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AN ANALYTICAL STUDY OF EMERGING ECONOMIC TRENDS OF INDIAN RAILWAYS SINCE 1998 TO 2008

Dr.S.K.S.YADAV 53 ANUJ KUMAR

Indian Railways Action Plans with defined Phases and Trends

Transportation in India depends heavily on railroads. The railway system, owned and

operated by the government, is the largest in the world under single management. Each

year, more than 4 billion passenger journeys are made by rail. Railroads also carry about

60 percent of India's freight traffic (421 million tonnes) every year.

Indian Railways highlights (2007 est.):

Route total: 64,000 km (17,000 km electrified; 12,617 km double track)

Broad gauge: 40,620 km 1.676-m gauge

Narrow gauge: 18,501 km 1.000-m gauge; 3,794 km 0.762-m/ 0.610-m gauge

Track total: 1,07,000 Track Kilometers

Passengers travel per day: 1.7 million

Stations: 6,977

Fleet of trains: 7,000 for passengers and 4,000 for goods

Wagons: 207,176

Indian Railways Revenues and Surplus

Year Revenue (Rs Crore)

Surplus before Dividend (Rs Crore)

2004-05 47,370 4,612

Chapter-2



2005-06 54,491 9,118 2006-07 63,220 13,000 2007-08 71,218 (est) 21,578

India cities are connected by express trains, and there are local trains between most parts

of the country. Rail-link buses serve areas not on the network. An underground railway

began operating in Calcutta in 1995.

The world's longest rail line is in Russia. It extends about 5,600 miles (9,010

kilometers) and connects Moscow and Vladivostok. Laid end-to-end, the tracks of the

world's main railroad routes would stretch about 750,000 miles (1,207,000 kilometers)--

about 3.25 times the distance from the earth to the moon.

Country Length of track (km) United States

Russia Canada China India

Germany

240,000 154,000 78,150 65,780 62,915 43,460

Sources: World Railways statistics, 2004, CIA; International Union of Railways; Statistics Canada; UN.

Country No. of Passenger-Km Japan China India Russia

Ukraine

396,336,000,000 363,276,000,000 316,728,000,000 227,100,000,000 70,884,000,000


Note:

- Passenger-Km signifies the multiple of number of passengers times their distance

travelled in Km's.

- Japan figures are high due to its high population density and over-reliance on trains

- The figure is higher for China as distances are higher in China than in India



Country No. of ton-Km United States

China Russia Canada India

1,759,464,000,000 1,242,600,000,000 1,195,164,000,000 279,510,000,000 252,588,000,000


Note:

- Ton-Km signifies the multiple of tons of freight transported times their distance

travelled in Km's.

- India is ranked only fifth as other countries have a bigger geographical area.

Plan outlays of railways, investment trends and strategy: Outlays in Five Year Plans: IR draws up its Development Plans within the framework of National Five-Year Plans.

Plan outlays for IR and the transport sector as a whole are given below:



The Year 2006-07 in Retrospect: In 2006-07, 23,088 wagons (in terms of four-wheeler units), 315 locomotives, 2,423

coaches, 224 EMU coaches, 64 MEMUs and 57 DMUs were acquired by IR. 361 route

kms. of track was electrified and 250 kms. of new lines constructed. Double/multiple

lines were provided on 386 kms. while 4,686 kms. of track was renewed (including both

primary and secondary renewals) and 1,082 kms. of lines converted from MG/NG to BG.

.The Plan allocation and actual expenditure in 2006-07 compared with 2005-06 were

As follows:



Strategies of Indian Railways

Indian Railways, the pride of India, has chalked out a plan to invest around Rs 2,000

crore (US$ 437.25 million) per annum to raise its consumption of stainless steel and add

brand new alloy-made wagons and coaches to its portfolio.

Pramod Kumar Gupta, Additional Member (Mechanical) of Railway Ministry, said

that "It was decided in a meeting few months ago that we will increase our consumption

of stainless steel to two lakh tonnes per annum which will entail an investment of Rs

2,000 crore (US$ 437.25 million) every year". At present, the consumption of stainless

steel by the Indian Railways stands at around 5,000 tonnes, and carbon steel is primarily

used for the purpose, entailing an expenditure of around Rs 800 crore (US$ 174.94

million), per annum.

"We are also talking to companies, transportation companies like Siemens and

Bombardier to set up a joint venture (JV) manufacturing unit in the country to make

stainless steel coaches and wagons. We are set to transform Indian Railways due to the

advantage the alloy provides," he further added. The Government of India will retain 26

per cent stake in the JV, while the rest would be held by the private counterpart. Indian

Railways is the world's fourth largest rail network and second largest rail network under a

single management. It is also the world's fourth largest freight carrier. Contributing to the

development of India's industrial and economic landscape for over 150 years, it accounts

for about 2.3 per cent of GDP and employs about 1.5 million people directly. Indian

Railway consists of an extensive network spread over 109,221 km, encompassing about

6947 stations and 17.7 million passengers.

Future Agenda: 1. The Indian Railways are under pressure to meet the transportation demand due to

enhanced economic growth in the country. Constraint of funds for augmentation of line

capacity and long gestation period in the implementation of such works will worsen the



situation. We have already surpassed originating loading of 600 mt and the target for the

current year is 700 mt. This has led to demands for increasing the throughput by better

utilization of existing assets and by introducing higher axle load wagons on the Indian

Railways. At present, the normal axle loads on the Indian Railways is 20.3 tons except

for certain sections where it is 22.9 tons (BOBS/BOY circuits). The existing casnub

bogie design is fit for axle load up to 23.5 tons.

2. This led to an examination of practices on the world railways. It is seen that Australia,

Brazil, Canada, USA, South-Africa, and China have successfully implemented the

movement of heavy haul trains. In Australia, the permitted axle load is 37.5 tons.

3. During the Governing Council meeting of RDSO on 5th November 2004, ME indicated

that the existing track may be fit for 25 ton axle load since the value of track modulus and

method of track stress calculation is still being done as settled down in 1968 whereas

there has been substantial change in the track structure with improved rails, sleepers and

mechanized maintenance. This matter was further examined and the Board has already

issued instructions increasing the axle load of freight wagons on iron ore routes by

permitting loading of CC+8+2 in BOXN wagons on specified iron ore routes as a pilot

project.

4. The time has now come to share the experiences of these higher axle load operations

and to evolve a consensus on the matters which will have a bearing on introduction of

higher axle load wagons and heavy haul operations to get the resultant economic

advantages.

5. Sixty-six per cent of the total traffic handled by the Indian Railways is amenable for

heavy haul operations. However, there are a number of issues involved in this connection

which need to be sorted out before the heavy haul is fully implemented on the Indian

Railways. Some of these issues are:

(i) Mechanical

a. Coupling of locomotives and failures

b. Availability and failure of powers

c. Increased braking distance and its impact on operations of trains



d. Improved designs of wagons and their colour (provision of additional springs on

wagons, etc.)

e. Requirements of bankers

f. Design of 25 ton/30 ton axle load wagons within the existing standard moving

dimensions

g. Re-examination of the restriction on the axle load of BOXN HA wagons which

through designed for 23.5 tons are restricted to 20.32 tons due to the restriction

h. Modification of design of existing wagons on order to make them fit for 25 ton/30 ton

operations

(ii) Engineering - Track and Bridges

a.) Stallings, wheel burns, instances on exit from yards, graded sections

b.) Standard of maintenance required

c.) Rail stresses and reduced fatigue life, quality of grooved rubber pads. Impact on PRC

sleepers, track fittings, formation and need for formation strengthening by blanketing,

frequency of incidences of rail/weld fractures

d.) Planning for track renewals for long and continuous stretches free of speed restrictions

e.) USFD testing to detect rolling contact fatigue and gauge comer fatigue defects

f.) Behaviour of LWR, need of distressing twice – before winter and summer seasons

g.) Rail profile measurements, rail grinding

h.) While the track structure for 25 ton axle load has been specified as 70 kg 90 UTS rail

of PSC sleepers 1,660 per kilometre, no track standard has yet been laid down for 30 ton

axle load. Work on this needs to be taken up by RDSO

i.) Bridge capability by using non-destructive techniques for assessing capability of

bridges taking into account the design features and to identify individual bridges which

may need strengthening or which could be used with speed restriction for the high axle

load till they are strengthened.

j.) The need for review of the standard of construction of all new line bridges/gauge

conversion projects now in progress where track work has not yet been done to identify

sections where the required upgrading for higher axle load can be done now itself by the

process of material modification to the sanctioned estimates.



k.) There would appear to be a need to review the existing codes for design of bridges

utilizing the services of IITs and eminent consultants to study the world practices and

update our codes

l. To start with, monitoring of the effect of the haulage of 58 BOXN wagon trains with

CC+8+2 loading needs to be done with wheel impact load detectors and inspection and

checking of the effect on individual sample bridges.

(iii) Traffic

a. Stalling of freight trains in the sections (level and graded)

b. Monitoring of overloading of wagons (CC+8+2) and weighment conditions

c. Trailing load and powering of trains

d. Requirement of bankers on graded sections

e. Operational problems of running heavier freight trains

f. Running of coupled locomotives.

(iv) Electrical

a. Coupling of electrical locomotives, failures of powers due to increased load,

calculation of increased braking distance and its impact on operation of trains

b. Movement of TE and PF coupled with loco operations.

(v) S and T

Increased braking distances and its impact on inter-signal distances: There would be a

need to examine the impact of the heavier axle load trains on the braking distance and

location of signals to see if any modifications are required.

(vi) RDSO

a. Reports of wheel impact load detectors

b. Study on rail stresses based on increased track modulus calculated

c. Report of stresses on sleepers at various points

d. Report of bridge load monitoring system



e. Report of vibration signature technique to measure dynamic recording and to monitor

characteristic and changes thereto to monitor health of bridges

f. TRC/Oscillation trials of sections carrying heavy axle load.

Railways Development under Plans: Performance

The impressive growth and the dramatic turnaround of the Indian Railways has caught

the attention of both management experts and global business schools like Harvard and

Wharton.

Boosted by the booming economy and trade, Indian railways have been recording

impressive growth rates-both on the physical and financial front. For 2007-08, the cash

surplus before dividend and net revenue are estimated at US$ 6.17 billion and US$ 4.53

billion, respectively, placing it at a much better position than many of the Fortune 500

companies.

In fact in the last four years, Indian railways have generated a cumulative cash surplus

before dividend of US$ 16.94 billion. Also, for the first time in independent Indian

history, the return on capital invested in railways is estimated to reach a record 21 per

cent.

Simultaneously, the operating ratio of railways has improved from 83.72 per cent in

2005-06 to 78.68 per cent in 2006-07 and further to an estimated 76.3 per cent in 2007-

08, making it a member of select club of railways in the world, having an operating ratio

of less than 80 per cent.

Freight and Passenger Traffic Growth

The railways have been recording consistent growth rates in the freight and passenger

traffic. Freight loadings increased by 9.06 per cent to 794 million tonne (MT) during

2007–08 as against 728 MT in the same period last year. Simultaneously, railways have

registered a 13.86 per cent increase in freight earnings to US$ 11.10 billion during 2007–

08, compared to US$ 9.75 billion during 2006–07.



Similarly, due to the increase in passenger traffic, earnings from passengers grew by

15.09 per cent to US$ 4.65 billion during 2007–08. With such buoyancy in earnings, the

gross traffic earnings of railways for the fiscal year 2007–08 is estimated at US$ 17.9

billion, a 16 per cent growth over the previous year.

The following table shows the indices of growth of traffic output vis-à-vis inputs:



Significantly, freight loadings have increased from 557 MT in 2003–04 to 794.21 MT in

2007–08. In fact, in the last four years Indian railways is likely to achieve an incremental

loading of 233 MT, which is about 160 per cent of the incremental loading registered in

the entire 1990's decade,

The growth momentum continues in 2008–09. During April 2008, railways have

generated US$ 1.03 billion from freight traffic, compared to US$ 841.52 million during

the corresponding period last year, recording a growth rate of 21.91 per cent. Freight

loadings have simultaneously increased to 67.69 MT, as against 61.05 MT in the same

period last year, recording a growth rate of 10.88 per cent. with such a buoyancy in its

overall performance, railways have set a targets of US$ 7.27 billion in cash surplus and

875 MT of freight loadings for the current fiscal (2008–09).

Private Sector

The Indian railways have lined up massive plans for up gradation and expansion of its

infrastructure, for which it has identified public-private partnership as a thrust area. The

railways minister has already announced plans to invest US$ 46.70 billion for the

modernization, capacity increase and completion of new projects during the 11th Five

Year Plan. Consequently, a number of areas have been opened for private investment.

Dedicated freight corridor projects.

Railway station modernization.

Manufacturing facilities for locomotives, coaches, and other railway equipment.

High-speed passenger corridors.

Container services.

Creation of Inland container depots and warehouses.

Passenger related non-core areas such as catering, luggage, cleaning and parcel

service among others.

Port connectivity projects.

In addition, Indian Railways also plan to involve the private sector in the development of

warehouses, logistics parks, and budget hotels and to create relevant infrastructure. The



railways also plans to open the marketing and operation & maintenance of luxury train

segment to private players, to take advantage of the demand for such trains.

The railways plan to attract about US$ 24.63 billion in the next five years through public

private partnerships, so as to complement its efforts to modernize, upgrade and expand its

infrastructure. In 2008-09 alone, railways plan to attract US$ 6.15 billion of private

investment.

Some Projects are undergoing

Railway stations are on the threshold to undergo a massive transformation with

underground parking, food plazas and separate terminals for arrival and departure. The

Railways has identified about 22 stations including New Delhi, Chhatrapati Shivaji

Station (Mumbai), Howrah, Chennai Central among others to convert them into world-

class ones.

The government also plans to set-up a new wheel factory at Chapra, a diesel locomotive

factory at Marora, an electric locomotive factory at Madhepura, and a coach factory at

Rae Bareli (at a combined cost of US$ 974.18 million) making "India a manufacturing

hub for southern Asia and Africa" in railway equipment.

Two dedicated freight corridors--the eastern corridor connecting Ludhiana with Kolkata

and the western corridor connecting Mumbai with New Delhi-are to be constructed at a

combined cost of US$ 7.15 billion.

Further, railways is planning to start new projects like construction of East-West, East-

South, North-South and South-South freight corridors, construction of high speed

passenger corridors in the Northern, Western, Southern and Eastern regions of the

country among others.

In fact, Indian Railways will invest US$ 46.95 billion for modernization, capacity

increase and completion of new projects during the Eleventh Five Year Plan (2007-

2012). Significantly, public-private-partnerships would be invited in non-core sectors like



establishment of logistic parks, wagon investment schemes and wagon leasing schemes

among others.

Global Majors

With such huge investment projects being thrown open for private sector, an increasing

number of global players have evinced a keen interest to take part in this emerging

segment.

Bombardier Transportation will set up a Greenfield plant to make rail cars in

Vadodara.

GE Equipment Services (GEES) has entered India by picking up a 15 per cent

equity stake in Titagarh Wagons.

Amsted Rail, world's largest producer of rail cast wheels, will set up cast wheel

manufacturing unit.

A consortium of RITES Ltd (India) - PCI (Japan) - PBI (USA) - SYSTRA

(France) has bagged the contract to provide consultancy services to Bangalore

Metro Rail Corporation.

Siemens Transportation System has tied with public sector enterprise RITES for

railway wagon production

Further many players like Mitsubishi Corporation, Siemens, Alstom, Itochu, Toshiba,

Kawasaki, Terry Farrell and Partners, Von Gerkan, Marg und Partner, Aedas Ltd,

Hellmuth, Obata and Kassabaum Inc and Arep Ville France among others have all shown

keen interest to participate in various segments of railways.

The railways are in a dynamic phase of growth with new initiatives planned to increase

its revenue and optimally utilize its resources.

Development of agri-retail hubs, cold storage houses, multi-purpose warehouses

on surplus land with the railways.

Development of 100 budget hotels with private participation in the vicinity of

railway stations.



Introducing new generation trains that would be fuel-efficient, recyclable and

low-emission to generate certified emission reduction credits.

Introducing marketing rights for advertising on railway tickets and reservation

charts.

Installation of Wi-Fi for providing wireless access at 500 stations.

Establishment of integrated logistic parks on unused lands.

Along with these, the railways has adopted many new measures like Dynamic Pricing

Policy, Tariff Rationalization, Non-peak Season Incremental Freight Discount Scheme,

Empty flow Direction Freight Discount Scheme, Loyalty Discount Scheme and Long-

term Freight Discount Scheme among others to boost its capacity utilization levels.

Road Ahead/ Future Target*

Already, Indian railway is the world's second busiest railway after china in terms of

passenger-km and third busiest overall. With further growth of the economy, the

estimated traffic level by the end of 2011-12 is expected to be about 8.4 billion

passengers and 1.1 billion tonnes of freight per year.

Also against the in-house manufacturing capacity of 2500 passenger cars and 350

locomotives per annum, 4500 passenger cars and 700 locomotives are required to meet

the future traffic needs. And with projects like dedicated freight corridors and high-speed

passenger corridor, an estimated US$ 56 billion investment will be made in Indian

railways, of which 30 per cent is expected to come from private sector.

Passenger Business IR plays a key role in passenger transportation. During 2005-06, it carried 5,725 million

passengers as against 5,378 million in 2004-05 – registering a volume increase of 6.5%.

Passenger kilometers, which is the product of the number of passengers carried and

average distance traversed, was 616 billion, up by 6.9% from the level of 576 billion in

________________________________________

*Source: http://ibef.org/artdisplay.aspx?cat_id=596&art_id=20290&arc=show, June, 2008



the previous year. Passenger earnings also increased by Rs.1,008.24 crore (7.2%) in

comparison with those of 2004-05. The long-term trends of passenger traffic since 1950-

51 are shown below in Table1:

Table I. Number of Passengers originating (In millions)

.



PASSENGERS ORIGINATING PASSENGERS ORIGINATING SUBURBAN NON-SUBURBAN



.

Table II. Passenger Kilometres (In millions)

.



A few conclusions emerge from these trends:

i) Over the years there has been an almost steady increase in passenger traffic output in

terms of number of passengers and passenger kms.

ii) Since 1950-51, passengers originating have increased by 346 % and passenger kms. by

826%.

iii) Suburban as well as Mail/Express traffic has shown a higher rate of growth since

1950-51 than the overall average.

The varying growth rates of the different passenger segments had its impact on the

composition of services and number of trains run in each category.

Passenger Revenue:

Passenger earnings in 2005-06 were Rs.15,080.76 crores (excluding Rs.45.23 crores

earned by Metro Railway, Kolkata). This was Rs.1,008.24 crores (7.2%) more than the

earnings in 2004-05. Suburban traffic contributed 9.09% of the total earnings. The

remaining 90.91% came from non-suburban passengers. Earnings from Second and

Sleeper Class Mail/Express long distance passengers comprised 53.04% of the entire

passenger earnings.

Earnings per passenger km. for different classes during 2004-05 and 2005-06 were as

under:



Railways Finances and Financial Results of Indian Railways:

Source: RBI Monthly Bulletin,2008



Persistent Deficits in Past Budgets and Surplus in Present Plan:

The financial performance of the Railways during 2008-09 indicated some slackening of

the turnaround process witnessed since 2002-03. The operating ratio is estimated to rise

markedly while the return on capital is expected to decline. This would follow from

marginal deceleration in gross traffic receipts following rationalization of freight rates

and passenger fares combined with significant rise in the working expenses on account of

salary and pension provision for implementation of the Sixth Pay Commission

recommendations. The Railway Budget 2008-09 emphasized the role of passengers and

freight in revenue maximization and the twin objectives for these two segments are

'commitment and comfort' and 'commitment and connectivity', respectively. The

competitive pricing policy in the freight segments facilitated enhancement of the revenue

earnings for the Railways and raised the internal resource generation substantially. This

had enabled a 21.0 per cent growth in the Annual Plan outlay for 2008-09, with the

internal resources contributing 56.0 per cent as compared with 51.0 per cent in the

preceding year.

The Budget proposes to enhance investment through public private partnership during the

Eleventh Plan in order to meet the growing demand for transportation. The Budget

proposes to accord priority to port-rail connectivity for tapping the opportunities from

core sectors like cement and steel as well as container business. The Budget emphasized

application of information technology in three core areas, viz., freight service

management, passenger service management and general management with a view to

making improvement in operational efficiency, bringing transparency in working and

providing better services to the customers.

The Annual Plan outlay at Rs.37,500 crore for 2008-09 was the largest ever for the Indian

railways and was higher by 21.0 per cent than the previous year. Ofthe total outlay, 56.0

per cent (Rs.21,126 crore) would be financed through internal generation of resources

and the budgetary support would finance 21.0 per cent (Rs.7,874 crore). Extra budgetary

resources would include Rs.8,500 crore.Thus, internal and external budgetary resources



would constitute 79.0 per cent of the annual plan. The outlays for doubling works, guage

conversion and for new lines have been increased to Rs.2,500 crore, Rs.2,489 crore and

Rs.1,730 crore, respectively. On safety related plan heads, provision has been made for

Rs.3,600 crore for track renewals and Rs.1,520 crore for signal and telecommunication

works.

Rs25,000-crore surplus in 2007-08, futuristic rail budget with reduced fares in 2008-09 In his last railway budget as the UPA railway minister, and the fifth in a row Lalu Prasad

Yadav today unveiled a budget with a strong technological focus on modernizing the rail

infrastructure to make Indian Railways a forward-looking, customer-friendly enterprise.

The railway budget for 2008-09 is aimed on providing more conveniences for the

common railway traveler and provides for more passenger trains, shorter journey times,

more convenient train bookings, with reduced fares for passengers on all express trains in

the country, discounts to women travelers and senior citizens and lower freight charges

for transporting fuel.

The railway minister announced a record Rs25,000 crore surplus balance, and an

operating ratio of 76 per cent during 2007-08, saying that reduced fares had increased

volumes and profits that enabled the Indian Railways make a turnaround.

Passenger fares have been reduced by 5 per cent for sleeper class as well as second-class,

while fares for AC I, AC-II and AC-II have been cut by 7 per cent, 4 per cent and 3 per

cent, respectively.

Senior citizens above 60 years of age will now get a 30 pet cent discount, while women

above 60 years would get a 50 per cent discount. (See: Passenger fares reduced)

Petrol and diesel has been cut by 5 per cent, and Fly ash by 14 per cent. The highest

freight rate classification has been cut to 200.



He said that in the last five years the departmental undertaking had made a combined

profit of Rs68,778 crore and paid the government a Rs15,000-crore dividend to the

government during the term of the government.

Among the traveler amenities that the Indian Railways plans to introduce, Yadav said the

Go-Mumbai Card / Smart Card facility for easier ticketing for commuters would be

launched shortly to, among the steps to remove the endless wait at booking windows at

railway stations in the next two years.

Besides, there will be an increase in ticketing counters to 15,000 in the next two years

from the current 3,000 now. The number of auto ticket-sale machines would go up by

6,000 in the next two years.

The minister also said that the railways would leverage the telecom infrastructure to

enable telephonic ticket booking and said that booking tickets through mobile phones had

already started. Moreover, all long distance trains would be equipped with on-board

indicators displaying information on the distance and time of approaching train stops.

For the convenience of commuters 50 major stations across the country will have lifts and

escalators, while 30 bigger stations would have multi-level parking system. He also said

that the railway ministry would run a Mother-Child Healthcare Express jointly with the

Rajiv Gandhi Foundation.



The Trends in Passengers’ Transportation, Trends in Goods Carriage The Passengers’ revenue in different classes with corresponding number of passengers

and passenger kms. for 2005-06 is given below:

Passenger Services:



Train kms. and vehicle kms., with density of train services for some selected years were:

Mass Rapid Transit System for Metropolitan Cities:

Kolkata:

(i) Metro Railway: The total length of 16.45 kms. has been under commercial operation

since 27.09.1995. Extension of Metro Railway from Tollyganj to Garia (8.5 kms.) costing

Rs.907 crore is in progress, this project is likely to be completed by December,2007.

(ii) Circular Railway: The 13.50 kms. long electrified single line section from Dum

Dum to Princepghat is in operation. Full section from Princepghat to Majerhat has been

opened to traffic on 30.01.06. The section from Dum Dum Cantt. To Netaji Subhash

Chandra Bose Airport is in progress and targeted to be completed by July,2006.

Chennai:

Under the Chennai MRTS Phase-II, 7 kms long single line section from Tirumailai to

Tiruvanmiyur (part of Tirumailai – Velachery) has been commissioned for passenger



services on 26.01.2004. Work on remaining section is in progress and full section is

expected to be completed by March, 2007.

Mumbai:

Cabinet Committee on Economic Affairs had approved the proposal for execution of

Mumbai Urban Transport Project in the city of Mumbai at a total cost of Rs. 3,125.20

crore with 50% of the cost being shared by the Government of Maharastra including

sharing 50% liability of World Bank loan component of Rs. 1,562.60 crore. Railway’s

share of the cost will be funded under MTP Plan Head. The project was included in the

Railway Budget for the year 2003-04 under the Plan Head MTP/Mumbai. The Railway’s

expenditure up to 31.03.2006 was Rs.1,026.75 crore. The project has been targeted to be

completed by June, 2008. In addition to this, Thane-Turbhe-Nerul/Vashi (18.50 kms.)- a

double line commuter corridor- has been commissioned on 9.11.2004. The balance work

is expected to be completed by March, 2007. Belapur-Seawood Uran-new double line

projects are also progressing satisfactorily.

Trends in Research & Development

Passenger Service Improvements:

Railways are the premier mode of passenger transport both for long distance and

suburban commuter traffic. Despite severe operational and resource constraints, IR

introduced 178 trains (single), extended the run of 105 trains (single) and increased the

frequencies of 28 trains (single) for non-suburban passengers. For suburban/local

passengers, Railways introduced 46 trains (single) and extended the run of 35 trains

(single). Besides, during the year, IR introduced 30 DMU/DEMU, 6 MEMU and 6 rail

bus services. Moreover, the run of 6 DEMU/MEMU services were extended.

Ticketless Travel:

During 2005-06, 14.12 lakh checks were conducted against ticketless/irregular travel

(including cases of unbooked luggage). About 119.07 lakh cases were detected and

Rs.233.11 crore realised on this account.

Passenger Amenities:

The allocation under the Plan Head “Passenger and Other Railway Users’ Amenities”

was Rs. 273.54 crores for 2005-06.



In order to provide upgraded passenger amenities at stations, 319 stations have been

identified for development as Model Stations till 2005-06 out of which 110 stations have

been developed already. Some of the thrust areas identified for improving passenger

amenities are as follows:

To improve standard of cleanliness at stations, a number of initiatives have been

taken including introduction of mechanized cleaning, provision of washable

aprons, ‘ Pay and Use’ toilets, etc. Under the Integrated Railway Modernization

Plan (2005-10), it is planned to extend mechanized cleaning at 250 ‘A’ and ‘B’ category

stations by 2007-08.

Integrated Train Enquiry System (ITES) has been set up at Patna and Bangalore

to improve telephone enquiry system.

The system consisting of both Interactive Voice Response System (IVRS) and manual

interface provides details of accommodation availability, current status of tickets and

status of running trains on dialing number 139 as a local call from anywhere in India.

Other parts of IR will soon be covered by this system.

Tatkal reservation has been extended to almost all mail/express trains and in all

classes excepts first class and air conditioned first class.

With a view to optimize the utilization of available accommodation in trains, a

scheme to upgrade full fare paying passengers to the higher class against the

available vacant accommodation has been introduced in all mail/express trains

having sleeping accommodation. During the year, 24 more stations were provided with

water coolers and another 102 stations were electrified.

Passenger Reservation System (PRS) has been increased to 1,315 locations in the year

2005-06 as against 1,180 locations in the last year. Similarly computerised Unreserved

Ticketing System (UTS) was made functional at 589 locations during 2005-06.

Coach upkeep:

498 old coaches were given mid-life rehabilitation. Improved flooring had been provided

in all coaches of mail and express trains.

Further, every coach is being provided with improved flooring at the time of overhauling

. Bogie mounted air brake system had also been retrofitted in the existing coaches. 860



coaches were retrofitted with enhanced capacity screw coupling and draft gear. Stainless

steel trough flooring had also been provided in 305 coaches including EMUs.

Clean Train Station Scheme:

In order to bring about a quantum jump is en route cleaning of trains, a new scheme

“Clean Train Stations” has been developed in which mechanized cleaning facilities are

being provided at selected stations en route on the entire Indian Railway network to

ensure effective cleaning of coaches and toilets within.

Catering Services:

During 2005-06, catering facilities were provided through 257 pairs of trains and 11,319

static catering units. There are 52 departmental catering units under zonal railways and

1,621 under Indian Railways Catering & Tourism Corporation (IRCTC). Privately-

operated catering units on zonal railways and under IRCTC were 3,671 and 5,975

respectively.

Facilities are being developed to meet the pressing requirements of passenger for good

quality food and simultaneously enhancing railway’s revenue by introducing the concept

of food plazas at stations. By the end of 2005-06, 36 food plazas were operational. The

sales turnover of the departmental catering units during 2005-06 was Rs.176.11 crore.

Licence fee realised from catering/ vending contractors amounted to Rs.84.16 crore in

2005-06.

Highlights of the Railway Budget proposals for 2008-09: Review of Performance : 2007-08 Double digit growth in traffic earnings maintained in first nine months. Growth in

passenger earnings was 14%. Expected growth in goods earnings was 14%. Gross

Traffic Revenues were 16% higher than the previous year and 2% higher than the Budget

Estimates. Operating Ratio is likely to improve from the budgeted 79.6 to 76.3 per cent –

best in last four decades. Return on Capital – an all time high of 21 per cent. Cash

Surplus before dividend was expected to be a record Rs.25,000 cr. Net Revenue was

expected at Rs. 18,416 cr and surplus after payment of dividend expected at Rs.13,534 cr.

Budget Estimates 2008-09



Freight loading target: 850 million tones. Revenues in Freight earnings to be Rs.52,700

cr; Passenger earnings to be Rs.21,681 cr. Gross Traffic Receipts to be Rs.81,901 cr – an

increase of 12.6 per cent over RE. Cash surplus before Dividend to be Rs.24,783 cr after

making an ad-hoc provision of nearly Rs.5000 cr for anticipated recommendations of the

VI Central Pay Commission.

Annual Plan 2008-09 The Annual Plan of Rs.37,500 cr is the largest ever Annual Plan so far. Thrust areas

include enhancement of high density network routes, improvement and expansion of

traffic facility and network, construction of flyovers, bypasses and upgradation of goods-

sheds.

New Lines - Rs.1,730 cr, Gauge conversion - Rs.2,489 cr, Electrification - Rs.626 cr,

Metropolitan Transport Projects - Rs.650 cr.

Track renewal - Rs.3,600 cr, Bridges - Rs. 600 cr, Signal & Telecommunication works -

Rs.1,520 cr, Road over/under bridges - Rs. 700 cr and manning of unmanned level

crossings - Rs.600 cr.

Passenger amenities - Rs. 852 cr, the highest so far.

Targets : New Lines - 350 kms, Gauge conversion - 2,150 kms, Doubling - 1000 kms.

Passenger Services

Trains -

10 new Garib Raths to be introduced.

53 pairs of new trains.

Extension of trains : 16 pairs.

Increase in frequency : 11 pairs.

300 additional services in Mumbai suburban.

Special train from Anandpur Sahib and Patna Sahib to Gurudwara Sachkhand Sahib

during tercentenary function of Shri Guru Granth Sahib of Gurta Gaddi.

Special train between Pune and Delhi for Commonwealth Youth Games being held in

Pune from 12th-18th October this year.



Amenities

Provision of on-line coach indication display board; on-line train arrival departure

information board; on-line reservation availability information board. Provision of

discharge-free green toilets in all 36,000 coaches in XI Plan period at a cost of about

Rs.4,000 cr. LHB design coaches for all Rajdhani and Shatabdi trains over next few

years. Provision of LHB coaches with stainless steel bogies in Mail/Express trains.

Concessions Senior citizen concession for women enhanced to 50% from existing 30%. Free Monthly

Seasonal Ticket to girl students up to graduation level in place of 12th standard and for

boys up to 12th standard in place of 10th standard.

Improvements in ticketing Termination of queues at ticket counters targeted in two years. Ticket booking on mobile

phones; E-ticket for waitlisted passengers. Increase in Unreserved Ticketing Systems

counters to 15,000 and ATVMs to 6000.

Reduction in passenger fares One rupee discount per passenger for fares up to Rs.50 in non suburban Second Class

(ordinary and mail/express) 5% discount across the board for passenger fares beyond

Rs.50 for all non suburban Second Class (ordinary and mail/express). Increase in

discount for travel in new design high capacity reserved coaches. Reduction in fare – AC-

I : 7%; and AC-II : 4% (the reduction will be half for popular trains and during peak

period).

Freight Business Reductions & Concessions

5% reduction in freight rates for Petrol and Diesel. 14% reduction in freight rate of Fly-

ash. Liberalisation of Traditional Empty Flow direction incentive scheme 30% discount

on entire traffic in place of incremental traffic booked from goods shed. Increase in

discount on incremental traffic booked from private sidings from 30% to 40%. 6% freight

concession for traffic booked from other States for stations in North Eastern States.

New Initiatives Target for loading fixed at 850 MT in 2008-09. Blue - Print prepared for High Density

Network. Top priority being given to port rail connectivity projects. New and dedicated

iron ore routes to be upgraded/constructed. Work on Eastern freight corridor from



Ludhiana to Dankuni (Kolkata) and Western freight corridor from Delhi to JNPT to start

in 2008-09.

Procurement of Rolling Stock: All time high of 20,000 wagons, 250 diesel and 220 electric locomotives to be

manufactured. New Wagon Leasing Policy and Wagon Investment Scheme formulated to

increase availability of wagons in the system. Discounts for development of bulk and

non-bulk goods terminals.

Safety & Security Multi-pronged scheme to strengthen railway safety through various automatic devices

like anti-collision device etc. Rail accidents have reduced remarkably despite substantial

increase in gross traffic volumes. Fire resistant material to be used in coaches. Unmanned

level crossings at busy sections to be manned on a fast track basis. Integrated security

plan drawn up through installation of CCTVs, metal detectors etc.

Welfare Measures Social Welfare: 99% backlog vacancies for SCs/STs filled up in special campaign

launched since 2004. Appointment of candidates from SCs/STs/OBCs exceeded their

respective quotas in Group D appointments. Minorities welfare cells to be opened at

Railway Board and Zonal Railways. One time exercise of appointing Railway Porters as

gangmen and to other Group D posts. Mother-Child Health Express to be run on a pilot

basis at concessional fares in collaboration with Rajiv Gandhi Foundation for providing

medical facilities to mother and child.

Staff Welfare Per-capita contribution to Staff Benefit Fund to be increased by ten times from Rs.35 to

Rs.350 for 2008-09. Northern Railway Central Hospital at Delhi to be made centrally air-

conditioned. Two divisional hospitals at Jaipur and Hubli to be upgraded to central

hospitals. A new divisional hospital at Ranchi and an OPD block at Integral Coach

Factory to be constructed. Employees who joined Railways from other agencies/PSUs etc

and are eligible for pensionary benefits, would now be eligible for post retirement

complimentary passes as per the norms being set.

Future Vision Vision 2025 document aims at setting the roadmap for coming 17 years – customer

centric and market responsive strategic initiatives. Information Technology Vision 2012



aims at radical changes in IT applications on a common platform with focus on

improvement in operational efficiency, transparency in working ad better services to the

customers. Multi-Departmental Innovation Promotion Group at Apex Level. Public-

Private Partnership schemes to be launched for attracting an investment of Rs.1,00,000 cr

over the next five years for developing world class stations, rolling stock ad other

logistics. Commercial use of Railway land by Rail Land Development Authority to give a

boost to Railway Revenues.

Other Important Announcements A new rail coach factory to be set up in Kerala. A new wagon re-construction unit to be

set up at Garkha in Chapra District. Modernisation and development of Workshops at

Jamalpur, Lilluah, Perambur and Ajmer. Taking over of Mokama and Muzaffarpur

wagon factories. Setting up of a 1000 MW thermal power plant, a joint venture of Indian

Rail Bijli Company Ltd. with NTPC, at Nabinagar District of Auragabad, Bihar.

Sample Advertisements

[Source: Leading national daily newspapers]



Sizing up the Railways Ministers Philosophically speaking, the real driver of rail reforms is not Lalu, though he must get credit for

executing them. The real driver is competition – from roads in freight and from airlines and cars

in the passenger business. The market share of the railways in carrying freight fell from 89 per

cent to 40 per cent between 1951 and 1996, and is expected to fall to 28 per cent by 2011. Its

share of passenger traffic will fall from 68 per cent to 6 per cent in the same period.

Financially, the Railways was moving towards a debt trap. Between 1996 and 2001, its net

revenue receipts (NRR) crashed from Rs 4135 crore to Rs 1,071crore, a fall of 24 per cent per

annum. In what can be described as its worst years, this period saw three ministers: Ram Vilas

Paswan (1996-98), Nitish Kumar (1998-99), Mamata Banerjee (2000). If the railways was a listed

firm, these worthies would be on the next train out.

The worst falls came when Nitish and Mamata were ministers. While Nitish oversaw a fall of 29

per cent, Mamata managed to lower it by another 28 per cent. The very next year, Nitish, in his

second term (2001-04) was able to stem the fall and lowered it by just 6 per cent. Riding that

success, Nitish, doubled the NRR of Rs 4,479 Crore.

That’s where Lalu took charge. In two years, he has tripled this to Rs 14293 crore – the highest

ever rise. To put this number in perspective, it is India’s second highest profit maker, after



ONGC’s Rs 15,143 crore. The operating ratio has returned to below 90%. The question is: Can

Lalu better his own record? [Source: Indian Express, April 2006]

References 1. Business Line (May 6, 2006). ‘Railways Targets Operating Ratio of 77 in 2006-07.’

2. Business Line (July 26, 2005). ‘To Export or Not?’

3. Business Line (Nov 26, 2003). ‘Freight, Passenger Fares May Be Spared in Rail Budget.’

4. CMA (2006). ‘Basic Data 2006,’ Cement Manufacturers’ Association.

5. CRISIL (2005), ‘Study Report on Business Development and Business Opportunity Identification

for Indian Railways,’ A Study Sponsored by ADB.

6. ET (2005). ‘Dear Laluji, What is Freight Corridor?’ The Economic Times Online.

7. FIMI (2006). ‘Indian Iron Ore,’ Federation of Industrial Mineral Industries,

http://www.fedmin.com.

8. India Today (May 29, 2006). ‘The Best & Worst Ministers.

9. Indian Express (April 2006). ‘Sizing up the Railway Ministers,’ Express Survey on Railways.

10. IRRE (2006). Indian Railways Reservation Enquiry, http://www.indianrail.gov.in.

11. MOR (Various Years-a). ‘Year Book,’ Ministry of Railways, Government of India, New Delhi.

12. MOR (Various Years-b). ‘Annual Report & Accounts,’ Ministry of Railways, Government of

India, New Delhi.

13. MOR (Various Years-c). ‘Performance Budget,’ Ministry of Railways, Government of India,

New Delhi.

14. MOR (Various Years-d). ‘Memorandum Explaining the Proposals for Adjustments in Freight

Rates and Passenger Fares in the Railway Budget.’ Ministry of Railways, Government of India, New

Delhi.

15. MOR (1994). ‘Report of the Committee to Study Organisational Structure & Management Ethos of

Indian Railways,’ Ministry of Railways, Government of India, New Delhi.

16. MOR (2006-a). ‘Data Book 2006-07,’ Ministry of Railways, Government of India, New Delhi.

17. MOR (2006-b). ‘Rates Circular No 25 of 2006.’ 28th

March, 2006.

18. MOR (2006-c). ‘Trains at a Glance: July - November, 2006,’ Ministry of Railways, Government

of India, New Delhi.

19. MOS (2006). ‘Development of Indian Steel Sector Since 1991,’ Ministry of Steel,

http://steel.nic.in.

20. MOPNG (2006). ‘Growth of Indian Petroleum Industry at a Glance,’ Ministry of Petroleum and

Natural Gas, http://petroleum.nic.in.

21. Mumbai Mirror (April 20, 2006). ‘Has Lalu Pulled a Fast One on You?’ Mumbai Mirror,

Mumbai.



22. NCAER (2001). ‘The Indian Railways Report – 2001.’ Expert Group on Indian Railways,

National Council of Applied Economic Research, New Delhi.

23. Planning Commission (2006). ‘Towards Faster and More Inclusive Growth: An Approach to the

11th

Five Year Plan,’ Government of India, New Delhi. June 14, 2006.

24. Raghuram G and Gangwar R (2006). ‘Indian Railways in the Past Twenty Years: Issues,

Performance and Challenges,’ Indian Institute of Management, Ahmedabad, Study Sponsored by

Asian Development Bank.

25. Raghuram G and Shukla N (2006). ‘Turnaround of Indian Railways: Axle Loading,’ Indian

Institute of Management, Ahmedabad, Study jointly conducted with Railway Staff College,

Varodara, Sponsored by Indian Railways.

26. Sudhir Kumar (2005). ‘Indian Railways - A Turnaround Story,’ Presentation by Mr. Sudhir

Kumar in Assocham Seminar, June 30, 2005.

27. Wikipedia (2006). ‘Indian Railways: Railway Zones,’ http://en.wikipedia.org.

28 R.B.I. Bulletins

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