chapter 2shodhganga.inflibnet.ac.in/bitstream/10603/24433/12/12_chapter2.pdfchapter 2 46 turnaround...

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)

Chapter 2

46 Turnaround in Indian Railways- A Study with Special Reference to Southern Railway

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.

IR-A Glimpse

Turnaround in Indian Railways- A Study with Special Reference to Southern Railway 47

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.

Chapter 2


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

IR-A Glimpse


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.

Chapter 2


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.

IR-A Glimpse


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

Chapter 2


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.

IR-A Glimpse


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

Chapter 2


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.

IR-A Glimpse


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

Chapter 2


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,

IR-A Glimpse


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

Chapter 2


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

IR-A Glimpse


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%

Chapter 2


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

IR-A Glimpse


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:-

Chapter 2


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.

IR-A Glimpse


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.

Chapter 2


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

IR-A Glimpse


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.

Chapter 2


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

IR-A Glimpse


` 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

Chapter 2


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.

chapter 2shodhganga.inflibnet.ac.in/bitstream/10603/24433/12/12_chapter2.pdfchapter 2 46 turnaround...

Documents