Indian Railways Asset Utilization

Ravish Bharti

Indian Institute Of Foreign Trade, New Delhi

14-17 Batch

Indian Railways is an Indian enterprise owned by state. Owned by

the Government of India through Ministry of Railways. Railways started in

India in the year 1853 from Mumbai to Thane. In 1951 Indian Railways,

became one of the largest networks in the world. Indian Railways operates in

both long distance and suburban rail systems on

broad, metre and narrow gauges. It also have coach and locomotive production

facilities at many places in India and codes are assigned to identify their gauge,

kind of power and type of the operation. Its operations cover all twenty nine

states and seven union territories in India and it also provides very limited

international services to  Bangladesh, Nepal and Pakistan. Indian Railways is

the world's largest railway networks having 115,000 km (71,000 mi) of rail

track covering route of 65,808 km (40,891 mi) and 7,112 stations.

Source: IndianRailways.gov.in

Current Status:

In 2014-15, Indian Railways carried 8.4 billion passengers annually and more

than 23 million passengers per day and 1058.81 million tons of freight in the

year. In 2014–2015 IR had revenues of ₹1634.50 billion(US$24 billion)

consisting ₹1069.27 billion (US$16 billion) freight revenue and ₹402.80

billion (US$5.9 billion) revenue from passengers tickets.

Indian Railways is world's 7th largest employer for commercial/utility, by no. of

employees over 1.376 million employees as of 2013.

Indian Railways has 245,267 Freight Wagons,10,499 Locomotives (43 steam,

5,633 diesel and 4,823 electric locomotives) and 66,392 Passenger Coaches.

The trains are having 5-digit numbering system and runs 7421 freight trains and

12,617 passenger trains daily. As of 31 March 2013, 21,614 km (13,430 mi)

(32.8%) of the total 65,808 km (40,891 mi) route was electrified. Since 1960,

almost all electrified sections on Indian Railways use 25,000 Volt Alternating

Current(AC).

Source: www.Indianrailways.in

Major Issues:

Indian Railways is the largest public sector undertaking and it has various

complex problems. Some of them are below:

1. Indian Railways is facing good competition from road transport:

Lack of deliveries in Indian Railways is a hinder. Indian railways is facing good

competition from roadways. In upcoming Rail Budget measures has been taken

to make railways a far more profitable sector than roadways.

To proper utilize the finances 3 Pillars are identified —

1. Exploring new avenues to increase revenues

2. To Improve efficiency

3. Cooperation, collaboration and communication should be the hallmarks of

Railways.

India has aimed to spend a huge amount on railways over the next 5 years,

which would result in 12-15% GDP growth between 2015-16 to 2018-19.

Improvement in Productivity will add in India's manufacturing competitiveness

and will lower CO2 emissions on freight.

As per World Bank, India's logistics costs (at around 10-14% of sales) are 2-3

times the benchmark costs.

It is believed that the key reason for under investment in Railways versus roads

is significantly lower than what it is in global standards.

Rail is 20% cheaper mode than roads and the share of roads (at 57%) in Indian

freight movement is more than 1.6 times that of the Indian Railways. These are

few reasons behind the massive decline in the share of the Indian Railways in

terms of freight and to passengers also. Budget allocation in railways, is just

20% of roads.

2. Current Railways network is overburdened in India and is inadequate to

meet the challenges of a transactional economy.

IR is serving to integrate the markets thus stimulating the emergence of a

modern economy. IR is connecting industrial production centres, markets and

facilitates industrial development. It is also linking agricultural production

centres in distant markets. IR provides reliable, rapid and cost effective bulk

transportation system to energy sector, for moving coal from coal fields to

power plants and petrol products from refineries to potential markets. IR is

linking places, enabling large, rapid and low cost movement of people across

lengths and breadths of India. In this process, IR has become a symbol of

national integration and a strategic instrument for enhancing our defence system

also.

    IR contributes to India's economic development, accounting for about 1% of

the Gross National Product (GNP). It accounts for 6% of total employment in

the organised area directly and an additional 2.5% indirectly through its

dependent organisations. IR plays an important role in (HRD) human resource

development. Indian Railways having 63,000 km fulfilling country's transport

needs, Majorly in respect of long distance passenger and goods transportation.

Freight trains carry nearly 1.2 mn tonnes of goods and 7,500 passenger trains

carry nearly 12 mn passengers every day.

 It is also acknowledgeable that passenger and Freight traffic carried by the IR

has made an impressive growth since independence. The input in terms of route

kms, locomotives, passenger coaches and wagon capacity has just doubled

during the period but the traffic has increased to 6 times. These achievements

were by just an affordable technology and innovative operational strategies,

reduction of staff phase wise and operating costs and monitoring of movements

and maintenance activities.

3. Some regions are not in reach of Indian Railways due to unfavourable

conditions :

Indian Railways started nearly 23 years earlier than Chinese railways is

way beyond what China Railway corporation has achieved. Chinese have

reached almost to every region in their territory, While our areas are needed

to be relook for removing inequalities regionally and remove the hinders

geographically by use of high technology for better economic growth.

4. Railways in India is overburdened with Plenty of staff on its regular pay

roles.

Indian Railways staff cost is the highest component in revenue expenditure,

and it is one of the largest employer in India. Railway Budget’15-16

estimated that 33% of its earnings was spent on its staff wages and welfare

and other 17% on pension benefits. Another 19% was forecasted to be

spent on fuel. Savings must have been made due to fall in diesel prices.

About 70% of the Railways earnings is utilized as given above, which

means that a small amount is left for generating new assets or replacing the

old ones. This burden is a hinder in its further development.

5. Indian Railways has a massive outstanding payments to electric and diesel

power supply companies.

 Diesel cost accounts for Rs 22,000 crore and electricity at nearly Rs 12,500

crore a year. IR has to make a road map so that railways could reduce down

the energy bill in the coming five years with huge no.s. A very comprehensive

energy efficiency plan is to be implemented. Energy Auditing is to be done to

ensure systematic utilization of energy. Solar , Wind and other means of

renewable energy sources are to be identified at a cheaper rate for consumption

in railways. Railways is also planning for manufacturing of dual energy

locomotives that run on for diesel and electric energy as well. This dual-mode

locomotive is heavier than the diesel locomotive and will run at a max. speed of

135 km/hr.

8. Major Chunk of equipment used by the Indian Railways are obsolete now and

need immediate replacements.

We are incurring loss due to obsolete and aesthetically bad looking trains. Their

Designs are outdated and dirty. Indian Railways which could be a cash cow for

Indian economy is lacking far behind. Indian Railways are aimed to be modern

like what other nations has did with their railway industry, a modernised look

has been given. There a big contrast between airport facilities and railways

facilities in India. Market for Long route travel which people aim to enjoy by

railways are now captured by airline industry.