management of the railways in India had, from the beginning, been left in the hands of local agents who acted under the direct guidance of the Board of Directors in England.

However, when the policy of state construction was adopted, the need for a more centralised control became unavoidable. Various trials and errors finally led to the formation of a State Railway Directorate in 1874 and a Director-General for railways, both state and guaranteed, was appointed in 1879.

The consulting Engineer for State Railways was associated with the Director-General for inspection and technical advice, while Director of Stores dealt with materials, rolling stocks, and establishment. The accounts work was under the charge of the Accountant General, and soon afterwards, a Director of Traffic was appointed to deal with traffic problems.

The period under review saw a substantial increase in railway mileage. Between 1869-1818, the total milage increased from 4255 to 9890, the average increase being 468 miles per year as against only 268 miles of the previous period.

The highest addition during any one year was made in 1878-79 when nearly 900 miles were added. Of the total length opened up to 1881, companies’ lines accounted for 6,132 miles, Indian State lines aggregated 446 miles, and the remaining 3,297 miles were government lines. In addition, more than 2,000 miles of new lines were under construction towards the close of the period.

The average cost of construction in the period compares very favorably with that of the previous period. The experience gained during the earlier years brought about more economical construction but, more than that, a great deal of the credit was due to the direct activities of the state.

The average cost of constructing a mile of broad gauge line by the guaranteed companies was estimated at rupees 1.80 lakhs although some lines cost rupees 2 lakhs and even more. In contrast, the average for state lines was only rupees one lakh.

This would have been still lower if only the gauge had not been changed midstream and if less hurry had been shown in completing the line to meet the emergency of the Afghan war.

As regards the financial results, the companies’ lines yielded an average return of 6.20% on capital while the state line yielded 2.15%. The poor results shown by the state railways were mainly due to the strategic lines of the Punjab and North West Frontier which comprised nearly 1/3 of the total mileage of state railways. Besides, the state lines were comparatively new and covered less profitable areas.

During the 12 years ending 1881-82, the state incurred a loss of nearly rupees 1.5 crores exclusive of interest and losses due to exchange. The year 1877-78 was the only one when about rupees 50 lakhs were obtained as net profit to Government.

c. The New Guarantee System, 1881-1900:

Even though financially cheaper and more successful than the guaranteed railways, the system of state railways soon came under attack primarily for the slow speed of construction.

The British merchants and industrialists, dissatisfied as they were with the existing volume of India’s foreign trade, clamored for better transport facilities so that the immense Indian market in the interior could be fully exploited and raw-materials from the remotest field speedily carried to Britain.

There was also the renewed pressure of investors who looked upon the guaranteed railways as a field for the safe investment of their surplus funds.

The Famine Commission of 1880, having been impressed by the part railways had played in reducing the intensity of famines, also urged immediate construction of 5,000 miles of new railway lines although it held that the country could not be made safe from famines until mileage reached 20,000. The revenues of the state were, however, wholly inadequate for the purpose.

The threat of Russian expansion on India’s North West Frontier had necessitated the transfer of large capital resour­ces to the construction of military and strategic lines. This was done without any consideration of cost and profitability so that the government railways were bur­dened with a large amount of unproductive capital.

Secondly, the series of devas­tating famines that visited the country between 1874-79, involved large-scale expenditure on famine-relief.

A third difficulty was the limit fixed in regard to the total burden of railways, whether due to direct expenditure from revenues or on account of the servicing of the railway debt. The co-existence of financial stringency on one side and the urgent necessity for rapid railway development compelled the government to seek once again the help of private companies in the task of railway expansion.

The tide of public opinion had already turned in favour of private companies so much so that when the government purchased the East Indian Railway in 1880, its management was left with the old company. Following the recommendations of the Parliamentary Select Committee of 1884, it was decided to employ both state and private enterprise in the future development of railways in India.

Accordingly, fresh contracts were signed with a number of companies such as the Bengal Central Railway, the Bengal Nagpur Railway, the Southern Maratha Railway, and the Indian Midland Railway.

The chief features of the new guarantee system were:

(1) The lines constructed by the companies were declared to be the property of the state which also had the right to terminate the contract after the expiry of 25 years from the date of signing of the contract or at subsequent intervals of 10 years, on simply repaying the capital provided by the com­panies for the construction of the line.

(2) The guaranteed rate of interest was much lower than before —the most usual rate being 3½%.

(3) The government received a much larger share, usually 3/5 of the surplus profits.

As can be seen, the terms offered this time were more favourable to the government. The tines constructed were the property of the state; the guaranteed interest was lower and the division of surplus profits more to the advantage of the government. In lines with the new policy, contracts with the old companies were also revised when due so as to secure more favourable financial conditions.

However, as Tiwari has pointed out, these relatively minor advantages were no compensation for “the exclusion of the state in toto from the field of productive enterprise and its confinement merely to those railways which, from their un­profitable character, could not be undertaken by private enterprise.”

The earlier policy of constructing both productive and unproductive lines was changed. Henceforth, the government confined itself to the construction of strategic, protec­tive but un-remunerative lines only, leaving profitable lines to private enterprise.

While the policy of companies’ lines existing side by side the state line was thus finally decided upon, the agency for construction or management was deter­mined according to circumstances in each case. This led to the creation of a complicated variety of as many as 33 working agencies.

In some cases, such as the Eastern Bengal, the Bengal Central, the Sind Punjab and Delhi lines, the lines purchased were transferred to state management.

In the case of Madras and the Indian Midland Railways, the lines were acquired but placed under the management of other companies with which they were amalgamated. In still other cases, the old company management was allowed to continue but more favourable terms were secured. This method was adopted in the case of the East Indian Railways.

In the words of Chesney, this was “sufficient indication of the total want of a systematic policy and good judgement which-characterised the railway administration.”

The Indian government defended its lack of consistency by arguing that it “arose primarily out of practical difficulties and friction which were bound to ensure in cases where one railway administration” possessed a line to the sea-board but its continuation or extensions upcountry were in the hands of another.”

Apart from this, many of the anomalies were due to the fact that the railway policies were not framed by one but two authorities, one in India and as other in England.

An important development of the period was the beginning of the Branch line companies. Failing to attract private capital and enterprise without sterling guarantee, the government proposed, first in 1893 and later in 1896, to invite capital on a rupee basis, for construction principally of branch lines.

The main terms of the proposals were:

(1) In addition to free grant of land, the government offered

(a) A guarantee not exceeding 3% per annum on actual capital expenditure or

(b) The grant of a rebate from the net earnings of the main line making up dividend at 31/2% on the capital expenditure of the branch.

In either case, the account was to be kept in rupees and the guarantee or rebate was calculated on a rupee basis. The first railway constructed under the Branch Line terms was the South Bihar line of which contract was entered into in 1895. Almost simultaneously, the southern Punjab main line contract was also signed. Tapti-valley railways followed soon afterwards.

Mention may also be made of the District Board lines whose construction was undertaken during this period. Under this scheme, efforts were made to get lines of purely local importance financed by district Boards on the security of their revenues. Few Boards were able to take advantage of this arrangement.

In Madras Presidency, the Boards were permitted to levy a special cess, solely for the construction of railways. The District Board of Tanjore was the first to avail of the opportunity. It constructed a short line from Mayavaram to Mutapet by raising half the capital required from its own resources and borrowing the rest from the government.

The sum borrowed was paid off in 1900 by imposing a special cess of 3 pies (about 1.5 new paise) in the rupee on all land revenue raised in the district.

Encouraged by the success of the Tanjore experiment, the Government of India authorised, in 1898, all local bodies to levy special cess for railway purposes. Little relief to the finances of the government could be expected from this source as the resources at the disposal of the District Boards themselves were rather small. Only 158 miles were built in Bengal and 105 miles in the Tanjore district.”

A notable event of the period was the reversal of the earlier trend towards decentralisation of control. The posts of Director- General of Railways Director of Stores, Consulting Engineer for state Railways, were all abolished. Also was abolished the post of Accountant General, Railways.

In their place, were appointed a Secretary to the Government of India in the public work department, Railway Branch, with three expert deputies, one of whom was Director of Traffic, another Director of Construction and the Third, Accountant General, Public Works Depart­ment, who was given the additional responsibility of looking after railway accounts as well.

The significance of all these changes was the increased centralisation of the machinery of control and its close dependence on the Govern­ment of India. Despite the limitations imposed by a vacillating policy, the period was char­acterised by railway development at ‘break-neck speed’.

Total mileage increased from 9890 miles in 1881 to 25363 miles in 1901…. and increase of 158% while total outlay increased from Rs. 141 crores to 339 crores , an increase of 140%. The average mileage constructed per year during this period was 774 miles as against 468 miles of the previous period.

The lowest addition in any single year was made in 1882 when only 282 miles were added while the highest net addition was 1484 miles in 1899. Of the total mileage constructed up to the end of this period, 14000 miles were of broad gauge, 10,006 miles of metre gauge and the rest were light railways of narrow gauge meant for hilly areas or suburban trains.

Despite this ‘phenomenal progress’, the overall achievement was still modest. As compared to 1 mile of line for every 5 square miles of territory in the U.K., and for each 6 square miles in Germany, India had, in 1902, only one mile of line to each 69.5 square miles of territory. Again, U.K. had a mile of line for every 1913 persons and Germany for 1714, Indian had only one mile of line for every 10,000 persons.

One of the most remarkable development during this period was the sea — change in the working of the railways. After years of losses, they began, in 1900, to show some profits to the state. The net gain during the three years 1900-1902 was about Rs. 1.75 crores. The gains to the state were not merely confined to the net amount contributed by the railways to the treasury.

The government also gained on account of the increase in general revenues and customs brought about by the expansion of trade and industry. Between 1881-1901, gross revenues of the Government of India increased from Rs. 75.7 crores to Rs. 110.8 crores. Thus, every rupee spent on railways came back many times over.

d. Pre-War Period, 1900-1914:

The twentieth century saw the railways in a favourable position. Exchange fluctuations had ended; trade and commerce had begun to flourish; traffic had enormously increased and railways had become a ‘running concern.’

Certain problems, however, still remained. The speed of movement of freight and passengers was slow and the accident-rate was high. The government, therefore, appointed Mr. Thomson Robertson, in 1901, to inquire into the administration and the working of the railways.

Apart from certain suggestions on technical matters, he recom­mended:

(a) The creation of a special Railway Fund, with Rs. 15 crores to start with, to be utilised for the improvement of old and the construction of new state lines. The surplus profits, accruing to government were to be credited to this fund.

(b) The establishment of a Railway Board consisting of three members with thorough knowledge of railway working. The president was to be a member of Viceroy’s Council for railway matters.

(c) The extension of railway mileage in the country by company management of all lines. In his opinion, the best course was “to revert to a system of guarantee which is much the cheapest for the country failing direct bor­rowing by the government.”

Public opinion in Indian was, however, opposed to company ownership and management. Indian leaders argued that private foreign companies could not be expected to work with the complete “unity of purpose” and in such a way as “to protect the real interests of the country.” The government was also not favourable inclined to lease out all the lines to companies.

Therefore, the old policy of having a dual system of state and company managed lines continued throughout this period. The proposal regarding the creation of a Railway Fund was not accepted but the Railway Board was constituted in 1905. Accordingly, the Railway Branch of Public Works Department was abolished and its functions transferred to the Board.

Despite the progress, railway facilities were still found to be inadequate. British merchants led deputations to the Secretary of State, complaining about the inadequacy of railway facilities in India. The position of railway finances, though better than before, was still far from satisfactory.

In 1908, a special com­mittee, presided over by Sir James Mackay, was set up to examine the problems of railway finance and administration.

The committee found no substance in the allegation that the government was not giving due encouragement to private enterprise and yet, it recommended that some of the state-managed lines should be transferred to the companies; that the leases of the companies should be extended to longer terms of up to 50 years ; that the ‘detailed and vexatious’ controls over companies should be withdrawn and, finally, that railway undertakings should be made ‘attractive’ to private companies.

In addition, the committee recommended:

(a) That existing railway facilities being inadequate, one lakh miles of railway lines should be regarded as the desirable requirement of the country.

(b) That an annual expenditure of Rs. 18.75 crores should be incurred for railway improvement and new constructions.

(c) That the equipment and improvement of existing lines should take precedence over the construction of new lines.

(d) That “as far as possible, the trunk lines should own as well as construct and work their branch lines.”

(e) That the powers of the Railway Board should be increased so as to enable it to improve the administrative and operational efficiency of rail­ways.

The Government of India revised the branch line terms, but maintained the main line policy undisturbed. Whenever an opportunity arose, the lease was ter­minated and the line was purchased by the government. Thus the most outstanding feature of the railway policy during this period was the acquisition of ownership of lines by the State and retransfer of those for management to remodeled com­panies.

The aim always kept in view was to remedy the defects of the previous contracts and the secure more favourable terms for the state. As regards Branch or feeder lines, the old policy declared in 1896, of securing the assistance of companies with rupee capital was continued. Since the response was poor, the terms were revised so as to make them ‘considerably more liberal in several respects.’

In line with the recommendations of the Mackay Committee, the Railway Board was reorganized. The Chairman was designated as President and his powers enhanced. The Accountant General, Public Works Department, was no longer required, and an Accountant General Railways was appointed.

The post of Direc­tor of Railway Construction was abolished and, in its place, the post of Chief Engineer with the Railway Board was created for the purpose of advising the Board on technical matters.

The government did not accept, as a matter of policy, the recommendation regarding the annual expenditure of Rs. 18.75 crores on railway development. Actual expenditure from 1908-14 amounted to Rs. 110 crores, giving an average of Rs. 15.7 crores a year.

On the whole, the period, 1900 1914, proved satisfactory. Total mileage in­creased from 25363 in 1901 to 34,656 miles in 1913-14, giving an annual average of 715 miles. The highest net addition during the year was 1172 miles in 1913-14.

The total capital at charge on all railways, including those under construction, up to 1913—14, amounted to Rs. 495.09 crores. The net earnings rose from Rs. 17.22 crores in 1902 to Rs. 30.65 crores per year; the percentage of net earnings to capital averaged 5.6% during the years 1903-08 and 5.8% during the next five years.

While these were welcome results, they were, at least partly, achieved at the expense of passengers. As Robertson had pointed out “the railways in India were insufficiently appreciative of the value of Third class passengers” who often had to travel in cattle^:trucks and goods wagons. Even regular third class coaches lacked lavatories.

There were no proper and adequate facilities for booking, drink­ing water, waiting-halls for third class passengers who, in addition, were not treated with courtesy and sympathy. These grievances were to strengthen public demand for state ownership and management of railways.

e. The First World War:

The First World War brought out, in a dramatic way, the weaknesses existing in the Indian railway system. Even before the war, the incapacity of the railways to cope with the growing volume of traffic was noticeable. During the war, it became so acute as to first lead to rapid deterioration and then to a breakdown of the system.

The war placed a severe financial strain on the government which could hardly spare any money for railways. This is evident from the fact that the capital expenditure on railways, which stood at Rs. 18.4 crores in 1913-14, came down to an insignificant Rs. 2.97 crores in 1916-17. Consequently, works of railway construction and repair, other than those meant for defence purposes, were suspended.

At the same time, all imports of railway material, including locomotives and wagons, became difficult if not impossible so that worn-out equipment could not be replaced. To make matters worse, the Indian railways had to supply from their meagre stock considerable quantities of locomotives, rolling stock, permanent way material and staff to the Middle-East where it was urgently required for military purposes.

On the other hand, railways had to cope with heavy military traffic over and above the ordinary, while suffering from insufficiency of stock and equipment for want of fresh supplies. In addition, a number of river-crafts were also sent away resulting in the closing or curtailing of several ferry services and a considerable diversion of their traffic to railways.

All this led to a heavy strain on the railway system and, understandably, the standard of its operational efficiency declined. In the words of the Acworth Committee, there were “scores of bridges with girders unfit to carry train-loads up to modern requirements; ……… many miles of rails, hundreds of engines and thousands of wagons whose rightful date for renewal long over-past.”

Due to shortage of wagons, goods lay rotting in railways godowns while goods wagons were used for carrying passenger traffic. There was acute over crowding in the passenger trains and many had to travel an foot-boards or on the roof of wagons.

To meet the situation, the government took steps in two directions. One was the adoption of measures to discourage traffic. All fare — concessions were withdrawn; numerous other traffic restrictions were introduced, and pilgrims and intending passengers were warned of the incapacity of the railways to cope with abnormal traffic.

Changes were also introduced in the central controlling machinery to deal with the increased government traffic, both civil and military. In September, 1916, a War Branch of the Railway Board office was formed and, in 1917, a Controller of Traffic was appointed to take such steps as were found necessary for the most 380 Economic History of India economical use of the limited transport available, and to control traffic in the best interests of national and general purposes.

In 1918, a special member of the Railway Board was added for the war period, and to regulate traffic, and elaborate system of ‘Priority certificates’ was instituted. To solve the problem of supply of wagons to the colleries, a special coal indent system was introduced and a Coal Controller was appointed to work out the system.

Comparing the general course of goods and passenger traffic during the war, it is noticed that goods tonnage increased faster then passenger traffic, the growth being nearly 10% from 1913-14 to 1918-19, as against a nominal increase in passengers. Passenger traffic increased from 458 million in 1913-14 to 460 million in 1918-19 while freight carried rose from 82.6 million tones to 91.2 million tons during the same period.

This change is explained by the fact that far heavier restrictions were imposed on passenger movements than on goods. Apart from increase of fares at an early stage, passenger train miles were reduced from 56 millions in 1913-14 to 44 million in 1918-19, while goods train miles increased from 58 million 74 million during the same period.

In the addition of stock and purchase of stores also, greater attention was given to the needs of goods than passenger traffic. Sanyal, Concludes that “the railway authorities preferred to sacrifice passenger traffic in favour of freight” during the war.

The war-period also saw an increase in railway rates and fares. This was a measure designed to assist the finances of the state and the proceeds were taken by the government for general purposes. The inconvenience of railway travel on one side, and higher rates on the other, created great dissatisfaction among the public.

Mahatma Gandhi stirred up the whole country with strong indignation at the hardships of passengers. The criticism gathered strength with the uncovering of a number of cases where the companies had entered into secret agreements and acted against national in­terests.

There was a growing demand for state management of railways. Resolu­tions were introduced in the Viceroy’s Legislative council urging the appointment of a committee of enquiry or the adoption of direct state management as a panacea for many of the evils of company management.

Despite the acute shortage of funds and materials, some lines of strategic importance were built during this period so that the total mileage increased from 34656 in 1913-14 to 36,616 in 1918-19. The total capital at charge on all railways, including those under construction, amounted to Rs. 549.74 crores. Except for the year 1914-15, the period of the war showed good financial results.

There was a large increase in railway profits which, in 1918-19, amounted to Rs. 15.8 crores. The percentage of net earnings to total capital outlay averaged 6.8% during 1914-15 to 1918-19. These satisfactory results were due principally to a suspension of expenditure on renewals and repairs.

These expenses, it was argued on behalf of the government, were rendered impossible on account of the stoppage of supply of materials for England. That may be so but what is most deplorable is that the savings so made, instead of being put into a reserve for future use, were treated as ordinary profits. The Railway property was allowed to deteriorate and high dividends were paid by mortgaging future earnings.

The war taught many lessons regarding the administration and working of Indian railways. It emphasised the urgent need for extending traffic facilities in many directions. It hastened the policy of appointing Indians to superior services; it greatly strengthened the case for encouraging the development of indigenous railways industries.

Lastly, it prominently brought to light the highly unsatisfactory system of financing the railway and the non-commercial method of accounting.

f. Over-Hauling of Railway Policy, 1921-30:

The growing public criticism of various aspects of the Indian Railway system led to the appointment, in 1920, of the Indian Railway Enquiry Committee under the Chairmanship of Sir William Acworth, a railway expert. The Committee was specially asked

(a) To consider the relative advantages of different methods of managing the state-owned railways. In this connection, the committee was asked “to advise as to the policy to be adopted as and when the existing contracts with the several railway companies” ended.

(b) To advise on the organisation of the Railway Board and the extent of government control over railway administration; and

(c) To report on the financing of railway in India.

The committee was unaminous in thinking that “railways should be managed not from London but from India ” because “— the advantages of English manage­ment were out-weighted by the great disadvantage of absentee control and the difficulty of keeping in close touch with the modern social and trade condition of India.”

It, therefore, recommended that “the existing contracts with the English guaranteed companies should be permitted to expire at their respective dates and should not be reviewed.” As regards management, the committee was not unanimous but the majority recommended that “the undertakings of guaranteed companies, as and when the contracts fall in, be entrusted to direct management of the State.”

A regards the working of the Railway Board; the committee found that most of the evils complained of by the Mackay committee still continued. There was constant interference by the government as well as the Secretary of State and the Board had no initiative even in small unimportant matters.

The Committee, there­fore, recommended the establishment of a new Department of Communications responsible for railways, roads, and Telegraphs; the setting up of a railway Com­mission with a Chief Commissioner of Railways and four other Commissioners.

The most far-reaching recommendation of the committee was regarding railway finances. The war had brought to light various limitations of the Indian railway system as also its incapacity to lift the growing volume of traffic.

These were “the inevitable results of the paralyzing system” which did not provide adequate funds for capital expenditure on development and extensions, and even for the essential operations of renewals and repairs.

The Committee, therefore, recommended “complete separation of the railway budget from the General budget of the country – and the emancipation of the railway management from the control of the Finance Department.”

Other recommendations related to the setting up of central and Local Advisory Committees with a view to giving representation to public opinion; a Railway Rates Tribunal to determine rates and fares and the creation of a Depreciation Fund out of which renewal and repair of track and rolling stock could be financed.

The government accepted nearly all the major recommendations of the com­mittee. A number of lines were brought under state-management on expiry of their contracts — the management of the E.I.R. and the G.I.P. Railway was taken over in 1925.

The government also purchased, in 1926, in the Delhi-Ambala-Kalka Railway on cash payment. The Eastern Bengal, the Oudh Rohilkhand and the North Western Railway had already come under state management.

Thus by 1927, 71.8% of the Indian railway route mileage had come under government ownership and 40.2% was actually managed by it. The Railway Board was reconstituted; central and Local Advisory Committees were established; railway finances were separated from the general finances so that railways no longer had to depend upon the “unappreciative liberality of the Finance Department.”

Also, accounts were separated from audit and divisional type of organisation introduced. However, the government did not accept the recommendation regarding establishment of the Rates Tribunal; instead, a Rates Advisory Committee was set up.

Meanwhile, the Inchape Retrenchment Committee also had examined the financial position of the railways and, reporting in 1923; recommended the creation of Railway Depreciation Fund and immediate reduction in working expenses.

The acceptance of the Acworth Committee’s recommendations and the separa­tion of Railway Budget made possible a continuous railway expansion. Programmes involving an additional 1000 miles of lines a year — mostly feeders to fill the gaps in the network of trunk lines, was drawn up.

With a view to carrying out some of the recommendations of the Acworth Committee, the government appointed two small committees in 1926: one under Arthur Dickinson to examine and report on the system of accounting and to suggest improvements and the second, under Sir Vincent Raven, to enquire into the working of the mechanical departments of the railways.

The period, in general, was one of progress and prosperity. The total rail mileage increased to just over 42,000 miles in 1931. India’s was the third largest system in the world ; only Russia and America exceeded India while Canada was a close rival. In addition to increase in mileage, better facilities in the case of waiting rooms, raised platforms, more comfortable seats in third class compart­ments—were also provided.

Electrification of the suburban trains of Bombay and Madras was another important development of this period. At places, railway track was doubled and certain new bridges built. The capital at charge amounted to Rs. 869.8 crores. The period was one of continuous profits except for the year 1921-22 which turned out to be deficit one on account of the trade slump.

Luckily, the situation soon improved. In the period of 5 years ending 1928-29, the average annual contribution of the railways to the general revenues was about Rs. 6 crores and the net revenue of the railways exceeded, on an average, the interest charges each year by Rs. 9.75 crores.

g. The Great Depression and after, 1929-1939:

The Great Depression of the 1930’s had devastating effect on the economy of India. With the decline in the volume of foreign trade and the overall prosperity of the country, railway traffic also came down.

The passenger traffic fell from 634 million in 1929-30 to 480 million in 1932-33, and the freight carried from 91 million tons in 1928-29 to 71 million tons. The result was complete reversal of the financial position of the railways.

Earnings came down and, as compared with the surpluses of the previous period, there were large deficits (amounting to Rs. 41.3 crores between 1930-31 to 1935-36) which were met by transfers first from the Railway Reserve Fund and, later, from the Railway Depreciation Reserves.

The difficult position was further aggravated by the growing competition from road transport which threatened “to cripple the railways without providing a trustworthy service on the roads.” The annual loss to the railways, on this account, was estimated at Rs. 4.5 crores in 1936.

The government met the situation by taking steps to improve earnings on one side and reduce expenditure on the other.

On the side of earnings, the most important steps were: the introduction of cheap fares to stimulate traffic, par­ticularly in competitive areas, and special reductions in freight rates and parcels and goods traffic, improvement of arrangements for booking traffic by organising street-collection and delivery of parcels and goods in some of the larger towns, formation of research organisations on certain railways to encourage the develop­ment of new traffic, to assist in the development of areas and to organise special tours.

The expenditure was sought to be reduced through the pooling of railway resources at certain joint-stations and mechanical improvements, e.g., pooling of locomotives, obtaining increased mileage from engines and condemning engines and railways stock without replacement.

To suggest further economies, the Retrenchment Committee was appointed in 1931 and the Pope committee was set up in 1932. As a result of Pope’s Visit, small organisations were created on the more important railways to conduct detailed investigations called Job-Analysis.

In addition, Pope suggested directions in which railway earnings could be increased, viz., improved publicity work increased efforts at Salesmanship, closer study of exports and imports and markets, and more elasticity in the quotation of rates and fares.

The Wedgewood Committee was appointed in 1936 to examine the position of state owned railways, to suggest measures to secure as improvement in net earnings and to place railway finances on a sound footing.

The committee main­tained that “the Indian railways were well organised for conducting railway transport with economy and with operating efficiency, but they were ill-organised and ill- equipped on the commercial side —that is —on the side of creating and developing traffic, or securing and maintaining friendly relations with traders and trading bodies, and of cultivating good public relations generally.”

The committee con­cluded that the Indian railways had achieved ‘more favourable results’ during the Depression than the railways of many other countries such as Britain and U.S.A.

With a view to protecting the railways against competition from roadways, the Wedgewood committee recommended a strict system of licensing and regulation of road transport, participation by railways in road transport, fixation and regulation of rates and fares.

The railways turned the corner around 1936-37. Till then, the suspended contributions to the general revenues together with loans from the Depreciation Fund amounted to Rs. 61 crores. It was clear that the railways would not be able to repay this sum and also contribute to the General Revenues.

Therefore, in 1937, it was decided to suspend until 1942 any repayments by the railways under these heads. This enabled them to make a contribution to the revenues in 1937-38 when, after meeting all charges including depreciation and interest on capital at charge, the net result was a gain of Rs. 2.76 crores.

There was not much construction during this period on account of the paucity of funds. In-fact, with the separation of Burma in 1937, total mileage declined to 41,156 in 1938-39 and total capital at charge to Rs. 847 crores.

h. The Second World War:

The railways had as yet not fully recovered from the effects of the depression when the storm of the Second World War overtook them in 1939. In addition to large movement of troops and enormous war supplies, civilian passenger and goods traffic also rapidly increased with the expansion of industrial production in the country.

There also developed an acute shortage of motor vehicles and petrol while the entry of Japan into the war made the playing of coastal vessels very risky. This necessitated diversion of both road and coastal traffic, in part, to the railways.

While traffic thus increased, import of urgent repair-material and spare parts became very difficult if not impossible. England, the traditional source of such supplies, was engaged in a life and death struggle and could hardly meet Indian needs. The position was made more difficult by shipping shortage and the presence of enemy submarines on the high seas.

Indian workshops were few and ill-equipped to meet the demands made upon them. As in the previous war, some of them even switched over to the production of war materials. In addition, at least 26 branch lines covering about 600 miles were dismantled and transported along-with engines and wagons to the Middle East.

This put the railways under a severe strain. There was extreme overcrowding on passenger trains and inordinate delays on goods trains while railway equipment underwent rapid wear and tear. To meet this extraordinary situation, rail travel was discouraged.

Concessions granted during the depression were withdrawn while posters carrying the slogans ‘Travel only when you must’ and ‘Travel light’ appeared all over the country.

The government set up a War Transport Board for:

(1) organising alternative means of transport;

(2) creating administrative machinery for this purpose;

(3) devising means of carrying troops and essential commodities by rail.

On the recommendation of this Board, a Central Transport Organisation and Provincial Transport Boards were set up for the purpose of relieving over-crowding on the railways by diverting traffic to other means of transport.

These measures could hardly make much impact on the bad situation made worse by the Bengal Famine. Along with troops and war — materials, now food grains had also to be transported to feed the starving people.

The war period was, otherwise, one of financial prosperity. The losses and deficits of the preceding period were gone. Instead, there were abnormal earnings which enabled the railways to replenish their Reserve Fund and to repay the arrears of contribution to the General Revenues.

The Gross Traffic Receipts rose from Rs. 99.62 crores in 1938-39 to Rs. 225.74 crores in 1945-46, while the net receipts, after providing for depreciation, increased from Rs. 30.44 crores in 1938-39 to Rs. 76.59 crores in 1943.44. The surplus left over after payment of interest charges showed a phenomenal rise from Rs. 1.37 crores in 1938-39 to Rs. 50.84 crores in 1943-44.

Over the period 1939-46, as a whole, railways, apart from ac­cumulating Rs. 76 crores in the Reserve Fund, contributed Rs. 159.80 crores to the General Revenues. Large surpluses with the railways and growing needs of the government led to the suspension of the Separation Convention of 1924 and it was decided to share the surplus on commercial lines on the basis of the needs of the railways and the general revenues.

The increased earnings also enabled the railways to establish a Betterment Fund in 1946-47 for providing more amenities to railway employees and third class passengers. To carry out a thorough overhaul of the railway system, a Post-War Reconstruction Plan was drawn up. It could not be implemented on account of the partition which came in the wake of the independence of the country.

i. Partition and After:

The partition of the country, in August, 1947, stretched the railway system to further strain. About 6,950 miles or 19% of the track went to Pakistan leaving 33,985 miles representing Rs. 742.20 crores as capital at charge to India. 4/5 of the North Western Railway and portion of Bengal-Assam Railway went to Pakistan.

Rolling stock was shared on mileage cum traffic basis while the workshops were divided on the basis of their location. Communal riots led to large scale transfer of staff also.

According to Pant 1,26,000 railway workers, living in territories constituting Pakistan, opted for India but only 1,08,000 arrived while 83,000 migrated from India to Pakistan. A noteworthy feature of the transfer of the staff was the most of the Muslim staff that left India was skilled in trades like copper smithy, blacksmithy or were drivers and firemen.

Their migration caused great difficulty on the E.I.R. and G.I.PR. On the other hand, most of the staff that came to India was clerical whose absorption created new problems.

The partition gave rise to certain traffic problems as well. With the loss of Karachi to Pakistan, Bombay grew in importance as the principal port of supply for the western region of the country. The result was a heavy rush on the Delhi- Bombay line.

The partition of Bengal into two raised a new problem in as much as India was left with no rail route to Assam without crossings into Pakistan territory. The problem was, however, solved by the construction of the 149 miles long Assam link in 1949.

Earlier in 1946, the government had appointed a Railway Enquiry Committee under the Chairmanship of Shri H.N. Kunzru to consider the economies that could be introduced to secure an improvement in net earnings. The Kunzru Com­mittee, after making a broad financial and statistical survey of the Indian railways, came to the conclusion that there had been a substantial decline of 33-40% in their standard of efficiency and performance since 1938-39.

The Committee was dissatisfied with the financial results and warned that the future of the railways could by no means be considered bright. As a remedy, the Committee recommended the introduction of job analysis in railway workshops, abolition of grain shops but increase in dearness allowance, greater emphasis on workers’ education and postponement of the railways re-grouping scheme for five years.

The government accepted most of the recommendations except two, namely, those relating to the abolition of the grain shops and the postponement of regrouping.

An important development was the adoption of Railway Convention. The earlier convention, adopted in 1924, was found to be unsatisfactory and demand began to be made for its revision. The main point of criticism was that it did not allow the railways to build up adequate reserves in prosperous years, surpluses being largely absorbed by the general revenues.

Even the Kunzru committee found the inquiry into railway finances necessary although it did not recommend one “owing to the uncertain factors involved in the present situation.” Dis­regarding these views, the government appointed a new convention committee in 1949 whose recommendations were later embodied in a resolution of the Con­stituent Assembly passed in 1950-51.

The Revised Convention provided for:

(1) Continued separation of railway and general finances;

(2) A minimum contribution of Rs. 15 crores a year to the Depreciation Fund;

(3) Constitution of a Development Fund to finance amentities to passengers, welfare Schemes for the employees, and construction of new lines;

(4) Payment of fixed 4% on the capital at charge, the Revised Convention was to remain in force for five years.

Another major development during this period was the introduction of the Railway Re-grouping Scheme under which different railway units were amal­gamated and regrouped into six zones. Earlier, the issue of regrouping had been examined by the Acworth as well as the Wedgewood committee which had recom­mended regrouping of railways into three and eight zones respectively.

Although their recommendations were then turned down, but some form of regrouping became inevitable after Independence. The partition had broken up the North Western and the Bengal-Assam railways. Furthermore, the integration of princely states with the Indian Union brought the state railways of various sizes under the control and management of the government. The spirit of quickly re-building the country gave it an added urgency.

Accordingly, in 1950, the entire railway system was reorganized into six zones.

The division was decided keeping in view that each zone:

(a) Served a compact area;

(b) Was large enough to have personnel and resources of appropriate quality;

(c) Was set up with minimum dislocation.

The Southern, Central, and Western Zones came into existence in 1951 and the Northern, North Eastern and Eastern Zones in 1952.

The Ministry of Railways hailed it as a great step forward in railway ad­ministration, better operational efficiency, greater economy, and better use of rolling stock. The critics, however, held that the scheme was not based on any accepted principle and that it was likely to result neither in economy nor greater efficiency.

The strongest criticism came from the northern and eastern regions where, it was felt, regrouping would hamper coal movement, disturb industry, trade and commerce, and also result in loss of operational efficiency.

The splitting up of the Eastern Railway into the Eastern and the South Eastern in the same year was a clear enough admission by authority that regrouping had been carried out hastily on preconceived ideas. The basic fault lay in the fact that it was based on a concept of numerical equality in mileage among several zones.

In result, some of them became unwieldy and difficult to control. The Railway Corruption Enquiry Committee (1955) attributed the growth of corrupt practices on the railways partly to weak supervision and poor discipline which prevailed in the wake of regrouping.

Criticism apart, regrouping did lead to some operational economies. The former junction points and points of interchange within zones were eliminated, thereby resulting in savings of locomotives and coaches and facilitating wagon traffic movement through what previously were artificial bottlenecks.

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2. Essay on the Development of Roads in India:

Before the advent of the British rule, roadways in the modern sense were practically unknown and long after its establishment, there were few to be found. The East India Company, being a commercial organisation, was not much interested in meeting the road needs of the country.

It left the duty of opening and maintaining local roads to the zamindars while the main roads were placed in the charge of Military Boards, one for each province. These Boards, however, were without sufficient power, either financial or administrative.

The actual work was done by the provincial authorities through their own officers but “the funds were supplied, sometimes directly by the Central government, sometimes by the local government, and, on occasions, party by government and partly by zamindars and traders directly interested, sometimes by the great nobles and Rajas through whose ter­ritories the roads passed.”

Most of these roads were of poor quality ‘having been done in great haste to the prejudice of the work itself.’

It was Lord Dalhousie who first initiated a vigorous road policy and set up a Central Public Works Department supplemented by similar Provincial Depart­ments in place of the Military Boards which were abolished in 1855. From now onwards, progress in road-making became much more methodical and their up­keep more satisfactory.

About the same time, the construction of railways also gave considerable encouragement to road building. As railway construction was pushed ahead, it became more and more necessary to build bridges and metalled feeder roads which could give access to the railways at all times of the year.

A further stimulus was given by the extension of the Local-Self Government. Just as the financial decentralisation carried out by Lord Mayo and Lord Lytton enabled the Government of India to transfer most of the responsibility for road work to provincial govts., so the extension of local self government carried the process of decentralisation a step further and enabled the Provincial Governments to delegate a large portion of their functions in this respect to District Boards.

In each case, the extension of local control was accompanied by considerable improvement in local communications. In Madras, decentralisation was carried so far as to place nearly all roads in the hands of local bodies, while in other provinces, the local government maintained the main lines of communication.

By 1901-2, the total length of metalled roads reached 37,000 miles, upkeep of which was divided equally between government and local authorities. Unmetalled road-mileage amounted to about 1.36 lakh of which 5/7 were maintained by local bodies. It need hardly be mentioned that the quality of these roads was extremely poor.

The meagre road mileage combined with poor quality certainly played its part in holding down the overall growth-rate of the economy.

It discouraged the farmers from growing cash crops for export. It also kept Indian factory production out of the villages as effectively as imported goods, thereby slowing down the transformation of India from a subsistence to a market economy.

After the reforms of 1919, roads became a provincial subject when they were divided into two main classes- Provincial and local. Provincial roads were financed exclusively from the revenues of the provinces and local roads from local revenues supplemented by provincial grants.

The extent to which the administration of roads was delegated to local bodies varied considerably from province to province but, taking British India as a whole, about 80% of the roads, other than municipal roads, were under the charge of the District Boards.

In addition, the District Boards also had additional responsibility in respect of roads belonging to minor local bodies. As the financial resources of the local bodies were extremely limited, progress in road building was very slow.

Besides, the road development was general­ly local in its outlook and objectives. Of course, Road Boards were set up to evolve a common policy and to coordinate local programmes, but they were mostly advisory in nature and hence not very effective.

The financial problems of maintenance and improvement of roads, as well as the problems of coordination in road development and research, led to the appointment of the Indian Road Development Committee in 1927.

The committee recognised the fundamental fact that road building had passed ‘beyond the capacity of the Provinces’ and as such, the Central government should provide assistance ‘in the form of annual block grants.’

Following the recommendations of this com­mittee, a Central Road Fund was constituted in March, 1929 out of which grants were made to provincial governments and centrally administered areas for approved projects of road development.

Up-till 1934 revenue of Rs. 5.13 crores was collected for this fund out of which a sum of Rs. 4.61 crores was distributed by 31 March, 1934 in accordance with certain ‘conventions’ agreed to by the Central Assembly.

Contrary to what might by expected, the creation of the Fund did not accelerate the pace of road building in the country for, instead of supplementing the resources of the state governments, it led to a reduction in the state expenditure on road building and development, especially the inter-district and inter-state roads. The purpose of the Road Fund was thus defeated.

In 1932, the total road length in India came to 2.53 lakh miles of which only 75,000 miles were metalled and motorable. In absolute terms, this achievement-a doubling of the road length in 30 years-might seem impressive.

But if we keep in mind the fact that the previous road mileage was miserably small and that what we needed was a many-fold expansion of road length, the utter inadequacy of this achievement becomes evident.

Even when seen in comparison with other countries, the achievement was meagre. As the Agricultural Commission pointed out, while U.S.A. had 80 miles of roads per 100 sq. miles of the area, there were only 20 miles roads per 100 sq. miles in India.

Meanwhile, the astonishing rapidity with which motor traffic of both private cars and especially of the public motor omnibus sprang up all over India created an entirely new range of problems of road development and its coordination with railways.

Accordingly, a Technical Committee (The Mitchell-Kirkness Committee) was set up in 1932 to enquire into the extent of rail-road competition and to collect other facts for securing a coordinated development of road-rail facilities.

The committee found that the deterioration in the case of roads was not due to the poverty of resources but because the administrative machinery of local bodies was not able to cope with the work. It, therefore, proposed that district roads should be transferred to expert provincial Highway Departments and that local bodied should cease to be responsible for their maintenance and construction.

It was the Second World War which brought home the danger of depending too much on a single type of transportation system. The need for the development of roads and road transport was now fully realised. Accordingly, a plan —now known as the Nagpur Plan— was prepared in 1943 for post-war-road development.

The Nagpur Plan was the first positive road development programme mapped out for the country as a whole.

Over and above the improvement of existing roads wherever necessary, it, as applied to post-partition India, envisaged the completion of about 1.23 lakhs miles of surfaced and 2.08 lakh miles of un-surfaced roads at an estimated cost of Rs. 373 crores. These targets were to be achieved in 10 years to cater for expected traffic needs over the next 20 years.

The over-all aim was to evolve an integrated, balanced and closely-knit road-systems so that no village in a well-developed agricultural area remained more than 5 miles from a main road, and in an under-developed area, 20 miles from a main road.

The plan classified roads into four categories, viz. National Highways, Provincial Highways, Major District Roads, Minor District Roads or village roads. Whereas the National Highways were made a direct responsibility of the Centre, all other roads came under the States.

The Nagpur Plan, in its essentials, was accepted by the Central and State Governments. The Central Government assumed responsibility for National High­ways from 1 April, 1947 and drew up a 5-year road-development programme involving Rs. 120 crores.

The actual progress was rather slow because of the inadequate supply of road machinery, steel and cement, delay caused by transport bottlenecks, acute shortage of engineers, technical personnel and delay in ac­quisition of land.

At the time the First Five Year Plan was introduced in 1951, there were over 98,000 miles of surfaced and 1.51 lakh miles of un-surfaced roads in the country. With the programmes undertaken in the First and Second Plan, the targets envisaged in the Nagpur Plan were exceeded both in regard to surfaced and un-surfaced roads.

By the end of the Second Plan period, the length of surfaced roads in the country reached 3.94 lakh miles. Any sense of satisfaction over this achievement, however, deserves to be modified in the light of the fact that 60% of this mileage consisted of earth roads only.

In 1959, road development received further attention when, at a conference held at Hyderabad, the Provincial Chief Engineers drew up a 20-year Plan to develop 6.6 lakh miles of roads between 1961-81. The broads aim was that all villages in developed agricultural areas should be within a reach of about 4 miles from a metalled road and 1.5 miles from any type of road.

The Third Plan, during which the outlay on road-development was fixed at Rs. 440 crores as a against Rs. 363 crores in the first two Plans, saw an increase of almost 26% in road mileage which reached 5.57 lakh miles at the end of the plan. Surfaced roads, however, increased by only 19%.

Taking the three Plans together, the increase in road mileage amounted to 123%. This performance, impressive though against the disappointing tempo of development in the past, may be viewed in the light of two facts.

Firstly, there were vast regional differences in respect of road development. States like Maharashtra and Gujarat which were among the top five states in the country in respect of per capita income, had road length well below the all India average while the otherwise backward states of Kerala, Assam, Orissa and Bihar had relatively more developed road systems.

Secondly, despite the advance made in road building, India was still way behind other countries.

Even a developing country like Sri Lanka had, in 1966, twice as much road length per 100 square mile area as India had while Belgium had 11 times more. What is even more regrettable is that, out of the total mileage attained by 1966, only about 31.6% was surfaced, and that even these surfaced roads carried substandard crusts and lacked the requisite thickness for the expanding volume and intensity of traffic.

Missing links, weak and, at places, missing bridges and culverts and woeful lack of two-lane carriageways further tended to reduce their usefulness. Many economically backwards regions and hilly areas had scanty road facilities while road develop­ment in and around villages had yet not taken place.

It is all the more striking in view of the fact that road development was estimated to yield a revenue of over Rs. 1,000 crores during the Third Plan. It might be rightly inferred that thousands of miles of potential roads were ‘lost’ to the nation due to the diversion of the proceeds of road transport taxation to other channels.

Rail-Road Competition and Co-ordination:

Roads and railways are much more complementary to each other than other modes of transport.

In the words of the Royal Commission on Agriculture, “The road system links up the cultivator’s holding with the local markets and the nearest railway station while the railway provides the connecting links between the area of production and consumers at a distance, and between the manufacturer in the town and the cultivator in the village. Without good and efficient roads, no railway can collect for transport enough produce to render its operations possible while the best of roads can not place the producer of crops in touch with the consumers.”

It was, therefore, necessary to have ensured, at an early stage, proper coordination between the rails and roads so that each could play its role without competing with the other. In India, however, no attempt was made for a well-planned and coordinated development of the country’s transport system.

Instead, it was allowed to grow in a haphazard manner with each branch developing in isolation of the other to suit the private or public ends the least of which was the economic advancement of the country as a whole.

The problem of rail-road coordination continued to be ignored so long as the railways, in which the State had made heavy investments, were earning profits. With the onset on the Depression and the consequent decline in traffic and earnings, a fierce competition developed between the two, which “at one time, threatened to cripple the railways without providing a trust worthy service on the roads.”

At first, this competition was confined to the neighbourhood of big cities and suburbs — within a zone of 1-50 miles-but later, it spread to long distance traffic as well. The worst affected were the light railways but, even on other railway systems, wherever motor services ran parallel to or short-circuited the railways route, as between Poona and Ahmednagar, the competition was most acutely felt.

A certain amount of this competition was unavoidable for nearly 48% of the lines ran parallel to and within ten miles of good metalled roads. The problem was aggravated when small units of motor transport attracted a large number of owner- operators to the field. Many of them were inexperienced and maintained practically no record of their for providing against depreciation.

They acquired second — hand vehicles, ran them at cut-throat rates on the busiest routes for a short while but abandoned the service when they found it un-profitable.

The existence of such owner-operators often prevented the maintenance of standardised services or of a regular schedule of rates and fares in an area. This was bound to result in considerable loss to the railways which was estimated at Rs. 1.90 crores a year in 1933 and Rs. 4.5 crores a year in 1936.

There were important reasons why motor transport gained at the expense of railways. Carriage by road means saving in terminal costs, elimination of incon­venience of trans-shipment, door to door collection, and delivery, greater speed and less man-power for handling the job.

Besides, motor transport does not require stations, sheds, signals, sidings nor does it involve problems of carrying half-empty wagons and of allowing a good deal of rolling stock to remain idle. According to David Hughes, there is another “advantage of road over rail delivery and that is the absence of pilferage. No loss, no ill will and no unduly expensive method of packing is involved.”

Another important advantage lies in the high adhesive quality of rubber to concrete, bitumen or road-metal surface, which enables it to climb a rise six times steeper than a rail can do. Consequently between two such points, it costs several times as much to build a railway line as it would to build a road. Yet another advantage lies in the freight structure.

In the case of railways, several factors, political, economic, and social, are taken into account while fixing the rates and fares. The road transport, on the other hand, being a highly decentralised industry, has practically no regular schedule of rates and, if any exists, is often changed according to market conditions prevailing at a particular time.

The operators also take into consideration what they hope to realise for the return traffic. Moreover, they carry only such traffic as suits them.

Certain studies conducted by different agencies have proved that the cost of transport of less than wagon-load traffic by rail up to a distance of about 300 kms. is higher than by road transport. This difference is the greatest on shorter distances.

For example, the cost of transport per ton for small packages up to 50 kms is estimated at Rs. 19.63 on steam and Rs. 19.19 on diesel traction but only Rs. 12.82 by road. That is why the road transport companies were taking up as much as 80-90% of small traffic in south India.

The need for coordination between road and rail transport could not belong over looked and, in 1932, the government appointed the Mitchell-Kirkness Com­mittee to study the problem for securing coordinated development of road and rail facilities.

The committee condemned the hasty expansion of motor transpor­tation and recommended:

(a) The creation of a Central Advisory Board of Com­munication and

(b) A better control of motor transport as one of the methods of making this competition ‘fair’.

The Rail-road conference, which met at Shimla in 1933 to consider the report, recommended:

(a) The removal of the statutory embargo on certain railways operating road motor services,

(b) The grant of mo­nopolies of road transport services with a view to developing rural service and

(c) The creation of machinery, at the centre and in the provinces, designed to secure the coordination proposed.

To give effect to these recommendations, the Railway Act was amended in 1933 whereby railways were empowered to run motor services in conjunction with rail transport. A Transport Advisory Council consisting of the ministers in-charge of roads in the provinces or their representatives was also formed.

Another important step was taken in 1937 when a new Department of Communications was established at the centre with a view to looking after all forms of communications in a coordinated manner.

However, the expected results did not materialize and the railways continued to suffer. The government, therefore, appointed another committee, called the Wedgewood Committee, to go into the question. The Wedgewood Committee noted that the transport policy followed till then had neither protected the railways nor allowed roads to develop along sound and economic lines.

It had, in other words, given India the worst of both worlds — un-prosperous railways and inadequate roads. To correct this situation, the committee recommended a system of restric­tions on road transport including regional licensing of vehicles; statutory provision for regulating freights; strengthening of the policy control and railway participation in road transport.

Realising the inherent limitations of these measures, the com­mittee emphasised “the importance of voluntary coordination between the railways and the more responsible elements in the road transport industry.”

In accordance with these recommendations, the government passed the Motor Vehicles Act in 1939 which included provisions for the establishment of Regional and Provincial Transport Authorities for licensing and controlling motor transport.

Under this Act, motor vehicles were required to operate under permit which laid down the maximum number of passengers they could carry, their working hours and conditions regarding satisfactory maintenance of the vehicle and observance of speed limits. A notable feature of the Act was the provision relating to compulsory insurance of motor vehicles in respect of third party risks.

The Act, though controversial, was hailed by some as a ‘Highway Code’ which laid the basis of coordination policy of the government. The out-break of the Second World War and the tremendous increase in traffic, both passenger as well as goods, shelved the problems of competition for the time being. It was, however, bound to reappear once the war was over.

In 1945, the government issued to the State governments. “A code of Principles and Practice” for the regulation of goods transport. This code recommended a restriction, viz; free carriage of all goods, other than those of a perishable or fragile nature, to a distance of only 75 miles beyond which it, was suggested, permits should be issued only if railways were unable to handle the traffic.

In 1950, The Road Transport Corporation Act, 1948, was amended and revised so as to enable the railways, along with the State Govern­ments and private operators, to participate in road transport.

It was hoped that “the formation of such corporations would lead to the coordination of rail transport with road transport so as to the coordination of rail transport with road transport so as to secure integrated operations in the best interests of the country.”

It would be seen that, throughout this period, “the principle of rail-road coordination was not fairly applied.” The government had only been trying to control road transport with the object of protecting the railways.

The 300 mile limit, dilatory formalities involved in the issue of route permits, frustrating delays, the restrictive provisions of the Motor Vehicles Act 1939 all these ultimately went to restrict the development of road transport in the country.

With the commencement of the First Five Year Plan, the problem of rail-road competition ceased to exist, at least for the time being due to a general shortage of transport in the country.

The Dalai Committee of 1950 categorically stated that the railways were unable to carry all the traffic offered and that there was little or no rail-road competition. And yet the state governments continued to follow restrictive policies in the matter of licensing and inter-state movement of commercial vehicles.

These policies have had some relevance in the 1930’s when the railways were crying out for traffic. It was totally unwarranted when traffic was held up sheer lack of railway capacity. These restrictions were all the more regrettable in view of the marked advantages which road transport possessed.

As the Road Transport Reorganisation (Masani) Committee argues, investment in roads was quite heavy-about Rs. 1000 crores as compared with Rs. 2000 crores in railways ; the cost of road construction was cheaper — about Rs. 1.5-2 lakhs per mile of 22 ft. with as compared with Rs. 7 lakhs per mile for a single track of railway; modern technological developments also favoured roads.

It was because of these advantages that the railways, which once constituted the most important carriers in most of the countries, had been loosing traffic to road transport in particular. As the United Nations Economic Survey of Europe (1956) revealed, in the U.K., France and West Germany, between 1930-54, the share of railways in goods traffic fell from 75% to 52% while that of road transport increased from 10-34%.

In some of the countries, there was even a contraction in the railway route mileage also. Several sections of railway lines, though not abandoned altogether, were closed to passenger traffic. In France, 24% of the total net work and in U.K. 13% of the total network had been closed to passenger traffic.

In view of this overwhelming evidence, the Masani Committee stated that “any attempt to turn back the wheels of progress and cling to a mode of transport (railways) that is no longer the most efficient or speedy would be to do grave injury to the basic interests of the country.”

It, therefore, made a forceful plea for a fuller development of road transport and, inter alia, suggested a relaxation of certain restrictions on road transport including a moratorium on the nationalisation of goods transport for at least 10 years from the end of the Third Plan Period.

Earlier in 1958, an Inter-State Transport Commission was set up by amending the Motor Vehicles Act, 1939, to chalk out programmes for the development, coordination and regulation of inter-state goods traffic and to settle disputes, if any.

As was to be expected, the establishment of the commission did not bring the much-needed coordination for, unlike the British Transport Commission which is a single, unified, coordination and regulatory body covering all modes of transport, it was limited in scope and dealt exclusively with interstate road-transport. Railways and water carriers were outside its purview.

In 1959, the government set up the Committee on Transport policy and Coor­dination to advise on long term transportation Policy.

In the committee’s view, “the basic problem is to develop different modes of transport in such proportions and combinations as will meet the full needs of the developing economy of the country economically, and to provide for the largest measure of coordination possible so that the various transport services will become complementary to one another and function as a composite net work.”

Towards this end, the committee suggested the creation of a suitable institutional set up both to undertake a scientific evaluation of transport needs of different regions as well as to ensure coordinated development of various modes of transport. It also asked the central government to regard inter-state transport as its special responsibility and called for a 5-yearly transportation survey at all India level.

While these recommendations assigned a major role to the government, the committee, for some obsecure reasons, advised the Government, not to nationalize road transport. One fails to understand how, with road transport in private hands, the government could promote coordinated development of transport on sound lines.

The problems involved in coordination were multifarious. It was not only limited to ‘rail-road’ but was equally urgent for ‘rail-sea’ transportation as well. Then again, it involved not only integrated operation or the cheap and efficient service, but also included division of functions or the determination of the means by which each consignment and passenger could economically travel.

Problems such as these could only be effectively tackled by a high level statutory body formed on the lines of the British Transport Commission or the Inter-State Com­merce Commission of U.S.A. the urgent need for such an organisation was further underlined by the colossal national waste which competition involved.

It alone could evaluate the transport needs of the country and find out the best and most economical ways of meeting them. And yet, such a Commission had not been brought into existence till the end of the Third Plan.

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3. Essay on Indian Shipping:

Ship building was an ancient industry in India. For thousands of years before the advent of the British, India had developed her shipping and maritime trade to a marvelous extent. Darius and Alexander had hundreds of vessels made in India.

Writing about 1565, the Venetian traveller, Cesare di Ferdici states that there was such an abundance of ship building material in the eastern ports of Bengal that the sultan of Constantinople found it cheaper to have vessels built here than at Alexandria.

This well-established shipping industry combined with “The genius and energy of her merchants, the skill and daring of her sea-men, the enterprise of her colonists-helped her to attain and long maintain her proud position as the mistress of the Eastern Seas.” Indian ships navigated Africa and plied as far as Mexico in the west and Java, Sumatra, Borneo in the east.

Even in the early days of the British, Indian shipping was in a flourishing state. A ship —building yard was maintained at Surat up to 1735 in which year, most of the work was transferred to Bombay. Soon Bombay boasted of a dry dock “perhaps not to be seen in any part of Europe, either for size or convenient location.”

The Bombay-built ships were very strong and durable. What is more, they were 25% cheaper as compared with ships built in the docks of England. There were several ship yards in Bengal also but gradually Calcutta developed to such an extent as to “be to furnish tonnage to whatever extent was required for conveying cargoes to England.”

The decline of the Indian marine began after 1840, no large ships having been built after that date. This may be seen from the fact that in 1857, 34,286 Indian vessels of 1.2 million tonnage entered and were cleared in Indian ports; in 1899-1900, the number had dropped to 1776 with 1.09 lakh tonnage.

In 1912, Indian shipping carried only 0.8% of the country’s ocean going trade. It had contracted so much as to give employment to only 14,321 men who built only about 125 gal boats a year. As for the Indian sailor, he had been reduced to the position of a mere ‘Lostan’ or at best a ‘Tindal’.

Many reasons have been advanced to explain the downfall of Indian shipping. Many British apologists like Dr. Vera Anstey have argued that the introduction of Iron —built ships, the rapid changes and improvements in naval architecture, and finally, the introduction of steam engines led to increasing concentration of India’s foreign trade in the hands of British shippers.

But such a view has been controverted by the Reconstruction Policy sub committee on shipping (1945) which held that “the decline or neglect of Indian shipping can’t be blamed on the coming of the steamships so much as the hostility of the British govern­ment.”

Likewise, the decline of Indian shipping cannot be explained by the superiority of the Dutch or English navigators, the superior construction of their ships, their supposed independence of the seasons or bad weather or the cheapness of their rates, as more land contends.

There is ample testimony to the effect that “the teakwood vessels of Bombay were greatly superior to the Oaken walls of old England.” Both Dutch and the English would not have got their ships built in India unless Indian ships were cheap and strong.

As regards lack of experience, the essence of Indian navigation was adaptation to stable seasons and avoidance of monsoons. But this was also the feature of Portuguese Dutch, and English navigation in Indian seas in those days.

It does not, therefore, prove that the Indian sailors were any more timid than their European counterparts. Finally, Moreland’s contention that the Indian rates were higher may be rejected as wholly incredible. In-fact, when competition was very keen and Indian shipping plentiful, Indian ship-owners quoted not high but extremely low rates.

The downfall of Indian shipping was brought about by a combination of factors, commercial, political, and racial. One was the outright Jealousy of the British shipping interests who did not want their monopoly to be broken.

Tolyor states, for instance, that the appearance of Indian ships in the port of London so frightened the British shipping monopolists that they, fearing their own ‘ruin’ and the starvation’ of their families, raised a hue and cry.

The government was also convinced of the necessity of maintaining British superiority on the high seas for the protection of her vest empire. Britain was a sea-power and shipping was her life line. She could never afford to relax her hold over the seas —the carrying trade had to become her monopoly.

The cry, therefore, prevailed and the entry of Indian ships in British ports was banned. Combined with the commercial and Imperial motives, was a petty feeling of racial superiority considered so vital for their rule in India.

It was thought ‘undesirable’, inadvisable and ‘unpatriotic’ to allow Indian sailors to visit English Ports because intimate contacts between them and British subjects “destroyed the awe and fear” which Indians had (and were expected to have) for their masters.

Diverse factors thus made up the mind of the British government which un­leashed a total war on Indian shipping till it was crushed to death. No weapon, fair or foul, was spared; Liberal mail contracts were awarded to British companies and often traffic under government control was diverted to them. No such assistance was given to Indian shipping; instead it was left to face all handicaps single-handed.

Rate war was one powerful weapon which was extensively used to stifle Indian shipping, For instance, the P and O line charged Rs. 19/- per cubic feet, while the Tata Line, set up in 1893 charged Rs. 12/-. The P and O group, in retaliation, brought down its rate to Rs. 1.50 besides carrying cotton to Japan free of charge. Tata’s protests fell on deaf ears and it had to go out of existence.

Between 1872-1927, about 32 Indian shipping companies were started with a capital of Rs. 12 crores. However, as a result of the rate war waged against them, 23 out of 32 companies with a capital of Rs. 8.50 crores went into liquidation.

The critics of Indian enterprise ascribed this to inexperience and mismanagement on the part of the promoters, but the Mercantile Marine committee admitted that the “system of deferred rebates and rate wars must operate as an obstacle to the entry of new comers.”

Yet another weapon, unreservedly condemned by the Indian Fiscal Commis­sion, (1921-22) was the Deferred Rabet system under which a shipper was given a rebate in freight paid by him in the previous year if he shipped his cargo with the same company next year again.

The system was designed to ensure continued ‘loyalty’ of a business firm to a shipping company and thus ensure its ‘monopoly’. In addition, Indian companies were made to suffer discrimination at the hands of foreign insurance companies which charged high premia even for ships of superior class.

When all other methods failed, the threat of criminal proceedings and even imprisonment was used. In 1906, Chidambaran Pillai started the Swadeshi Shipping Company at Tutcorin. The promoters of the company were charged with political bias. Pillai was tried for sedition and sentenced to two terms of transportation for life. Now shipping company could have survived these blows.

The revival of modern Indian shipping may be said to have begun with the formation of the Scindia Steam Navigation company in 1919. Seth Narottam Morarjee and Mr. Walchand Hirachand, with two or three others, joined hands to float this enterprise and their ship ‘Loyalty’ sailed on her maiden voyage to the U.K., on 5 April, 1919.

As was to be expected, it was given determined opposition; a rate war broke out but the Indian company held on. Eventually, an agreement was reached in 1924 by which the Scindia’s were allowed to ply vessels, not exceeding 75,000 tons, on the coastal trade of India while the overseas traffic was reserved for the British companies. Thus, for the first time, the right of an Indian company to ply in Indian coastal waters was recognised.

The country at this time, was swept by a wave of economic nationalism. Voices were raised demanding help for the industry; resolutions were moved in the central Assembly in 1992 asking for state help for the promotion of shipping and ship-building.

In response to these pressures, the government appointed the Mer­cantile Marine committee in 1923 to consider the claims of Indian shipping. The committee found that only 12% of coastal and 2% of the overseas trade was conducted in Indian ships.

It recommended:

(a) Both the exclusion of subjects of foreign nations from the costal trade and the “eventual reservation of Indian coastal trade for ships the owner­ship and controlling interests in which arc predominantly Indian” ;

(b) The purchase by the government of one of the existing British lines with a view to eventually transferring it to an approved Indian shipping company;

(c) The setting up of a training ship for providing training in Marine Engineering and shipping;

(d) The establishment of a ship-building industry in India and the grant of financial assistance for its development.

It, however, took full three years for the government to implement just one proposal —the establishment of the training ship “Dufferin”. All other proposals were shelved.

In view of this unsatisfactory progress, efforts were renewed to have the coastal trade reserved for Indian shipping. Sir S.N. Haji made the first attempt when he introduced, in 1928, a bill to this effect in the Assembly. It was argued by the Indian side that the principle of reservation had been adopted by most of the countries of the west as well as by Japan.

There was, therefore, no reason for refusing India the same facility, more so when it was likely to generate large employment. The government as well as the British mercantile community, on the other hand, opposed the measure tooth and nail on the ground that it would amount to virtual expropriation of British capital already invested in this business.

Notwithstanding this opposition, ‘the rising tide of patriotic fervour, the growing spirit to political independence, and the stimulating urge of economic nationalism won a magnificent victory’ when the principle of coastal reservation was accepted by an overwhelming majority.

The bill was referred to a select committee but meanwhile the Assembly was dissolved and the Bill lapsed. A second attempt by Sir A.H. Gazanvi proved equally unsuccessful.

The result was that the growth of Indian shipping continued to be arrested — ‘its tonnage on the eve of the Second World War being just 1.25 lakh or 0.23% of the world tonnage ; India carried only 25.6% of the coastal traffic but did not get any share in the overseas trade.’

The out-break of the Second World War saw a sudden increase in the demand for shipping. All the 28 ships belonging to eleven shipping companies in India were requisitioned for war needs. Foreign ships also went away for more urgent and important duties elsewhere, thereby creating a very difficult situation for the country’s foreign trade.

Half the tonnage was either lost or destroyed during the war so that by 1945, it was reduced to a bare 75000. One good result of the war was to make the government realise that a stronger maritime India would be an asset both economically as well as militarily.

Accordingly, the Reconstruction Policy Sub-Committee on shipping was appointed to recommend suitable measures for the development of Indian shipping in the post-war period.

The Report, published in 1947, strongly emphasized the need for a strong mercantile marine, owned, controlled and managed by Indian nationals and suggested a target of 2 million tons to be achieved within 5-7 years. Other recommendations included 100% share in India’s coastal trade, 75% in trade with coastal countries and 50% in the overseas trade for Indian ships.

The partition of the country left Indian shipping almost undisturbed. Almost all the tonnage, the country’s only ship building yard at Vizagapatam and five out of six major ports remained with India. On the eve of Independence, India had 59 ships of about 1.92 lakh G.R.T.

The post Independence Policy on shipping was largely based on the recom­mendations of the Reconstruction Policy Sub-Committee. A Directorate General of Shipping was established and the subject of shipping was transferred from the Ministry of Commerce to the Ministry of Transport.

A National Harbour Board was set up for the development of ports. A special licensing policy was initiated to reserve coastal trade for Indian vessels so that by 1952, Indian ships and sailing vessels were carrying the whole of the coastal trade.

The government had plans to establish three state shipping corporations but actually only one, namely, the Eastern Shipping Corporation, was set up in 1950. Liberal subsidies were also given to the ship building industry to build ships at competitive costs. As a result of these measures, the Indian tonnage grew in strength-being 3.72 lakh G.R.T. in April 1951.

The real progress of Indian shipping began in the planned era. In the words of S. Iqbal Singh, the five year plans were like “nautical milestones marking our progress in the world of shipping. The First Plan set a modest target of 6 lakh G.R.T. by March 1956 and provided a sum of Rs.26.3 crores for the purpose.

To provide encouragement, a scheme of advancing loans, up to 80% of the cost of the ship, was initiated. Several companies availed of the offer and the tonnage rose to 4.80 lakh G.R.T. by April, 1956 By then, Indian shipping had the entire coastal trade, 40% of trade with neighbouring countries but carried only 6.5% of the country’s overseas trade.

The broad objectives of the Second Plan were to cater fully for the needs of coastal trade with due regard to the possibility of diverting some traffic from railways to coastal shipping ; to secure an increasing share of India’s overseas trade for Indian ships ; and to build up a nucleus of a tanker fleet.

A sum of Rs.45 crores, later raised to Rs.56 crores, was provided for the purpose. In addition, a sum of Rs.10 crores was expected to be raised by the private sector from within its own resources.

As regards achievement, the second Plan fared better than the First. The Public sector shipping was expanded by the establishment of the Western Shipping Corporation in 1958, and by purchasing 26% shares, hitherto held by the Scindia steam Navigation company in The Eastern Shipping Corpora­tion, thus making it a 100% government concern.

A National shipping Board was set up under The Merchant Shipping Act, 1958. This Act was a significant landmark. It not only provided for the first time, a separate Indian Register, but also restored full meaning to the word ‘Indian’ in shipping.

A Preferential Development Rebate was granted to the industry with a view to accelerating its expansion. Further, a shipping Development Fund was established to extend loan facilities to the industry.

A separate committee was set up to deal with the problems of Indian shipping with particular reference to the allocation of government owned cargoes. A notable development during the second plan was the establishment of the Jayanti shipping company in early 1961.

The nucleus of the Tanker and Tramp fleet was laid. Indian shipping reached 8.5 lakh G.R.T. as against the target of 9 lakh G.R.T. and its share in the country’s overseas trade increased to 9%During the decade, 1951-61, Indian gross tonnage had increased by 129% and yet, India’s share in the world shipping tonnage was a bare 0.78%.

Despite difficulties created by the Indo-China war in 1962 and the Indo- Pakistan conflict in 1965, Indian shipping made fairly satisfactory progress during the Third Plan period.

Total tonnage reached 15.40 lakh G.R.T. and her share in the country’s overseas trade amounted to 12.9%. A significant development was the merger of the existing two public sector shipping companies to form the National shipping corporation of India in October, 1961.

Taking the three Plans together, the progress of Indian shipping is impressive. Starting with 59 ships of 1.92 lakh G.R.T. in 1947, India had 221 ships of 15.40 lakh G.R.T. by the end of the Third Plan.

In 1951, Indian fleet carried only 6.5% at the country’s overseas trade but by 1966, its share had almost doubled to 12.9%. And yet, India’s share in world tonnage came to a meagre 1% in 1966 which was way behind such small countries as Denmark, Holland, Spain, Greece etc.

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4. Essay on Inland Water Transport in India:

Inland navigation in India dates back to very ancient times. Magesthenes found ‘eight and fifty’ navigable rivers in the country. Ain-e-Akbari records that the inhabitants of Thatta in Sind had no less than 40,000 vessels of various sizes and shapes. The river Ganga was a natural highway and many centres of trade like Mirzapur flourished on its banks. The Jamuna Brahmaputra were equally busy thoroughfares.

The use of steam vessels in inland navigation was first started in 1823 when ‘Diana’ steamed off on a regular service, from Kulpi to Calcutta. By 1842, regular service was playing between Calcutta and Agra. Kanpur, on the river Ganga, was then ‘so plied with vessels that it presented the appearance of a port on a small scale.’

The decline of water transport began from about the middle of the 19th century. This was, in the first instance, caused by the growing railway competition. In the words of the Indian Industrial Commission, “the vested interests of the railways prevented water-ways in India from receiving the attention that has been given to them in other countries with such satisfactory results.”

The Acworth Committee also felt compelled to admit the ‘ruinous effects; of the railways on the development of inland navigation and cited, as example, the decline of the river ports of Broach and Surat in Bombay and the Bukingham Canal in Madras.

The government herself was deeply interested in the financial success of the railways in which it had made heavy investment. Narrow business considerations did not allow her to initiate any measures for the development of water ways which always haunted her as a potential rival of the railways.

To an extent, water transport itself was a blame for its decline. It never made any attempt to reorganize and modernize its fleet. The bulk of the cargo continued to be carried in country boats with steamships carrying only a fraction of the load.

Lastly, the construction of canals was defective in so far as no attention was paid to their navigational possibilities. These canals made large withdrawals of water from the scanty winter supplies thereby making the rivers largely un-navigable.

There is, however, no doubt, that there are good opportunities for inland navigation in India. It is estimated that there are 5000 miles of river routes in the country out of which the important ones are the Ganges and the Brahmaputra and their tributaries, the Godavari and the Krishna, the back waters and canals of Kerala, the Bucking ham and the west coast canals in Madras and Andhra, and the Mahanadi canals in Orissa.

Although the National Planning Committee had urged, in 1938, the appoint­ment of provincial and Inter-Provincial commissions to regulate, control, and develop the rivers and water ways in the country, it was only after 1947 that inland navigation began to receive attention at the hands of the government.

An important step towards its development was taken in 1952 when a Ganga Brahmaputra Water Transport Board, a joint venture of the central government and the state government of U.P. Bihar, west Bengal and Assam was established.

The function of this Board was to coordinate the activities of the participating governments in regard to the development of water transport on the Ganga-Brahmaputra system and to test the feasibility of operating modern craft on shallow water ways.

It operated:

(a) The country boat service between Patna and Buxar and

(b) Patna and Raj Mahal with pusher tugs and steel barges.

In 1957, the government set up the Inland water Transport Committee under the chairmanship of Shri B.K. Gokhale to:

(a) Recommend what rivers should be declared as ‘National Highways;’

(b) Examine the prospects of increasing and ex­tending the river and canal services and the possibility of organising an efficient country boat service;

(c) Recommend suitable measures for the increased utilisation of inland water-transport and for securing effective coordination between the railways and inland water ways.

Acting on the recommendation of this committee, the government established, in March, 1955, the Inland Water Transportation Directorate to carry out technical examination of the schemes received from the State Governments and render advice.

The Ganga-Brahmaputra water Transport Board was merged with the newly-created Directorate but a regional office was opened at Patna to attend to the river conservancy and hydrographic surveys on the Ganga.

During the Five Year Plans, inland navigation did not receive the attention it deserved. This may be seen from the fact that during the first two plans, a paltry sum of Rs. one crore was spent on the development of inland waterways.

During the Second Plan, apart from giving grants for river conservancy and loans for the replacement of the fleet, the government set up, in 1958, a state corporation in Kerala to take over, from private operators, the passenger motor boat service between quilon and Ernakulam, a distance of 90 miles.

The Third Plan provided for the completion of an inland port at Pandu and navigational work in the Damodar Valley canals. Provision was also made for the purchase of dredges and launches for Sunderbans and Brahmaputra.

In addition to these central programmes, the State programmes included development of navigational facilities in the Rajasthan Canal, improvement of Taldanda and KendarPara canals in Orissa so as to expand facilities for the export of Iron ore through the Paradip port.

A sum of Rs. 8.7 crores was provided for the im­plementation of this programme. Actual progress, apart from the near completion of the inland port at Pandu, was ‘Small’.

Even in financial terms, the performance was disappointing —actual expenditure being Rs. 2.5 crores against a provision of Rs. 8.7 crores. Obviously, much more needs to be done on a much wider scale if the potentialities of inland water transport are to be fully exploited.

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5. Essay on Air Transport in India:

Civil aviation in India began on 30 November, 1877 when joseph Lynn, an adventurer, made a balloon Slight from Lai Bagh Garden in Bombay and landed at Dadar. He made a second flight but this time, he landed in the sea from where he was brought to Appollo Bunder by a country boat. A similar demonstration flight was given by Mr. Percival spencer at Calcutta in 1889.

Commercial aviation may be said to have begun in 1911 when the first official air-mail was flown from Allahabad to Naini, a distance of 10 km. There after, were made several stray attempts under which some foreign companies, notably the Imperial Airways, began to operate their services to and beyond India.

The government also initiated measures for providing the necessary facilities, e.g., the civil Aviation Department was established in 1927; the first civil aerodromes were established and flying clubs were founded.

However, up to 1931, air transport in India was yet in the experimental stage; its progress was slow and it was char­acterised by the complete absence of Indian participation. In 1930, aero planes flying over India carried 35 tons of goods and 150 passengers.

The period 1932-39 saw the introduction of regular internal air services in the country. The first to enter the field was the Tata Airways (1932) which ran a regular service between Karachi and Madras Via kBombay. It was followed by the Indian National Airways (1933) and the Air Services of India (1936), the former operating between Calcutta-Rangoon and Lahore-Karachi and the latter between Bombay-Kathiawar.

A significant development was the inauguration, in 1938, of the “All-Up Empire Air Mail Scheme” which aimed at providing a coordinated air mail service through the important points in the British Empire. In India, the Tatas and the Indian National Air ways participated in the scheme which brought them handsome financial gains.

The commencement of the world war in 1939 brought about a complete change in the position. The Empire Air mail scheme was suspended and its resour­ces were diverted to the needs of the war. The military demand for air transport became so urgent that it was impossible for the Indian civil companies to operate.

Finally, these services were run directly for the government and the defence services. This proved a blessing in disguise in as much as it gave the Indian companies valuable technical experience, better reputation and a more sound financial position.

The end of the war opened a new chapter in the development of air transport in India. The war time boom in air traffic, the availability of war-surplus planes at low cost, new aerodromes constructed and the prosperity enjoyed by existing companies during the war, stimulated rapid development.

A number of companies obtained licenses from the Air-Transport Licensing Board set up for the purpose in October 1946. A notable development was the establishment, in 1948, of Air India International Ltd. The company, run under the joint auspices of the Tatas and government, started a thrice weekly service from Bombay to London.

By the end of 1948-49, there were operating in India 24 scheduled as well as non-scheduled companies with an authorised capital of Rs. 42 crores. The total distance flown by scheduled air lines went up from 2.7 million kms. in 1939 (for undivided India) to 20.3 million kms in 1948.

However, the financial position of most of these companies was far from satisfactory. All the companies were over-equipped and there was a general scramble for traffic with low air-craft utilisation, drain on capital resources, and heavy running costs. The introduction of the ‘Night Air Mail scheme’, helpful though, did not go far enough to improve matters.

Meanwhile, two companies, the Jupiter Airways and the Ambica Air lines, went into liquidation in 1948-49 while a third, The Orient Air ways, transferred its headquarters to Pakistan. The Government, therefore, felt compelled to intervene and it appointed the Air Transport Enquiry Committee in 1949 to enquire into the working of civil aviation in India and to recommend measures for its improvement.

The committee found that the problem of air transport in India was not so much of expansion as of intensive utilisation of its existing equipment and its replacement because the number of operating units was far in excess of requirements. The committee clearly stated that the private companies had “not done badly as to require a drastic change of system. Their operational efficiency had been uniformly good.”

It, therefore, recommended ‘rationalisation and not nationalisation’ of air transport and a reduction in the number of operating units to four so as to cut costs and improve efficiency. The committee honed that, by the end of 1952, the air-companies would not stand in need of further governments help.

These hopes were not fulfilled. The companies continued to incur losses and demanded recurring government help. New air-craft could not be purchased without government assistance. In fact, the very survival of the industry depended upon government help. In 1949, the continued losses of all scheduled operators, excluding Petrol rebate, were estimated at about Rs. 1.1. crores.

The government therefore, came to the conclusion that nationalisation was the only solution of the various ills from which the industry suffered. Accordingly, the Air corporation Act was passed in 1953 under which the operation and ownership of air-transport was taken over by the government.

Under the Act, two corporations, namely the Indian Airlines corporation and Air-India International, the former for serving within the country and for operations to neighbouring countries and the latter for operating long distance international flights, were established with effect from 15 June, 1953.

During the period of the first two plans, the expenditure incurred on civil Air Transport amounted to about Rs. 24 crores. The programmes in the First Plan mainly aimed at making good the deficiencies in aerodromes, communication facilities, equipment, etc.

The Second Plan provided for such programmes as could meet the new demands which had arisen from technical advance and from India’s obligation under the convention on International Civil Aviation to provide facilities at aerodromes in conformity with standards laid down by the con­vention.

Extensive development works were undertaken at Bombay, Calcutta, and Delhi air ports to facilitate the flight of jet air-craft. Four new aerodromes were built; 5 flying clubs set up; and plans initiated for the modernisation of the air-fleet.

The Third Plan provided for an expenditure of Rs. 25.5 crores on the extension of the existing runways including the development of a jet worthy airfield at Madras, construction of taxi tracks, aprons, terminal and other technical buildings, permanent ground lighting facilities at a number of aerodromes, construction of air-strips at tourists’ centres, new strips for flying and gliding clubs and improved navigational aids at selected aerodromes.

By the end of the Third Plan, Indian aircraft operated scheduled service on various routes by day and night, interlinking every Indian city and important town and connecting India with all parts of the world. In 1965-66, Indian air craft flew 49.3 million kms on scheduled services carrying nearly 1.4 million passengers, 23 thousand tons of cargo and 10.6 thousand tons of mail.

Although, the level achieved by India in the field of air transport did not compare favorably with that of other advanced countries, but within the limita­tions of time and meagre resources, its progress was indeed remarkable.

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