Economics of Indian Railways

Economics of Indian Railways
Sukumar Nandi
Indian Institute of Management Lucknow

9/15/2014
Economics of Indian Railways __
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Indian Railways__ Some Information
Indian Railways (IR) is an Indian state-owned
enterprise, owned and operated by the government
of India through the Ministry of Railways.

It is one of the world's largest railway networks
comprising 115,000 km (71,000 mi) of track over a
route of 65,000 km (40,000 mi) and 7,500 stations.

As of December 2012, it transported over 25 million
passengers daily (over 9 billion on an annual basis).
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Indian Railways__ Some Information
In 2011, IR carried over 8,900 million passengers
annually or more than 24 million passengers daily
(roughly half of which were suburban passengers)
and 2.8 million tons of freight daily.

In 2011-2012 Indian Railways had revenues of
111984.89 crore (US$21 billion) which consists of
69675.97 crore (US$13 billion) from freight and
28645.52 crore (US$5.3 billion) from passengers
tickets

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INDIAN RAILWAYS
Indian Railways is 150 year old

It is largest railway system in world under one management

It is a lifeline of country

It is biggest civilian employer in the world

No strike in last 30 years in spite of 17 lakh workers

Always targeted by public during any rally, agitation etc

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INFRASTRUCTURE
Railways has 7500 engines, 38000 coaches & about 2.5 lakh
of wagons

7000 stations & about 500 computerized passenger
reservation centers

1 lakh km of track

17 lakh employee(10 lakh in Group C) including 10000 officers

6 lakh staff Quarters

Biggest township Kharagpur has 12000 quarters

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ORIGIN & DEVELOPMENT
1947 Post partition 21 railway systems----10 owned by the GOI
and balance by princely states. Total integration of princely
state railways completed by first April 1950

1951 Southern, Central and Western Railways SR, CR&WR
created
1952 Northern, Eastern and North Eastern Railways,
NR,ER&NER created

1955 South Eastern Railways, SER created

1958 North East Frontier Railways, NFR created

1966 South Central Railways, SCR created 2002 East Central
& North Western Railways created in October

2003 South Western , West Central, North Central, South
Eastern Central & East Coast Railway, (SWR, WCR, NCR, SECR
and ECoR ) created in April 2003

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Speed
Shatabdi trains can run at maximum speed of 140 kmph
Rajdhani maxm 130 kmph
Superfast trains 110 kmph
Other mail & exp 110kmph but more stoppage
Goods train maximum 100 kmph
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ORGANISATION

3 tier Management

Top Railway board or Ministry of Railways headed
by Chairman Railway Board

Middle -16 zones headed by General Managers

Bottom -67 divisions headed by Division Railway
Managers
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Budget
Railway earns mainly from goods traffic

Daily expenditure is about Rs 100 cr (42% staff,
18% fuels)

Daily earnings Rs120 cr

daily loss on uneconomic branch line Rs 8 cr
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Department
Railway has its own cadre & consists of 9 Deptt (8 wheel & 1
brake)
Technical- 4 Engineering, mechanical, electrical & signal
Non technical- 5
Traffic, personnel, stores, security& finance
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Production units
Chitranjan locomotive works at Chitranjan for
electrical engine
Diesel locomotive works at Varanasi for Diesel
Engine
Coach factory at Perambur & Kapurthala
Railwheel factory at Bangalore
Diesel component works at Patiala
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PSU
Indian railway catering & tourism co (IRCTC)
Indian railway construction comp (IRCON)
Rail India technical services (RITES)
Container corporation (concor)
Railtel corporation (Rail tel)
Konkan railway corporation Ltd (KRCL)
Mumbai rail vikas corporation (MRVC)

[Railtel Corporation of India is a Government of India enterprise
focusing on providing broadband and VPN services. RailTel was formed
in September 2000 with the objective of creating nation-wide
broadband, telecom and multimedia network, to modernize Train
Control Operation and Safety System of Indian Railways. ]
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Research
Research Design & Standardization Organization (RDSO) in
Lucknow in house research organization

It is an integrated organization for track & rolling stock

responsible for developing and testing of new technology and
design related to railways

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TRAINING
OFFICERS
Railway staff college,Vadadara- General training for all Railway
officers

IRICEN,Pune Civil engg
IRIEEN,Nasik-electrical engg

IRIMEE-jamalpur-Mechenical engg
IRISET-Secundrabad-signal & telecommunication engg

Indian Railways Institute of Transport Management (IRITM) at
Lucknow-Traffic deptt

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Training (contd)

Supervisors and staff
Zonal training centre

Divisional training school
Others like drivers, engineering training schools

177 training institutes for training of non gazetted staff
25% of officers and 17% of staff are trained annually

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Public concern

Availability of Reservation
PRS irrespective of presence of Railway - cover more
than 90% of population including each district HQ
etc,(720 no)

tatkal booking, Internet booking
PNR enquiry.

It runs additional service in festivals, summer & winter
holiday
information for passengers on internet

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Public Concern
Safety & punctuality -generally good but adverse publicity is
more .
Annual deaths in Railways are much lesser than Road
Accidents

Cleanliness of stations ,waiting halls etc

Cleanliness of trains , toilets & linen supplied in trains- serious
concern. Lot of attention is being paid but lot is to be done.
depend on civic sense of rail users also

Hygienic food now IRCTC is setup to improve catering at
stations & trains

All information available in timetable & internet at
www.indianrail.gov.in

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Railways concern
Not able to fix fare as per cost -
i) loss in suburban service
ii) loss due to increase in cost of diesel

Not able to close uneconomic branch line-yearly loss
2500 cr
Political interference in investment decision

Not able to meet public demand for more seats in
few sector and run empty trains in others
Need Rs.50000 cr to complete on going projects
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Commercial versus Social
Issues
Railway has social obligation to run transport service
for all the area of country irrespective of profit
motive. It can not close uneconomic lines

It can not increase fare due to adverse political
impact even though fuel cost mounting

It has to generate enough resources for efficient
maintenance & replacements of assets on its own

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Performance of Indian Railways:
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Growth Rates of Earnings and Expenses
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The Operating Ratio = Total Expenses / Total earning receipt

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Investment Strategy of IR
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Gauge Conversion
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Doubling of Lines
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IR at a Glance
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Earnings in Freight
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Traffuc
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The trend of growth in receipts and expenditure on Indian
Railways
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The increase / decrease in originating tonnage of various
commodities in 2002-03 over 2001-02 is shown in the
following chart:
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PASSENGER BUSINESS OF IR
Indian railways have a share of nearly 22%
in the passenger transport market
DURING 2003-04
5210 Million passengers were carried
Passenger kilometers was 530 billion
Passenger earning was 13460 crores

Passenger business accounts for 31% of
the revenue
Passenger business has two major segments
Premium passenger service
Mass Volume transportation segment

1300
1600
2500
3600
4600
5100
0
1000
2000
3000
4000
5000
6000
50S 60S 70S 80S 90S 2000S
PASSENGERS CARRIED (IN
MILLIONS)
70
80
120
210
300
520
0
100
200
300
400
500
600
50S 60S 70S 80S 90S 2000S
PASSENGERS KILOMETERS
(IN BILLIONS)
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Reservation
PRS NODE
2001 2004 2001 2004 2001 2004 2001 2004 2001 2004
Delhi
781 1020 153 362 886 1360 2.31 2.75 1.83 2.52
Mumbai
532 686 100 228 640 984 2.01 3.14 1.41 2.42
Calcutta
365 630 102 368 425 1009 1.22 1.81 1.01 1.7
Chennai
271 370 76 183 310 628 1.35 1.65 1.1 1.46
Secunderbad
279 292 59 100 250 492 0.56 0.81 0.4 0.72
Total
2228 2998 490 1241 2511 4473 7.45 10.17 5.75 8.82
PEAK NO OF
PASSENGERS
PER DAY (IN
LAKHS)
AVERAGE NO OF
PASSENGERS
PER DAY (IN
LAKHS)
PASSENGER RESERVATION SYSTEM LOAD
Trains Locations Terminals
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Role of IR
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Organization
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Any question is most welcome

THANKS
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