ECONOMICS PROJECT

Rail Transport In India

Submitted by:
Poorvi Medatwal B.Sc. SEM II (Pass course) ICG\2008\8480

Rail transport in India

INDEX Transport
Introduction Significance of the transport Modes of transport

Rail transport in India

Introduction Statistics Relevance Methodology Development of rail transport in India Development of railways under the plans Expansion of Chinese and Indian railways Fare freight ratio Deficits, inefficiency and finances Railway rates Current problems in Indian railways Suggestions to the problems listed Conclusion

Bibliography

According to Kurt Wienderfield, Transportation system is the sum of all the technical instruments and organization designed to enable persons, commodities and news to master space .The major means of transportation are rail, road, air water etc. India is a country where one can find every kind of land and terrain, from desserts to mountains. Due to this variety of terrains, there is a great variety of transport methods.

Transport
Transport is the movement of people and goods from one location to another. Transport is performed by various modes, such as air, rail, road, water, cable, pipeline and space. The whole country has a varied setup of transport system. Every city has an independent transport system that uses various transport methods from manual rickshaws to trains. Transport system of India is one of the biggest and most complex transport systems in the world. The Indian Railway is the world's biggest railway network. All parts of the country are equally well connected with roads as well as railways. However there are some parts of the country where trains cannot reach so one has to retort to roads only. Airways connect most of the country's urban areas.

Significance of Transport
Alfred Marshall, the classical economist has summed up the importance of transport in the following words, Thus, transportation industries which undertake nothing more than the mere movement of persons and things from one place to another have constituted one of the most important activities of men in every stage of advanced civilization.
1.

The transport system helps to broaden the market for goods and by doing so; it makes possible large scale production through division of labour. It is also essential for the movement of raw materials, fuel, machinery etc. to the places of production. The more extensive and continuous the production in any branch of activity, continuous the greater will be the need for the transport facilities.

2.

3.

It helps to open up remote regions and resources for production .By linking the backward regions with the relatively more advanced; it helps in the better in fuller utilization of resources.

4.

Expansion of transport facilities helps industrialization directly .the demand for locomotives, motor vehicles, ships etc. leads to the start of industries which specialize in the production of these goods.

Modes of transport
The different means of transport available in India are:
*

Water transport

Rail transport

Air transport

Road transport

Rail transport in India

Rail transport is the transport of passengers and goods along railways (or railroads), consisting of two parallel steel rails, generally anchored perpendicular to beams (termed sleepers or ties) of timber, concrete or steel to maintain a consistent distance apart, or gauge. Railways came to be operated in India for the first time in 1853.Indian Railways Hindi: Bharatiya Rail), abbreviated as IR () has a total state monopoly on India's rail transport. It is a commonly used mode of long-distance transportation in India. It link up the various distant regions of the country and increase the occupational mobility, covering a total length of 63,332 kilometers (39,233 miles). Its operations cover twentyeight states and three union territories and also provide limited service to Nepal, Bangladesh and Pakistan. It is one of the largest and busiest rail networks in the world, transporting 18 million passengers daily and more than two million tonnes of freight daily. IR is the world's largest commercial or utility employer, with more than 1.6 million employees.

Statistics (2005-06)

World's 4th largest rail network, with route length of 63,332 km. World's largest rail network under a single management. 300 storage and maintenance yards. 2,300 warehouses. 700 repair shops. 8,025 locomotives. 44,090 passenger coaches. 32,434 freight wagons. 6,974 Railway stations

Relevance of the Indian Railways

Indian railways are the single largest transport in Asia. It has fourth ranking in the world regarding transport. Also the railways have the first place in internal transport. 1. Agricultural development The railway helps in the movement of the produce by the small farmers to the large cities, thus making subsistence farming to commercial farming. Farmers can grow crops commercial crops for sale even in the distant markets. 2. Industrial development Industrial development requires cheap, efficient transport and adequate means of transport. Through efficient means of rail transport, factories get raw materials and laborers get food grains.
3. Mobility of Factors

Mobility of labour and capital in various sectors has increased due to development in the rail transport. Factors of production can move from one place to another easily and cheaply, thus removing the regional imbalances. 4. Revenue to the government Gradually railways have become a good source of earnings for the Indian government, which earlier proved to be a costly affair till late 19th century. 5. Expansion of trade Developments in the rail transport have helped in the establishment of profitable trade and economic relations in the country. 6. Development of cities It has greatly reduced the distances between the cities and villages and has provided opportunity to the rural unemployed people to get them employed in the nearby cities. 7. Economic development

Rail transport help bring about equilibrium between demand and supply and thereby check wide changes in prices. 8. Growth of market It facilitates the growth of markets. Resources can be withdrawn from different areas and also final goods can be sold at any part of the county. 9. Large scale production It has lead to the regional specialization of production. Goods produced at one place in bulk can be conveniently sold across different parts of the country. 10. Encouragement to tourism The rail transport has made a remarkable encouragement in the tourism sector. People are encouraged to visit different places as travelling became convenient and comfortable.

Railways Have an Edge

Rail transport have an edge over other means of transport, road transport in particular. Following points bring out this distinctive feature of railways:

Railways are much more economical in land use compared to road transport. It is estimated that the rail transport is four times more economical compared to the road transport in the use of land.

* * * *

As regards the use of energy, rail transport is found to be four times more energy efficient than the road transport. For a given level of traffic, cost factor is approximately six times lower in the case of railways compared to the other means of transport. Railways are much more environmental friendly compared to the other means of transport. Railways are major means of transportation which can use any one of the conventional sources of energy, i.e. coal, oil, or electricity.

Methodology

This is an analytical study based on secondary sources, various books, journals, periodicals, magazines, which have been referred for this study. Even internet has been used for the collection of required information.

Development of Rail Transport in India

Railways have revolutionized the transport system world over. It is the convenient mode of transport for long distances .It is most suitable for carrying heavy and bulky goods, materials, machineries etc. In fact railways play a crucial and vital role in the economic development of the country. Railways came to be operated in India for the first time in 1853 when the first railway train made its historian journey in the Bombay area from Bori Bunder to Thane, a stretch of 34 kms. The railways at present constitute a sizeable part of the countrys infrastructure .in 1905, a railway board was constituted for its management .In 1914, there were nearly 32,285 miles of railway lines. The railways construction slacked during the First World War (1914-1918) and in the next 30 years. The growth of railway since independence in 1947 has been rapid. As the Indian Economy moves in to a higher growth trajectory, Indian Railways have also stepped up developmental efforts and is preparing itself for an even bigger role in the future. At present, the Indian railways occupy a significant place in the Indian economy. It is the countrys biggest nationalized enterprise and also the largest in Asia and 4th largest in the world. It has the investment to the tune of Rs.23, 590 crores in 1994-95.The Indian railways employs nearly 1.7 million persons and have route of 62,500 kms.

Railway Development under the Plans

Broadly speaking, the progress and development of Indian railways under the five year plans has passed through the three stages, i.e. Expansion, modernization and self sufficiency in equipment. The main objective of planning in India in railways in the past was to expand railway traffic in such a way to avoid bottlenecks in the production process and to ensure an efficient rail transport system. The total outlay on railways in the first five year plan to seventh five year plan was Rs. 24,000crores. The main objectives of rail transport system under various five year plans are as follows:i. ii.

First Plan(1951-56) rehabilitation and replacement of over aged assets; Second Plan(1956-61) particular emphasis to prepare the railways for carrying the traffic generated by the new steel plants and the increased production of coal; Third Plan (1961-66) building up additional capacity so as to be ahead of the traffic demand and to prevent bottlenecks ; Fourth Plan to Seventh Plan modernization of the system to improve the efficiency of the operations and high priority to the development of the freight terminals to facilitate the free and smooth movement of wagons; accelerate the conversion steam locomotives to diesel and electric traction. Eight and Ninth Plans main thrust was on capacity generation, manpower planning and energy conservation, safety and consumer satisfaction. Tenth Plan (2002-07) emphasized capacity expansion through modernization and technological upgradation, improvement in quality of service and improvement in safety and reliability of railway services. It has seen a remarkable turnaround in the financial performance of the Indian Railways, making it possible

iii.

iv.

v.

vi.

for it to place increased reliance on internal resources and market borrowings for development. The actual mobilization of internal resources went up from a meager Rs.3,113 crores or 27% of total resource mobilization in its first year to a sizable contribution of more than Rs.12,000 crores or nearly 50% of the total resource mobilization in its final year.
vii.

Eleventh Plan (2007-2012)

emphasized particularly the need to increase

capacity on critical routes such as Delhi-Mumbai and Delhi-Howrah and Expects to provide World class transport services .The railways are taking a major initiative in shifting to Public Private Participation (PPP) .This will enable the railways to undertake a much large programme of capacity incrementation.

Progress and development of Railways since 1950-51

Particulars
1.Route length (kms) of which electrified route lengths(kms) 2.Passengers originating (millions) 3. Goods 93 156 197 380 666

1950-51
53,000 390 1,290

196061
56,200 750 1,600

1970-71
59,800 3,700 2,430

1993-94
62,600 11,260 3,700

2005-06
63,370 17,910 5,830

originating(million tonnes) 4. No. of locomotives Of which diesel Of which electric 5. No. of coaches 6.No. of wagons(thousands) 8,210 17 72 19,630 206 10,620 180 130 28,440 308 11,160 1,170 600 38,150 384 7,800 4,170 2,120 40,000 312 8,025 4,900 3,080 44,090 207

Expansion of Chinese and Indian Railways

Comparison between Chinese and Indian railways
(1992-2002)

China
New track Electrification Investment(billion $) Freight(2003-04)
(billion net ton kilometers)

India
682 5192 17.3 381 541

13797 8975 85 1724 478

Passenger(2003-04)
(billion passenger kilometer)

The mid term appraisal of the tenth plan document had noted that the Chinese railways is carrying 4.5 times more freight than the Indian railways , mainly due to the larger investments made in the Chinese railways in expanding and strengthening the infrastructure which also contributed towards improvements in the productivity of the Chinese railways . Indian railways carries more passengers than Chinese railways but the longer term of development of the railways in India depends crucially upon its ability to move freight , in keeping with the needs of the growing economy and at speeds and reliability determined by the need to be competitive.

Fare Freight Ratio

The fare freight ratio, i.e. the ratio of passenger fare per km and freight rate per tonne km, in India is among the lowest in the world, indicating the extent of crosssubsidization from freight to passengers. This is not a viable strategy since the railways are competing with the air traffic for premier segment and the airline sector is strongly competitive. Reducing cross-subsidization within passenger fares and between the fares of passenger and freight is now an urgent necessity. In any case, railways have to move towards aligning the fares with the cost in all modes and classes of traffic.

Deficits, Inefficiency and Finances

Deficits in the railway budgets for quite many years, in fact involved the railways into large indebtedness to the government as the rise in fares and free trades could not balance the budget. These deficits have been caused largely by three main factors: *

Rise in the cost of inputs like coal, diesel etc. Wages of railway personnel too have gone up. The rising expenditure that railways have to incur on fulfilling its social obligation. For example, it has to carry certain essential goods like food grains, fodder, salt etc., at charges less than its cost. Certain lines i.e. suburban trains have to be managed at concessional rates, which may even be unremunerative. Railways also have to incur large relief measures which reduce their earnings.

Finances of Indian railways

Year Total earnings Total expenses Net earnings Dividend to general revenue Surplus(+) Deficit(-)

(in crores) 2005-06 54,491 45,574 8,006 3,668 +4338 2006-07 65,980 50,200 15,780 4,240 +11,540

1950-51 260 210 50 30 +20

1980-81 2,260 2,500 120 320

2004-05 47,370 42,759 5,274 3,200 +2,074

-200

The table above gives the summary of the working of the Indian railways since independence. The first column gives total traffic earnings (which include passenger earnings, goods earnings, and other miscellaneous receipts).The total working expenses and also appropriation s to the depreciation reserve and the pension fund. Out of the net revenue or earnings, the railways pay a dividend to the government (as the sole share holder) and this is known as dividend to general revenues. The following data has been graphically represented in the above graph.

Railway Rates
Railways rates connected with the finances of railways, is that of the pricing of its services. The fixation of railway rates has also along been a problem because of the conflicting objectives of balancing the budget, as also of meeting its social obligations. A balanced approach is necessary in this regard, as the railways do not run for themselves alone, but equally importantly they do so in the interest of the economy. Any shortfall in this service has a multiplier effect on the level of activity in the country. Therefore, it sometimes happens that the raising of rates results in a larger loss to the economy than the gain to the railways. Again, concessions withdrawn or reduced to meet deficit affect adversely the vast consumers of essential goods or exports of the country, backward regions etc. Even in the advanced countries railways are made to offer concessions. In Germany and England for example, railways carry a substantial proportion of goods traffic at concessional rates to encourage foreign exchange earnings. Hence, what is needed is not merely a rational rate structure, i.e. one that makes sense in respect of different distances to be covered, different commodities with differences in rates and bulkiness of goods etc. But equally and in fact more importantly, it should be socially oriented to promote priorities of the society. As such, society should ensure that the finances of railways do not get upset. Either concession are met from general budget, or railway deficits (subject to efficient management) are made good by the government, or dividend and contributions by railways to the general budget be so tailored as to fit in with this policy.

CURRENT PROBLEMS IN INDIAN RAILWAY

Despite the large progress in railways there are still inadequate funds for the growing needs and railway also offer from certain short comings in their operation. A few of them are listed below:

Gross inadequacy

This is evident from several aspects of the railway system such as The total mileage which is still very small considering Indias large population, long distances, the growing agriculture and industry. This shortcoming is brought out pointedly if we compare it with other countries.
Country Railway mileage
(per one lakh population) Area wise(per 100 sq. miles)

Canada UK USA India

465 465 224 9.5

20.0 20.4 6.6 2.8

Unequal distribution
Its distribution is unequal with backward areas very much short of this service. In many areas in the south, as also in Madhya Pradesh, Tripura, Gujarat and Bihar, this service is woefully short.

Overcrowding
Overcrowding is a big issue, with the General compartment often two months in advance, to avoid a generally static waiting list. being packed beyond capacity. During the holiday seasons, reserved tickets have to be booked

Slow modernization
The pace of modernization has been slow indeed. The electrification of routes is far from satisfactory. Again other equipments such as signaling have not yet been fully updated. Trains with speed of more than 100km per hour are very few in number.

Accidents
The main problem plaguing the Railways is the high accident rate which stands at about three hundred a year. Although accidents such as derailment and collisions are less common in recent times, many are run over by trains, especially in crowded areas. Human error is the primary cause (83%) blamed for mishaps.

Level crossings and fencing

In many places, pedestrians, vehicles or cyclists may cut across the tracks to save time, causing a safety hazard to the railways. Reasons given are that suitable bridges or level crossings over the tracks are non-existent or inconveniently placed. Most railway land in India is not fenced or restricted in any way, allowing free trespass. In rural areas, cattle and other animals may stray onto the tracks, posing a much more serious safety hazard to fast-moving trains.

Sanitation
Sanitation is a significant problem on Indian Railways. Due to the size of the network and low speeds, journeys can last many days. The toilets on Indian Railways trains are of the direct-vent type (i.e. a hole in the floor), without any effluent storage tanks on board. This causes an accumulation of human waste on the tracks in places where the train stands still, such as in large stations. Due to the number of users, the toilets are often in bad condition.

Suggested measures

The major problem that the passenger faces is of overcrowding in trains. This is the root cause of many other problems arising in the Indian Railways in one way or the other.
1.Expansion and modernization of railway network

This requires large allocation of resources. The increase in the previous plans though impressive in money terms has not been much in real terms because of the large rise in prices. Large funds are required for the expansion of rolling stock, track renewal and extension of tracks as also for upgradation of technology. There is also an urgent need to make railways modernized as to make them safe to travel.
2. Huge rush / capacity of train :

To reduce the rush we have to design coaches in such a manner that maximum utilization of available space can be done. Use of chair-car coaches instead of sleeper. Some coaches should have space for standing only. Sideways of coaches should be designed for more capacity of luggage. 3. Comfort and User-friendly : Passengers should be provided with facilities to enhance their comfort .For that we need to keep in mind the below mentioned points: Seats should be comfortable and spacious.

Hangers for standing people should be of comfortable material.

Proper announcement for required information as upcoming stations. Automatic doors to avoid accidents.

Proper availability of light and air. Some seats are provided for Handicapped persons.

Conclusions
The progress, development and expansion of railways have revolutionized the transport system all over the world. The railways ushered in the possibility of cheap bulk and mass long distances transportation. But the remedial strategies have naturally to be multipronged. On one side the railways have to rationalize their fare and freight structure and make it largely cost based. Railways has to bring out large improvement in operations by switching over mainly to long and medium distance operations, adopt a forward looking transaction policy and inventory management, update technology, resort to aggressive marketing strategies and restore discipline and raise productivity. On the other planning commission has to treat the railways again as a core sector and provide it need based resources for renewal, replacement and development. The continued neglect of the railways will be suicidal. This is the only real national transport network for medium and long lead traffic, and along with the energy sector, this lays the foundation for sound economic development. A better coordination and regulation of both of these systems will go a long way in achieving optimum utilization of natural resources.

Bibliography

 KPM Sunderam Rudra Dutt, INDIAN ECONOMY, S.Chand 2008,57th revised

N.D.Mathur, Economic policy and planning

S.K.Mishra & V.K.Puri , Indian Economy, Himalayan publishing house, 27th

revised edition Planning commission of India, Eleventh Five Year Plan

http://articles.industrialsoft.org

http://www.indianrail.gov.in/abir.html

http://www.indianrailways.gov.in/deptts/stat-eco/yearbook-0607