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IR (IR) is one of the largest and busiest rail networks in the world, transporting over 17 million passengers and more than 2 million tons of freight per day. It is the world's eighth largest commercial or utility employer, with more than 13 lakh employees. IR operates long distance and suburban rail systems on a multi-gauge network consisting of Broad, Meter and Narrow Gauge. It passes through the length and breadth of the country over a total route length of 64,460 kilometers, over 7146 stations and owns 229,381 wagons, 55,339 coaches and 9549 locomotives of rolling stock (IR Year Book, 2011). According to the World Bank, IR is one of the top five national railway systems in the world; others being the United States, Former Soviet Union,(FSU) Canada and China (WTO,1998).
The first train in India was run on 22 December 1851 for the hauling of canal construction material in Roorkee (Milne 1995). Later, on 16 April 1853, the first passenger train service was run between Bori Bunder in Bombay and Thane, covering a distance of 34 kilometers. There were forty-two rail systems by 1947 and in 1951, these were nationalized and integrated into one unit, to form IR. (Srivastava 1964)
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2.1 Organizational Structure of IR
IR is a Department, owned and controlled by the Government of India, under the Ministry of Railways and is administered by the Railway Board. IR operates with a four tier organization structure, of which the Minister of Railways is at the apex level, Railway Board at the next tier, Zonal Railways in the third tier, divisions and workshops, individual stations, yards and goods terminals in the last tier. The formation of policy and overall control of the Railways is vested in the Railway Board.
The organization structure is outlined in Figure 2.1.
Source: Annual Report and accounts, MoR, 2011-12.
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IR is divided into 17 Zones, including Kolkatta Metro, which are
further sub-divided into 68 Divisions, each having a Divisional Headquarter.
Each of the seventeen Zones is headed by a General Manager (GM) who
reports directly to the Railway Board. BWEL and BCL come under MoR in
2008 and 2010 respectively for the manufacture of wagons and structural
fabrication work. BSCL is engaged in manufacture of rolling stock.
The size of IR’s network, Zone - Wise and Gauge - Wise as on
31/03/2011 is given in tables 2.1 and 2.2.
Table 2.1: Zone - Wise Distribution of IR
Zone Head quarters Year of formation Route kilometer Southern Chennai 1951 5102
Central Mumbai CST 1951 3905
Western Mumbai 1951 6440
Eastern Calcutta 1952 2435
Northern New Delhi 1952 6968
North Eastern Gorakhpur 1952 3721
South Eastern Calcutta 1955 2632
North East Frontier Maligaon 1958 3908
South Central Secunderabad 1966 5810
East Central Hajipur 2002 3656
North Western Jaipur 2002 5464
East Coast Bhubaneswar 2003 2646
South East Central Bilaspur 2003 2455
South Western Hubli 2003 3177
West Central Jabalpur 2003 2965
North Central Allahabad 2003 3151
Source: IR’s Year Book 2011, p.13.
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Table 2.2: Gauge – Wise distribution of IR as on 31-3-2011
Type of gauge Gauge span Route km Broad gauge 1676 mm 55188
Meter gauge 1000 mm 6809
Narrow gauge 762/610mm 2463
Total 64460
Source: IR’s Year Book, 2010p.13
In addition to the said Zones and Divisions, IR has certain production
units and public sector undertakings, which are briefly explained.
2.2 Production Units and Public Sector Undertakings
IR has its own manufacturing units to provide the essential rolling
stock required for its uninterrupted operation and developmental activities. It
runs workshops for the maintenance of wagons and coaches and for
outsourcing different activities such as development of land, catering,
ticketing etc. It has promoted several public sector undertakings. An
overview of the working of these units is given:
2.2.1 Production Units
There are six Production Units now in operation in IR for the
manufacture of locomotives and coaches and their ancillaries and spare parts.
The Production units are Chittaranjan Locomotive Works in West Bengal,
Integral Coach Factory in Tamil Nadu, Diesel Locomotive Works at Varanasi
in Uttar Pradesh, Wheel and Axle Plant at Bangalore, Railway Coach Factory
at Kapurthala in Punjab and Diesel Component Work at Patiala in Punjab. A
new coach factory is in progress at Rae Bareili, Uttar Pradesh to meet the gap
between production and requirement. Another coach factory is planned to be
set up at Palakkad, Kerala. In addition to these production units by IR, Bharat
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Earth Movers Limited (BEML), although independent of the Railways,
manufactures coaches for IR, Metro coaches for Delhi Metro Rail
Corporation (DMRC), and cars for Bangalore Metro.
Goods wagons for IR are manufactured mostly by firms in the private
sector and in railway workshops. On August 31, 2009, a unique collaborative
alliance was formed between IIT-Kanpur, Research Design and Standards
Organization (RDSO) of IR, and Steel Authority of India (SAIL) to develop
cost-effective corrosion-resistant rails for the first time in the country. RDSO
concentrates on the development of new designs, new technology and
standards for materials, technical inspection of safety items of rolling stock,
locomotives, signalling and telecommunication, equipment and track
components. Two independent units of IR are Central Organization for
Railway Electrification, Allahabad. (CORE) and Central Organization for
Modernization of Workshops, New Delhi.(COFMOW) There are two
important maintenance workshops in IR viz. Southern Railway Workshop,
(Golden rock), Tiruchirapally and Rail Spring Karkhana, Gwalior.
2.2.2 Public Sector Undertakings
Eleven public sector undertakings, which perform railway related
functions ranging from consultancy to ticketing, have been set up under the
administrative control of the Ministry of Railways, with specific objectives
assigned to them, which are briefly mentioned as under:
1. Container Corporation of India Limited. (CONCOR) - CONCOR was
established in March 1988 to develop multimodal transport logistics
infrastructure to support country’s growing international trade and
domestic traffic.
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2. Centre for Railway Information System (CRIS) - CRIS was set up in
1987 to develop IR projects which relate to computerization, which
includes Freight Operation Information System (FOIS), Passenger
Reservation System (PRS) and Unreserved Ticketing System (UTS).
3. Dedicated Freight Corridor Corporation of India (DFCCI)- The
project was conceived mainly due to capacity constraints faced by the
rail network, which envisages construction of dedicated freight lines
along the eastern and western sides,(Delhi and Mumbai) covering
2739 km through seven states. The construction of eastern freight
corridor started in February 2009.
4. IR Construction Company Limited. (IRCON) - It was established in
1976 for taking up construction of railway projects including
designing and construction, signalling, telecommunication and
electrical systems, railway tracks, manufacture of concrete sleepers,
workshops on turnkey basis or otherwise both in India and abroad.
IRCON has the distinction of being the first Indian construction
company to have ISO 9002 certification for its activities and also
Mini Ratna status by the Government of India.
5. IR Catering and Tourism Corporation Limited. (IRCTC) - It became
functional from August 2001 with the main objective to upgrade the
catering services on IR, develop food plazas and budget hotels at
railway stations, promote domestic and international tourism,
facilitates rail travel through internet based ticketing, provide pure
and safe packaged water to rail users and establishment of important
railway stations.
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6. 6. IR Finance Corporation Limited. (IRFC) - IRFC was incorporated
in 1986 for raising money from market to part finance the plan outlay
of IR for meeting its developmental needs by issuing bonds. IRFC
raises funds from market at 8-9 per cent and charges 12 per cent from
Railways. These funds are being invested by the corporation to
acquire railway assets such as wagons, coaches and locomotives
which are leased to the railways on payment of leasing charges.
7. Konkan Railway Corporation. (KRC)- It is the first railway project in
the country, commissioned in 1998 and executed on Build, Operate,
and Transfer (BOT) principle. Its length is 760 km between Mumbai
and Mangalore along the west coast passing through four states viz.
Maharashtra, Goa, Karnataka and Kerala. It has resulted in reduced
travel time, savings in fuel and less fare for passenger.
8. Rail India Technical and Economic Services Limited (RITES) -
RITES set up in 1974, a multi-disciplinary, ISO 9001-94 certified,
consultancy organization, is in the field of transportation
infrastructure and related technologies. It is now an internationally
recognized leading consultancy organization with operational
experience in 59 countries.
9. Railtel Corporation of India (RAILTEL) - RAILTEL was incorporated
in 2001 to modernize IR communication system for safe and efficient
train operations and to generate revenue through commercial operation
of the system.
10. Rail Vikas Nigam Limited. (RVNL)- RVNL was set up in 2003 to
undertake project developments, financial resource mobilization and
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execution of projects on a commercial format using non-budgetary
funds.
11. Rail Land Development Authority (RLDA) - RLDA was set up in 2005
through an amendment of the IR Act, 1989 for the development of vacant
railway land for commercial use for the purpose of generating revenue.
Railway land sites not required for operational or for expansion purposes
are identified by Zonal Railways and entrusted to RLDA for commercial
development.
In addition to these corporations, IR has formed six Special Purpose
Vehicles (SPVs) for undertaking network expansion projects. Of these, three
are operational- Pipavav Railway Corporation Limited (PRCL), Kutch
Railway Company Limited, (KRCL) and Hassan Mangalore Rail
Development Company Limited (HMRDCLL). Pipavav Railway Corporation
Limited (PRCL) is formed as a joint venture company of Ministry of
Railways with equal equity participation of Railways and Gujarat Pipavav
Port Limited. This is the first railway infrastructure executed through Public
Private Participation (PPP) for freight operation and the line was
commissioned in March 2003. PRCL also operates 9 pairs of passenger
services on different sections of Pipavav railway.
2.3 Development of Railways
The progress in capital-at-charge, physical assets and the number of
stations of IR from 1853 to 1951 is explained in table 2.3.
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Table: 2.3 Progress of IR up to 1951
YEAR 1853 1900 1920 1940 1951
Capital-at-charge (In crores) 90 329.6 626.8 853.8 827
Route km 7679 39834 59592 66067 53596
No. of stations *NA 3627 6726 7286 5976 Rolling stock: A) Locomotives:
Steam: NA 4629 9365 8414 8120
Diesel: Nil Nil NA NA 17
Electric: Nil Nil Nil 72 72
B) Coaches NA 17272 24951 23450 19168
C) EMUs Nil Nil Nil 438 460
D) Wagons NA 88612 201194 215253 205596
No. of Staff (in thousands) NA 350 752 728 914 *NA-Not Available. Source: IR: M. A. Rao, 1975, p.22. Figures prior to 1947 relates to Railways of undivided India.
Immediately after independence there was a reduction in rolling stock,
route kilometer and in the number of stations due to the partition of India.
However, the number of employees did not decrease considerably as majority
of the staff preferred India as their motherland. The number of EMUs was not
affected since Pakistan lacked a suburban rail system.
2.3.1 Road Map of Development of Railways after Independence.
The growth of IR can be observed under two era viz. Era of
integration and regrouping and the Era of Planning.
a) Era of Integration and Regrouping (1949-1951) Acworth,
Inchcape, Pope, and Wedgewood Committees recommended for
regrouping of Railways. When India attained independence, there
were 9 nationalized and 33 state railways. To overcome unnecessary
correspondence and inter-railway adjustments, the Railways were
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reorganized into 6 zones with the conditions that each zone having a
route length of 5000-6000 km, must serve a population of 5 crores
and have revenue of 50 crores. Southern Railway was the first zone
formed, consisting of Madras, Southern Mahratta, the South Indian
and the Mysore Railways on 14th April, 1951.
b) The Era of Planning (1951 onwards) - Under different Plans, many
developments have taken place.
Table 2.4: Progress of IR from 1951 to 2011
Infra structure: 1951 1961 1971 1981 1991 2001 2011 Route Km 53596 56962 59997 61240 62231 63028 64015
Electrified % 0.7 1.3 6.2 8.7 16.0 23.6 30.5
Number of stations 5976 6523 7066 7035 7100 6843 7146
Number of staff (‘000s) 914 1163 1379 1574 1655 1549 1328
Rolling stock ( in number)
Steam Loco 8120 10312 9387 7469 2915 54 43
Diesel Loco 17 181 1169 2403 3750 4702 5137
Electric Loco 72 131 602 1036 1743 2810 4033
Passenger coaches 13109 20178 24676 27478 28701 33258 46218
Goods Wagons 213270 307907 383990 400946 346103 222193 228401
Passenger Earnings (in crores) 98 132 296 828 3148 10515 28417
Goods Earnings (in crores) 139 281 601 1551 8247 23305 60687
Selected financial indicators: (in crores) Capital at charge
827 1521 3331 6096 16126 43052 104545
Gross traffic receipts 263 457 1007 2624 12096 34880 94535
Total working expenses 210 358 847 2536 11154 34667 89474
Net revenue 48 88 145 127 1114 1071 6346
Source: IR Year Book for various years.
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After 1991, the electrified route kilometer has increased considerably
and the number of stations reduced from 7100 to 6843 due to the temporary
closure of stations for gauge conversion. The number of employees reduced
from 15, 49,000 in 1991 to 13, 28,000 by 2011. Railways concentrated on
Uni-gauge Policy and the Capital-at-Charge increased from ` 16126 crores in
1991 to ` 43052 crores in 2001. Seventh and Eighth plans concentrated on
strengthening of railway assets to meet the increasing demand. Table 2.5
shows the indices of growth of traffic output vis-à-vis inputs to show the
productivity.
Table 2.5: Indices of growth of traffic Output and Inputs from 1950-51 to 2009-10
(Base=100) Output Indices Investment Input Indices
Year Freight traffic (NTKM)
Passenger traffic (PKM
(Non-Suburban)
Wagon capacity
Passenger coaches Route km Running
track km
50-51 100 100 100 100 100 100
60-61 199 110 152 154 105 107
70-71 289 159 226 188 112 121
80-81 356 279 269 210 114 128
90-91 550 394 278 219 116 133
00-01 715 614 246 254 118 138
05-06 1001 849 241 291 118 142
06-07 1094 972 243 297 118 144
07-08 1185 1084 247 311 118 144
08-09 1251 1189 283 321 119 147
09-10 1363 1288 299 332 119 147
Source: IR Year Book 2009-10
It is evident from the table that during a period of 50 years from 1950-51 to 2000-01, an increase of 38 per cent (138-100) in route km and an increase of 154 per cent in passenger coaches have resulted in an increase of 514 per cent (614-100) in passenger traffic. Similarly, with an increase of 146
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per cent in wagon capacity along with increase in route km during the period 1950-51 to 2000-01, contributed to a 615 per cent (715-100) increase in freight traffic.
However, during 2005-06 to 2009-10, an increase of 10.68 per cent in route km and an increase of 14.08 per cent in passenger coaches have resulted in a corresponding increase of 109.77 per cent in passenger traffic. Similarly, an increase of 24.06 per cent in wagon capacity in 2005-06 to 2009-10 has led to an increase of 36.16 per cent in freight traffic. The abrupt increase in productivity from 2005-06 warrants an in-depth study into the infra structure improvement. Hence, details regarding the infrastructure improvement from 2004-05 to 2009-10 is examined in table 2.6.
Table 2.6: Infrastructure improvement from 2004-05 to 2009-10 (in km)
Year 2004-05 2005-06 2006-07 2007-08 2008-09 2009-10 Total New lines 150 180 250 156 357 258 1351
Gauge conversion 779 744 1082 1549 563 1516 6233
Doubling 282 231 386 426 363 448 2136
Electrification 320 170 361 502 797 1117 3267
Source: Annual reports of various years.
It is evident from the table that during the period, gauge conversion
and doubling work improved except in 2008-09 since Railways concentrated
on electrification and new lines construction. Gauge conversion, doubling
and electrification were at the highest in the year 2009-10.
The infrastructure improvement and productive activities of IR are
meant to improve the quality and quantity of the services rendered to the
public. Hence, the different types of services rendered by IR are examined.
2.4 The Services
The important services provided by IR are passenger services, freight
services and miscellaneous services. IR also performs certain services in hill,
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sub-urban and metro railways including allied services like, multi-modal
transport.
2.4.1 Passenger Services
Rail service is considered as the most preferred form of long distance
journey. IR operates about 11000 passenger trains and transport 20 million
passengers daily across twenty seven states and two union territories. Sikkim is
the only state not connected by rail. Most of the long distance trains have two to
three classes of travel such as AC, First and Second, which have differential
pricing system for various amenities. The amenities in trains depend on the
popularity, type of train and length of the route. The different classes of travel in
IR are given in the table 2.7.
Table 2.7: Classes of travel in various trains
H1- First Class AC Most expensive sleeping accommodation, Carpeted coaches with personal
coupes. Bedding is included in the fare; carry only 18 Passengers in a coach.
A- AC two tier AC coaches with sleeping berths, spacious leg rooms, curtains and individual
reading lamps. Bedding is included in the fare, can carry 48 Passengers.
FC- First Class Same as first AC without Air Conditioning and is not very common now.
B - AC three tier AC with three tier sleeping accommodation carries 64 Passengers in broad
gauge. Bedding is also provided.
CC- AC Chair car An AC seated coach with a total of 5 seats in a row used for day travel
between cities.
D- De-reserved coaches Reserved sitting facility during day time.
EC- Executive class Chair car An AC seated coach with a total of 4 seats in a row for day travel between
cities.
SL- Sleeper Class Regular sleeping coaches with three berths, carries 72 passengers per coach.
2S-Second class sitting Only seating arrangements with cushioned seats.
Source: Own compilation
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Reservation against cancellation (RAC) is a provision for shared berth
in case the travel ticket is not confirmed. It is a way of maximizing the
number of waitlisted passengers to be accommodated in case of cancellation.
Presently, Railways serves as many as 21 classes of seats/berths and nine
categories of train services (Annual Report, 2010). Many innovations are
being done in ticketing and coaching services.
2.4.2 Freight Services
IR provide door-to-door services to raw materials, ores, minerals and
station-to station services to finished products like steel and cement and also
transports vehicles over long distances. Green van is a special type
refrigerated van used to transport fresh food and vegetables. Recently, IR
introduced the special Container Rajadhani- CONRAJ for high priority
freight. Companies are being allowed to run their own container trains under
a privatization scheme. Out of the total freight, 31 per cent of traffic
originates in industries, 58 per cent from mines and 11 per cent from ports
(Indian Railway Magazine, 2010). Freight trains run regularly between India
and Pakistan, India and Nepal and also between India and Bangladesh. A
number of concessions and loyalty discounts are given to attract more
customers to freight traffic.
2.4.3 Miscellany Services
Miscellany services include Sundry services and Other coaching.
Sundry services include renting of advertisement space, parking, catering and
land lease. Other coaching includes parcel and luggage transportation
services, special trains for armed forces and pilgrimages. The pricing is made
according to quality of service and speed of trains. In the parcel segment,
speed and reliability counts more than the price. Railway’s sundry earnings
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have increased to ` 2600 crores from ` 1000 crores during 2004-2008. (IR
Annual Report, 2010).
The composition of freight, passenger and miscellaneous earnings are
shown in the form of a Pie diagram.
Figure 2.2: Composition of freight, passenger and miscellaneous earnings.
2.4.4. Multi Modal Transport
Multi Modal transport is nothing but, the involvement of more than one
mode of transport for the movement of material and men from the place of origin
to destination. Multi Modal Transport for the carriage of materials has been
affected through containerisation, “Roll On Roll Off” (RORO) and that of men
by trains Multi Modal Transport System (MMTS)) in Hyderabad / Secunderabad
suburban areas.
Containerisation could be defined as a means by which goods are
transported within lounge uniform containers or boxes that could
conveniently be carried by and transferred between different modes of
transportation. RO-RO service in Railways is a win-win strategy of
compromising with the competitor for mutual advantage. Under this scheme,
Freight64%
Passenger31%
Miscellany5%
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loaded trucks are rolled on flat wagons and moved to destination where they
are loaded off the wagon. This requires tie-up with road transport agencies
and customized trucks to maximize rail throughput. It eliminates a lot of time
lost in intermodal transshipment. Konkan Railway pioneered the RO-RO
concept in India in 1999 on its route between Mumbai (Kolad) and Goa
(Verna). Multi Modal Transport System, Hyderabad (MMTS) was
inaugurated on 14 February 2004 and was jointly taken upon 50:50 cost
sharing basis by South Central Railway and Andhra Pradesh government.
2.4.5 Services in Hill Railways
The rail-lines to carry passengers to the hill stations are popularly
known as hill railways, which connects hill stations built for British settlers.
Till 1920 there were four such rail lines built by different companies in four
different parts- Simla in the north (Kalka 1903), Darjeeling in the east,
(Himalayan Railway 1872), Ooty in the south (Nilgiri 1899) and Matheran in
the west (Light railway 1907). All are unique in character: Darjeeling with
loops and gradients, Nilgiri with gradients or slopes, Simla with numerous
bridges (969) and tunnels (103), Matheran with sharpest curves and Kangra
valley with natural beauty.
2.4.6 Suburban Rail Services
Suburban networks operate in Mumbai, Chennai, Kolkata, Delhi,
Lucknow, Hyderabad and Pune. Hyderabad, Mumbai and Pune do not have
dedicated suburban tracks but share the tracks with long distance trains. Only
Mumbai, Kolkata and Chennai have extensive suburban rail services.
Chennai has a combination of surface and elevated metro (MRTS) and the
trains are run mostly on an elevated structure. Suburban trains that handle
commuter traffic are mostly Electric Multiple Units (EMUs). The rakes in
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Mumbai run on direct current while those elsewhere use alternating current.
Delhi has limited suburban rail services and a far more extensive metro.
2.4.7 Metro Rail Services
New Delhi, Chennai, Kolkata and Bangalore have their own metro
networks. India’s first underground railway, the Kolkota Metro, commenced
on 24 October 1984, offers an efficient, comfortable, safe and eco friendly
transport from Tollygunge to Dum Dum (16.45km) and now it has a total
route kilometre of 25.14 kms (IR Annual Report, 2011). Ballast less tracks
have been devised for the metro in which the rails will rest on the rubber pads
placed on concrete sleepers fixed directly on a concrete bed. Delhi Metro Rail
Corporation Limited (DMRC) is the implementing agency for the Delhi
Metro and the project has become operational since 2002 with three
corridors with a total length of 61.8 km. The ticketing system is fully
automatic and the metro passengers have the option of using contact less
smart cards and tokens, which can be used for single and return journeys. It
became the first railway project to be registered for carbon credits and
energy-efficient urban transport system by the United Nations in 2007 (http:
//world transport. org). Chennai Metro is another rapid transit rail system,
which is under construction. It is expected to be fully operational in 2014-15.
It will have two corridors one from Tiruvottriyur to Chennai airport and the
other will be from Chennai Central to St. Thomas Mount. Almost half the
routes will be underground and the rest will be elevated.
2.4.8 Tourist Services
In addition to these services, certain special trains are also run to cater
to the needs of tourists, international travelers and fast travelers. Tourist
trains include the following:-
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Palace on wheels, which is a specially designed train in Rajasthan,
operates between September and April to promote tourism in Rajasthan.
Royal Rajasthan on wheels is a new luxury train, which is an advanced
version of Palace on wheels. Deccan Odyssey is a luxury train introduced by
Maharashtra Government covering various tourist centers in Maharashtra and
Goa. Golden Chariot is another luxury train introduced by the Govt. of
Karnataka in December, 2010, connecting popular tourist destinations in
Karnataka and Goa. Shivalik queen is a special tourist train which runs
between Kalka and Simla. Another tourist train – The Maha Parinirvan
express – Buddhist Circuit Special has gained popularity among the domestic
and foreign tourists, which has been awarded the National Tourism Award of
Excellence in 2009-10 (IR Annual Report 2010).
International tourist trains include Samjhauta express which runs
between India and Pakistan and Thar Express which connects Khokhrapur
(Pakistan) and Munabao (India). Trains for fast travelers include Bhopal
Shatabdi train, which is the fastest train in India having a maximum speed of
150 km per hour in Faridabad- Agra section. Rajadhani Express and
Shatabdi Express are the fastest (130-140 km/hr) and most luxurious
superfast fully air- conditioned trains of IR. Duranto Express trains are non-
stop, fully AC, end to end service in many routes introduced in July 2009.
The following Heritage Trains run by IR also come under the
category of tourist trains. Frontier Mail is one of the oldest trains running on
IR, between Mumbai Central and Amritsar started in September 1, 1928. It
was the fastest train during the British Period. Deccan Queen was started on
June 1, 1930 and was one of the first inter-city trains of India which runs
between Mumbai and Pune. Flying Rani started its first trip on 1 May 1937
from Mumbai to Surat, takes 4 hours 40 minutes to complete the journey.
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This is the first train on which double decker coaches were introduced
recently.
While carrying passengers and goods from one place to another,
Railways consider their safety and security. Therefore, the study also
considers the safety and security measures taken by IR.
2.5 Safety and Security
Safety represents safety in operation of trains to prevent accidents and
security represents protection to passengers by prevention of crimes and
maintenance of law and order in trains and in station premises. Security has
become a major concern and passengers expect security in trains and stations
during rail travel.
IR created a Special Railway Safety Fund (SRSF) in October 2001, based
on the recommendations of the Khanna Committee for liquidating the arrears of
replacement of over aged assets like tracks, bridges, rolling stock etc (Arpita
Mukherjee 2004). Regarding safety, in 2003, the then Railway Ministry prepared
a Corporate Safety Plan with an outlay of ` 31835 crores for the next ten years
with the objective of realizing a vision of an accident-free and casualty-free
railway system.
As a result of safety measures taken by Railways to prevent accidents,
there has been a declining trend in the number of train accidents from 415 in
year 2001-02 to 194 in 2007-08 and further to 177 in the year 2008-09.
Considering the size of operations, eliminating accidents in Railways is an
unrealistic goal, and at best they can only minimize the accident rate. Human
error is the primary cause (83%) blamed for mishaps. The Konkan Railway
route suffers from landslides in the monsoon season, which has caused fatal
accidents in the recent past.
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Each and every train accident is inquired either by a Committee of
railway officers or by the Commissioner of Railway Safety depending upon
the seriousness of the accident. During the years 2006-07, 2007-08, 2008-09
and from April to July 2009, a total of 613 consequential train accidents took
place on IR, out of which, 80 were inquired into by the Commission of
Railway Safety and balance 533 were inquired into by the Departmental
committee (IR Annual Report 2010).
Security in trains is monitored by the combined efforts of Railway
Protection Force (RPF) and Government Railway Police (GRP). RPF has
been entrusted with the duties of security of railway property, passenger areas
and passengers. It has to deal with offences such as unauthorized alarm chain
pulling, roof travelling, touting, ticketless travel, unauthorized entry into
ladies coaches, unauthorized vending, trespass etc. RPF is assisted with the
GRP under respective state governments in controlling crime over Railways.
To provide services with safety and security and to run production
units and public undertakings, adequate finance is required. In this context,
railway finance is reviewed.
2.6 Railway Finance- An Overview
As per the Acworth Committee recommendations, Railway finance
was separated from general finance. IR has its own Finance Department
under the control of the Finance Commissioner, who is vested with the
powers to sanction railway expenditure subject to the general control of the
Finance Minister. The financial arrangements between the Central
Government and the Railways are periodically reviewed by the Railway
Convention Committee. The Railway Budget deals with the induction and
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Turnaround in Indian Railways- A Study with Special Reference to Southern Railway 65
improvement of existing trains and routes, the modernization and most
importantly the tariff for freight and passenger travel.
Railway raises its funds through budgetary support from the Centre,
own funds generated out of revenue and IRFC funding for acquisition of
rolling stock. In addition to these sources, Japanese funding for DFC, debt
and equity participation raised by RVNL/ other SPVs to finance projects, cost
sharing by State Governments/Government agencies, Viability Gap Funding,
Wagon Investment Scheme (WIS), rolling stock leased from manufacturers,
Public Private Partnership (PPP) – BOT, BOLT etc.
While the revenue expenditure is met entirely by Railways itself, the
shortfall in the capital (plan) expenditure is met partly from borrowings
(raised by IRFC) and the rest from budgetary support from the Central
Government.
2.6.1 Unique Accounting Procedure
The accounting procedure of Railways combines both the Government
accounting and Commercial accounting as it has the dual role as a
government department and as a commercial undertaking. The two sets of
accounts are inter-linked by operation of suspense accounts such as demand
payable, demand recoverable etc. for unrealized profits and unrealized
expenditure of the financial year. The accounts of zonal railways and
independent units are closed every month and submitted to Railway Board
for further submission to Ministry of Railways. A large number of
transactions remain unadjusted in respect of adjustments of transfers between
Railways and it results in untrue picture of accounts, which makes
managerial control difficult.
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66 Turnaround in Indian Railways- A Study with Special Reference to Southern Railway
2.6.2 Beginning of a Crisis and Turnaround
During liberalization period, the demand for value added transport
services increased and IR faced capacity constraints in high density corridors
and suffered from monopoly induced inefficiency. Moreover, IR increased
the freight rates to subsidize passenger transport. This led to a shift in freight
traffic from rail to road transport. Similarly, the upper class rates were
increased to subsidize lower class rates, which led to a shift in passenger
traffic from railways to airlines. Also, higher freight charges for commodities
like petroleum, steel and cement increased the cost of production and affected
India’s global competitiveness. Though the Railways took various measures
in early 2000 to re-balance tariff and involved private sector in non-core
activities, it suffered operational crisis and the operating ratio increased to
98.3 per cent.
In 2005-06, the Ministry of Railways formulated an Integrated Modernization
Plan for five years to upgrade the operations to global standards. Innovative
strategies were formulated to increase the revenue and reduce the cost. The
private players are allowed to participate through PPP in operating container
trains on designated routes, developing rail-side warehouses, logistic parks,
budget hotels, strengthening port connectivity, developing dedicated freight
corridors etc. After these measures, IR recorded an impressive growth in
cumulative cash surplus before dividend of ` 9000 crores in 2005, ` 14000
crores in 2006, ` 20,000 crores in 2007 and ` 25,000 crores in 2008-2009
fiscal years. Its operating ratio improved to 75.8 per cent in 2008-09. This
sudden change is technically termed as the ‘turnaround’.
However, based on the recommendations of the Sixth Pay
Commission, the salaries of all railway officers and staff are revised with
retrospective effect from January 1, 2006, resulting in an expenditure of over
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Turnaround in Indian Railways- A Study with Special Reference to Southern Railway 67
` 13000 crores in 2008-09 and ` 14000 crores in 2009-10. Consequently, the
ratio of staff costs excluding pension to working expenses have raised from
44 per cent of ordinary working expenses to 56.16 per cent in 2009-10 (IR
Annual Report 2010). This resulted in an increase in operating ratio to 94.2
per cent in 2009-10. During 2009-10, gross traffic receipts increased by 9 per
cent, whereas ordinary expenses grew by 21 per cent over the previous year.
Annual Growth rate of freight earnings fell from 12.65 per cent to 9.49 per
cent and that of passenger earnings from 10.52 per cent to 7.10 per cent. Net
revenue sharply declined from ` 13431 crores in 2007-08 to ` 4457 crores in
2008-09 and to ` 75 lakh in 2009-10.
Summary
IR is transporting over 17 million passengers and more than 2 million
tons of freight per day, across the country. IR progressed much since its
inception and also during various Plan periods. It provides passenger, freight
as well as miscellany services like other coaching and parcel services. It has
its own Metro, Suburban, tourist (both national and international) and MRTS
services, along with its hill rail services. With liberalization, the demand for
value added transport services increased and the Railways faced capacity
constraints in high density corridors and suffered from monopoly induced
inefficiency. Therefore, during that period, IR concentrated on infrastructure
development like, new lines, doubling, electrification and gauge conversion.
The population density in the southern part of the peninsula is high
and coal, iron ore and other mineral resources are concentrated highly in the
northern part. (Bengal, Bihar and Jharkhand areas) This unique feature of IR
gives enormous opportunities for the transport of people and material across
the country in all the directions. India also has an ancient history - the
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68 Turnaround in Indian Railways- A Study with Special Reference to Southern Railway
heritage locations and other historic centres of the world. Pilgrim specials are
run across the country almost throughout the year at various seasons to
different destinations. Therefore, IR has a greater potential to boost revenue
both from the passenger and freight segment.
IR have dual obligations and been functioning both as a government
undertaking and a commercial undertaking. As a part of its social obligation,
IR is running suburban trains, maintaining uneconomic branch lines and
providing a lot of concessions. At the same time IR have to generate profits
for its existence and future growth as a part of its commercial obligation.
With expansion in road network and increased production of luxurious
vehicles, competition from road transport has become a significant factor
influencing railway earnings. The cross subsidization of freight earnings to
passenger earnings resulted in higher freight rate which caused diversion of
freight customers from rail transport. Even in the passenger segment, upper
class fares were subsidized with lower class fares which resulted in increase
of revenue to the Airlines. For the past few years, IR has made investments in
non-remunerative projects ignoring commercial consideration. Poor
budgetary support also hindered IR. All these resulted in loss of revenue to
the Railways and a financial crisis in 2001.
However, a turnaround happened in IR in 2005-06. To get back the
lost revenue, value added services with improved technology, revision of
freight tariffs and passenger fares, introduction of PPP and outsourcing were
made. To find out the reasons for turnaround and to assess the impact of
various schemes taken during the turnaround period, they are taken
individually and analyzed in detail in the ensuing chapter.