INTRODUCTION

Indian Railways (Bhāratīya Rail), abbreviated as IR, is the state-owned railway company of

India, which owns and operates most of the country's rail transport. It is overseen by the Ministry

of Railways of the Government of India.

Indian Railways has one of the largest and busiest rail networks in the world, transporting 20

million passengers and more than 2 million tones of freight daily.[5][6] It is one of the world's

largest commercial or utility employers, with more than 1.6 million employees.[5][7] The railways

traverse the length and breadth of the country, covering 6,909 stations over a total route length of

more than 63,327 kilometers (39,350 mi). As to rolling stock, IR owns over 200,000 (freight)

wagons, 50,000 coaches and 8,000 locomotives.[5]

Railways were first introduced to India in 1853. By 1947, the year of India's independence, there

were forty-two rail systems. In 1951 the systems were nationalized as one unit, becoming one of

the largest networks in the world. IR operates both long distance and suburban rail systems on a

multi-gauge network of broad, metre and narrow gauges. It also owns locomotive and coach

production facilities.

The Indian railways were initially both designed and built by the British, during their colonial

control of the continent.

Organizational structure

Indian Railways is a department owned and controlled by the Government of India, via the

Ministry of Railways. As of March 2010, the Railway Ministry is headed by Mamata Banerjee,

the Union Minister for Railways, and assisted by two ministers of State for Railways. Indian

Railways is administered by the Railway Board, which has a financial commissioner, five

members and a chairman.

History of Railways“ Indian railways are older more than 150 years ”

In the year 1832 the first railway running on steam engine, was launched in England. Thereafter

in may 1843 a young engineer graham Clark got down from a ship harbored at Mumbai (then

Bombay). He was sent to India at the insistence of the textile industrialist of Manchester ,

Lancashire, Liverpool, in England to find out how and in which part of India a railway can be

built which would be useful transport cheap cotton from Indian hinterland first to Bombay harbor

and then from there to England by ship.

Thereafter on 1st of august, 1849 the great Indian peninsular railways company was established

in India. On 17th of august 1849, a contract was signed between the great Indian peninsular

railway company and east India Company. As a result of contract an experiment was made by

laying a railway track between Bombay to thane (56 kms).

Important Years In Indian Railways

1832 Plans were proposed to introduce a rail network in India.1844 Private entrepreneurs set up a private rail system in India.

1851 Trains became operational.1853 Passenger trains were introduced.1875 95 million pounds were invested into Indian railways by British companies.

1895 Indian locomotives began to operate in the country.1901 A Railway Board was established.1907 The government obtained total control over most of the rail companies.1908 First electric locomotive was introduced.

1947 40% of the railway network came under Pakistan's possession.1951 Nationalization of the rail system in India took place.

1952 Six railway zones were introduced.1995 Steam locomotives became obsolete. Only diesel and electric locomotives were

operational.

1987-1995

The Indian Railways reservation system was computerized.

RAILWAY ZONES

The headquarters of the Indian Railways in New Delhi

Indian Railways is divided into zones, which are further sub-divided into divisions. The number

of zones in Indian Railways increased from six to eight in 1951, nine in 1952, and finally 16 in

2003. Each zonal railway is made up of a certain number of divisions, each having a divisional

headquarters. There are a total of sixty-seven divisions.

Each of the sixteen zones, as well as the Kolkata Metro, is headed by a General Manager (GM)

who reports directly to the Railway Board. The zones are further divided into divisions under the

control of Divisional Railway Managers (DRM). Further down the hierarchy tree are the Station

Masters who control individual stations and the train movement through the track territory under

their stations' administration.

Sl. No

Name Abbr. Date

EstablishedHeadquarters Divisions

1. Central CR1951, November 5

Mumbai Mumbai, Bhusawal, Pune, Solapur, Nagpur

2. East Central ECR 2002, October 1 HajipurDanapur, Dhanbad, Mughalsarai, Samastipur, Sonpur

3. East Coast ECoR 2003, April 1 Bhubaneswar Khurda Road, Sambalpur, Visakhapatnam

4. Eastern ER 1952, April Kolkata Howrah, Sealdah, Asansol, Malda

5. Konkan KR1998, November 26

Navi Mumbai Ratnagiri, Madgaon, Karwar, Mangalore

6. North Central NCR 2003, April 1 Allahabad Allahabad, Agra, Jhansi

7. North Eastern NER 1952 Gorakhpur Izzatnagar, Lucknow, Varanasi

8.North Western

NWR 2002, October 1 Jaipur Jaipur, Ajmer, Bikaner, Jodhpur

9.Northeast Frontier

NFR 1958 GuwahatiAlipurduar, Katihar, Lumding, Rangia, Tinsukia

10. Northern NR 1952, April 14 DelhiDelhi, Ambala, Firozpur, Lucknow, Moradabad

11. South Central SCR 1966, October 2 SecunderabadSecunderabad, Hyderabad, Guntakal, Guntur, Nanded, Vijayawada

12.South East Central

SECR 2003, April 1 Bilaspur Bilaspur, Raipur, Nagpur

13. South Eastern SER 1955 Kolkata Adra, Chakradharpur, Kharagpur, Ranchi

14.South Western

SWR 2003, April 1 Hubli Hubli, Bangalore, Mysore

15. Southern SR 1951, April 14 ChennaiChennai, Madurai, Palakkad, Salem, Tiruchchirapalli, Thiruvanathapuram

16. West Central WCR 2003, April 1 Jabalpur Jabalpur, Bhopal, Kota

17. Western WR1951, November 5

MumbaiMumbai Central, Vadodara, Ratlam, Ahmedabad, Rajkot, Bhavnagar

SOME MISCELLANEOUS FACTS ABOUT INDIAN RAILWAYS.

SOME FACTS:

The total route length of Indian railway is approximately 63,000 kms.

The first electric train was opened in February 1925 on Mumbai suburban railway on Mumbai Victoria Terminus (VT) – Kurla branch line.

As on 31st march, 2004 the electrified route was 17,503 kms.

The Indian railway largest in the Asia and second largest in the world after the USSR.

The total number of railway station in India is more then 7,000.

The Indian railway operates approximately 7,525 trains’ daily covering 7,031 railway stations.

The largest platform in India is at Kharagpur. The length is 2,733 feet. It is situated in west Bengal.

The longest railway tunnel is Konkan railway tunnel i.e. 65 kms.

The longest rail bridge is across Godavari River. The length is 10,052 feet.

The largest marshalling yard is at Mughalsarai.

The third class in the Indian railway was abolished in 1974. Now there are seven classes- AC-1st, AC-2T, AC-3T, Sleeper, AC chair car, first class and second class.

Railway set up a fund in 1974 to give financial assistance to victims of railway accidents.

As per the latest data Indian railway have more then 1.5 million employees

The Indian railways have 7,817 engine, 46,119 coaches and 2, 28,170 wagons.

The steam engines are being phased out and diesel and electric locomotives are being introduced. As on 31st march 2004 there were 45 steam, 4,769 diesel and 3003 electric locomotives.

India’s first metro railway was opened in kolkata on 24th October, 1984.

Rajasthan’s prestigious tourist train Palace on wheels, renamed the royal orient express, extended to Gujarat and the responsibility of its operation handed over to the tourism corporation of Gujarat.

About 27 % of the total route km on the Indian railway is electrified.

Computerized reservation increased to 92%.

Prestigious Konkan railway (760 km) project has been commissioned.

A new rail coach to run at a speed of 160 km per hour but 25% lighter than the conventional bogies has been developed by rail coach factory, Kapurthala.

On November 23, 1999, after a gap of 25 years a direct train link with Bangladesh was reopened.

On December 24, 2002, metro train service started in New Delhi.

RAILWAY BUDGET

Background

The Indian Railways (IR) is the world’s second-largest rail network under a single

management. IR operates approximately 11,000 passenger trains a day, around 5,000 freight

trains a week and employs nearly 1.412 million people. The freight traffic accounts for roughly

67 per cent of its revenues while the passenger traffic constitutes 33 per cent of its receipts.

The economic slowdown has significantly affected IR. Annual growth (year-on-year/y-o-y) in

freight loading (million tonnes) has actually declined 4.97 per cent in FY09 from 9.1 per cent in

FY08. The same had revenue implications. Growth (y-o-y) in total earnings moderated to 11.4

per cent in FY09 from 14.5per cent in FY08. The implementation of the sixth pay commission

contributed to a jump in working expenses growth to 32.3 per cent in FY09 from 9.3 per cent in

FY08. Consequently operating ratio (gross working expense to gross earnings) witnessed a sharp

increase to 90.5 per cent in FY09 from 75.9 per cent in FY08.

As the Indian economy recovers, key challenges confront IR. Strong growth in the previous five

years was complemented by optimal utilization of existing assets to improve operating ratios.

However, the need for augmenting investment in infrastructure and network has become

evident during the downturn and the same would have to form a crucial part of the

future strategy of the ministry.

Moreover infrastructure augmentation would have to be underlined by accelerating

investment in technical up-gradation. The same would require a larger proportion of operating

surplus. Balancing the imperatives of passenger pricing with a rational freight pricing policy

presents a challenging policy task to the railway minister.

The Indian railways have one of the largest networks of trains in the world and since the first rail

from Bombay to Thane stated in 1853, Indian railways has come a long way. Indian railways

carry millions of passengers daily from one place to another place. The ministry of railways

controls the Indian railways.

Every year the ministry of railways presents the Indian railway budget in the parliament. The

Budget is presented two days before the general budget. It has to be passed by the Lok Sabha

before it is accepted. The rail budget deals with the improvement in the existing trains and

contains details of the new trains. It also gives details about the passenger fares and tarries to be

levied.

Indian Railway Budget 2010-11

Railway Minister Mamata Banerjee has presented the Rail Budget in the Parliament on Feb 24,

2010. According to budget draft there will be no increase in the passenger fares of any class or

category of trains. Freight tariffs will also remain the same for 2010-11.

Railway has proposed INR 41,426 crore, the highest ever plan investment to provide efficient,

customer focused and modern railway network. Out of this allocation, INR 4,411 crore has been

proposed to achieve the target of 1,000 kilometers for new lines and INR 1,302 crore for

passenger amenities. The Plan would be financed through gross budgetary support of INR

15,875 crore, Diesel Cress of INR 877 crore, internal resources of INR 14,523 crore and EBR of

INR 10,151 crore including market borrowing through IRFC of INR 9,120 crore.

Railway is committed to take up socially desirably projects connecting backward areas of the

country. Surveys for 114 projects for such areas will be updated and surveys for 55 new lines

will be taken up during the year. 800 kilometer Gauge Conversion and 700 kilometers of

doubling the rail line will be achieved during the year besides a number of new projects on cost

sharing with state governments or through PPP route.

Annual Plan for FY2010-11

Annual Plan Outlay for FY2010-11 is proposed to be at Rs.41,426 crore, the highest

plan investment since independence. The resource mobilization is mainly from Gross Budgetary

Support of 38 per cent, internal resources to the extent of 35 per cent, around 25 per

cent via external borrowings and a small portion of 2 per cent through diesel cress.

The Budget estimates for FY2010-11 targets a freight loading of 944 million tonnes which is

around 6 per cent higher than the revised estimates. The annual plan also envisages an expansion

of 1,000 km to the existing rail network of 64,015 km.

As per revised estimates for FY2009-10, the Gross Traffic receipts stood at Rs.88,356 crore

and gross working expenses stood at Rs.83,440 crore. The net revenue stood at Rs.951 crore

(after meeting full dividend liability). In the Budget estimates for FY2010-11 the gross traffic

receipts are projected at Rs.94,765 crore (showing a growth 7.2 per cent from the revised

estimates) as against projected working expenses of Rs.87,100 crore (which has fallen by 1.4

per cent from the revised estimates). The net revenue after meeting dividend liability stood at

Rs.3,173 crore.

BUDGET PROPOSALS

Introduction

Economic viability and Social responsibility – main consideration for taking up of the

projects.

‘Inclusive growth and expansion of rail network’ for development of the country.

Special Task Force to clear proposals for investments within 100 days.

A separate structure will be created within the Railways for implementation of the

business models.

Commitments Fulfilled

Of the 120 new trains, extensions and increase in frequencies announced, 117 would be

flagged off by the end of March 2010.

Recruitment policy of the Railway Recruitment Boards (RRBs) has been reviewed.

RRB examination fee for woman candidates and those belonging to minority and

economically backward classes waived.

All question papers to be set in Hindi, Urdu, and English and in local State languages

and examination for a particular post will be held on the same date simultaneously by all

RRBs.

Izzat Scheme, implemented within three months of announcement.

Work initiated in all the 67 Multi-functional Complexes (MFCs). Development of

Adarsh Stations started in phases.

Passenger Amenities/Facilities

94 stations to be upgraded as Adarsh Stations

10 more stations identified to be converted as World Class Stations

Construction of additional 93 Multi Functional Complexes

Multi-level parking through PPP route.

SMS updates of reservation status and punctuality of trains to passengers,

SMS updates on the movement of wagons to freight customers.

RFID technology for tracking of wagons

to provide modern trolleys at all important stations to be handled by uniformed

attendants for senior citizens and ladies.

Allotment of iron ore rakes to be rationalized scientifically and would be accessible

through the web.

Introduction of e-ticket based mobile vans for issuing tickets.

Safety and Security

Automatic fire and smoke detection system to be introduced in 20 long distance trains.

All the unmanned LCs to be manned within five years.

12 companies of women RPF personnel named ‘Mahila Vahini’ to be raised.

Sports

Railways first recipient of Rashtriya Khel Protsahan Puraskar

Five Sports Academies at Delhi, Secunderabad, Chennai, Kolkata and Mumbai to be

setup.

Astro-turfs to be provided at more places for hockey.

Railways will be lead partners of Common Wealth Games.

Railways to run a Commonwealth exhibition train.

Culture and Heritage

To set up a Railway Cultural & Heritage Promotion Board for coordinating and

supervising all related activities on the railways.

To set up Rabindra Museum at Howrah and Gitanjali Museum at Bolpur to

commemorate 150th birth anniversary of Rabindranath Tagore.

To set up Shambhu Mitra Cultural Complex with performing arts and a music academy

at Howrah.

Staff Welfare and Health

A new scheme “House for All” to be launched, to provide residences to all railway

employees in the next ten years with the help of Ministry of Urban Development.

MOU entered with Ministry of Health and Ministry of Human Resource Development for

setting up of hospitals and educational institutions on surplus railway land.

To set up about 522 hospitals and diagnostic centres, 50 Kendriya Vidyalayas, 10

residential schools on the pattern of Navodaya Vidyalaya, model degree colleges and

technical and management institutions of national importance to benefit railway

employees and their children.

To set up 50 crèches for children of women employees and 20 hostels. Railways will

also provide more numbers of community centres and stadia.

Contribution to Staff Benefit Fund to be enhanced to Rs 500 per employee.

Scope of safety-related retirement scheme to be expanded to cover all safety category

staff with a grade pay of Rs 1800.

To extend Rashtriya Swasthya Bima Yojana to all licensed porters, vendors and

hawkers, from unorganised sector and socially challenged.

To set up a state-of-the-art advanced loco pilot training centre at Kharagpur, an advanced

railway track training centre at Beleghata and four multi-disciplinary training centres.

Railway Research

A Centre for Railway Research to be set up at IIT, Kharagpur. To establish strong

research partnerships with premier institutes like IITs, NITs, CSIR and DRDO.

Infrastructure

To modernize and augment the capacity of CLW to 275 locomotives.

A Diesel Multiple Unit (DMU) factory to be set up at Sankrail. Second unit to be

installed at ICF.

Wagon repair shop to be set up at Badnera.

Centres of Excellence in Wagon Prototyping to be set up at Kharagpur Workshop.

A new Rail Axle Factory to be set up in New Jalpaiguri under PPP/JV mode.

A Design Development and Testing Centre for Wheels to be set up at RWF, Bangalore.

A new MLR workshop of 250 coach capacity to be set up at Anara (Adra).

Five state-of-the-art wagon factories to set up at Secunderabad, Barddhaman,

Bhubaneshwar/Kalahandi, Guwahati and Haldia underPPP/JV mode.

Two workshops for POH of high axle load wagons to be set up in Maharashtra and

Dankuni.

Kisan Vision Project initiated at six locations, namely Dankuni, Mechheda, Nasik, New

Jalpaiguri, New Azadpur and Singur as pilot projects.

To set up a refrigerated container factory on PPP mode at Budge.

Freight Business

A modified wagon investment scheme for high capacity general purpose and special

purpose wagons to be introduced.

Private operators to be permitted to invest in infrastructure and run Special freight train.

To set up automobile and ancillary hubs at 10 locations.

Carbon Footprint

Railways to distribute 2.6 million CFLs to railway employees.

To introduce ten rakes with green toilets and install on diesel locomotives a GPS-based

optimized driver guidance system.

To set up 10 Rail Eco-parks to conserve, protect and promote Railways’ wetlands and

forest areas.

Other Projects

Preliminary Engineering-cum-Traffic Survey (PETS) to be taken up for north-south, east-

west, east-south and south-south DFCs.

Six high speed passenger corridors identified, to be executed through PPP mode. To set

up a National High Speed Rail Authority for planning, standard setting, implementing

and monitoring these projects.

To provide rail link between Akhaura on Bangladesh side and Agartala on Indian

side.

To new Railway projects viz., Jogbani (India) – Biratnagar (Nepal) new line and

Jaynagar (India) – Bijalpur (Nepal) gauge conversion with extension upto

Bardibas(Nepal) have been taken up to improve transport infrastructure between the two

countries.

Financial Performance in 2009-10.

Loading target of 882 MT likely to surpassed by 8 MT in 2009-10.

Gross Traffic Receipts kept at Rs. 88,356 crore, i.e an increase of 10.7%.

The full impact of VI CPC fully absorbed within the Railway resources.

The current dividend liability to be fully discharged.

Annual Plan kept at Rs 40,284 cr.

Budget Estimates 2010-11.

Freight loading targeted at 944 MT – an increment of 54 MT; number of passengers

likely to grow by 5.3 %.

Gross Traffic Receipts estimated at Rs. 94,765 crore, i.e Rs 6490 cr more than 2009-10.

The dividend payable to general revenues kept at Rs 6608 cr.

Budgeted operating ratio 92.3%.

Annual Plan 2010-11

Highest ever Plan Outlay at Rs 41,426 cr. an increase of Rs 1142 cr. over 2009-10.

New Lines – Rs 4411cr.

Passenger Amenities–Rs 1302 cr.

Metro Projects – Rs 1001cr.

Aquisition of 18000 wagons.

Additional budgetary support of Rs 3701 cr sought for 11 National Projects.

Surveys for 114 socially desirable projects connecting backward areas to be taken up.

54 Surveys for new lines,2 for gauge conversion,7 for doubling and 5 others to be

taken.

1021 km of New Lines to be completed. 9 new line projects announced.

800 km of gauge conversion and 700km of doubling targeted.

Several projects being taken up on cost sharing basis with State Governments and on

PPP mode.

Concessions

Technicians of regional film industry when traveling for film production related work

to be eligible for 75% concession in Second Sleeper and 50% concession in higher

classes in all trains.

Cancer patients going for treatment to get 100% concession in 3 AC and Sleeper Class

50% concession to spouse of the correspondents extended to the companion of those

correspondents who do not have a spouse, and dependent children up to 18 years.

Service charge on e-tickets to be reduced to Rs.10 for Sleeper Class and Rs.20 for AC

Class.

New Suburban services

101 new suburban services to be introduced in Mumbai area.

More services to start in Chennai and Kolkata areas.

Special Trains / New Trains

Sanskriti Express to run across the country to mark the 150th birth anniversary of

Kabiguru Rabindranath Tagore. It is also proposed to take this train to Bangladesh.

Ladies special trains to be renamed as ‘Matrabhoomi specials’.

3 unreserved trains named as ‘Karambhoomi trains’ to be introduced.

Special tourist trains called “Bharat Tirth” to start on 16 routes.

6 long routes Duronto trains and 4 short distance Duronto day trains to be introduced.

54 new train services to be introduced.

28 new passenger train services, 9 MEMU and 8 DEMU services to start.

Extension of 21 trains and increase in frequency of 12 trains announced.

Expenses Proposed In Railway Budget 2010

Indian Railways' total cost is dominated by staff cost (44%), depreciation and lease charges

(14%) and fuel (14%) as can be seen from the break-up below: Both staff cost and fuel expenses

are external to the system and have been increasing. In absence of productivity increases, the unit

costs have also increased in tandem.

The Railways' new approach on tariff rationalization, improved wagon turnaround time and the

reverse-flow discounts have helped it to augment its financial performance significantly.

ANALYSIS OF RAILWAY BUDGET 2010

Restructuring Indian Railways

The ritual of annual railway budget is over. Mamata Banerjee was loud and clear that social

responsibility is more important than economic responsibility. Having said that, rest of her

budget speech was focused on the election track in West Bengal rather than on the railway track.

So additions of few trains and tinkering here & there, was all she could manage in spite of her

busy schedule in Kolkata.

Mamata Banerjee has ruled out privatization of Railways but accepted Public Private

Partnership. Considering the strategic importance of the railways to serve as life line of the

nation, it is understandable not to privatize the same. However, there are other options to

improve the overall management and give boost to Indian Railways. What we need is a mix of

management structures of corporate sector and public sector to move out of government

departmental structure & attitude.

It is no doubt 4th largest railway net work in the world with more than 1.5 million employees. But

look at large public sector companies like ONGC or, Oil Marketing Companies, GAIL, or

BHEL, which are being managed efficiently in spite of political patronage. They are all

strategically important to the nation. Today the pity is that not many know the real brains and top

managers of Indian Railways. I felt bad to see a small interview of chairman of Railway Board

with tongue in cheek answers to very routine questions relating to the budget (one can’t afford to

displease the mercurial minister). We can not wish away the political patronage but we need to

bring in CEO approach to this monolith.

Vision 2020 and Strategic Leap

Vision 2020 calls for investment of Rs. 14 lakh crores in ten years or Rs. 1.4 lakh crores on

annual basis. Every time one talks about an organizational leap it is inevitable to crystallize

strategy, program and organization structure to achieve the same. Vision 2020 document has

brought out three important strategic components for growth over next decade.

First component is segregation of dedicated double line corridors for passenger & freight, second

is increasing the speeds from 130 to 160-200 kmph range, and third is introduction of four high

speed bullet train services at 250-350 kmph range.

Restructuring the Organization

If Vision 2020 has to be implemented, there would be need to change the organization structure

for effective decision making, accountability and performance. Since independence we have not

added any significant new routes and have just been building on the British legacy. What is now

required is to create new infrastructure, new routes, new technologies and new means of funding

the investments.

Corporatization

The Railways should have a public sector holding company with the board of directors headed

by an Executive Chairman. The mandate to the company should be to establish & operate the

railways net work efficiently and generate surplus revenue for redeployment into existing and

new projects. The government funding of new infrastructure projects through budget along with

operational subsidies on certain sectors and activities have to be accepted for say first ten years

till new model stabilizes.

Fortunately for the railways, there is no problem of finding markets with ever growing

population. They just have to be competitive with other alternative means of transportation

through technology up gradation and passenger focus.

The restructuring of Railways therefore should aim at focus on infrastructure development,

technology development, and operational efficiency. The first two aspects are of strategic

importance and therefore should be handled through Strategic Business Units. Weakness of the

railways is in operational efficiency and therefore restructuring of the operations should aim at

improving the same.

Strategic Business Units

The most significant approach to run the railways in future should involve separation of

ownership & management of infrastructure & technology development and operations. In my

opinion, the restructuring should be done to manage three strategic components of Vision 2020

separately with three Strategic Business Units (SBUs). This calls for setting up two SBUs to set

up new and manage existing infrastructure for dedicated corridors of passengers and freight

separately. The strategy to increase speed levels needs to be driven by separate SBU for

modernization and technology up gradation of existing infrastructure of the net works. Logically,

the same SBU can establish infrastructure for high speed bullet trains. This restructuring would

give strategic identity and focus for implementation of the Vision 2020.

Public Private Partnership

PPP has been accepted by railways for certain limited and selective aspects. To crystallize an

option, let us look at road transport which is the most efficient mode today. The infrastructure of

roads and highways net work is by and large owned and established by the government. But the

rolling stock on the roads is owned by millions of individuals and thousands of companies in

private as well as public sector. This little difference is an important driver of efficiency &

productivity. Can we not adopt & adapt the same model suitably to rolling stock for railways?

Own Your Wagon Scheme has been in operation in a very limited sense. I would like to suggest

a separate subsidiary company “Indian Railways Rolling Stock Company” (IRRS), under the

holding company, which would own the rolling stock, ferry the cargo & passengers and be the

user of the railways network and infrastructure. IRRS should have the 99 year lease for use of the

network with lease rentals to be paid to the respective SBUs for providing infrastructure and

technology along with maintenance services. IRRS should therefore focus on only operations.

SBUs for infrastructure & technology would be responsible for their respective activities at their

own costs recovered through rentals & annual maintenance contracts (AMC) from IRRS.

The IRRS should be the entity for partnership of Indian Railways with private companies & the

public. It can raise finances by going public and offering shareholding and long term bonds so

that the rolling stock is indirectly owned by the millions of shareholders and thousands of

corporate entities. IRRS should have only controlling interests through equity from the holding

company for strategic reasons. The net result of this approach would enable the political

establishment to focus on budgeting only for investments in infrastructure and technology on one

hand and operational subsidy on the other hand. It is needless to say that the operations should be

generating enough revenue to offset the expenditure and generate surplus. It is understandable

that the decisions like passenger fares and freight rates have to be decided in larger public

interest and therefore an element of selective subsidy can not be avoided.

This approach will also take the pressure off the exchequer for funding resources for operations

of the railways freeing the same for infrastructure development. This would also bring in

substantial improvement in the customer orientation, operational efficiency and private sector

participation in management of services. In this initiative, the control of the strategic assets

would remain completely with the government and operations would be funded by the users

resulting in true public private partnership initiative.

VARIOUS OPINIONS FOR RAILWAY BUDGET 2010

Railway budget satisfactory, say industry bodies

The industry chambers have welcomed the Railway Budget 2010-2011 announced by Minister of

Railways Mamata Banerjee on Wednesday. Some of the proposals announced by the minister

will lead to modernisation of Railways and propel economic growth, Bangalore Chamber of

Commerce and Industry (BCIC) said.

The involvement of public-private partnership (PPP ) model to operate special freight trains,

maintenance and improvement of amenities in railway stations, setting up National High Speed

Railway Authority for introduction of High Speed Rail corridor, setting up of a special task force

to clear proposals for investment within 100 days, exploring ideas for new business models will

result in modernisation of the Railways, the BCIC said in a statement.

BCIC hailed the railway minister for announcing auto hubs to ancillary industries, high-speed

train corridors to port connectivity and multi-level parking to mine connectivity, among others.

“We are happy that some proposals submitted by us to the railway minister at the pre-budget

meeting on February 6 are accepted,” BCIC said.

The chamber had demanded the introduction of multi-level parking complexes through the PPP

route, introduction of special freight train under PPP to carry commodities such as automobiles,

vegetable oil, molasses, chemicals, petrochemical and bulk traffic like fly-ash, cement, among

others.

BCIC has also welcomed the proposal to have new survey lines and hope this will be translated

into reality in the next Budget. The proposed survey for the Belur-Sringeri and Mysore-

Kushalnagar-Madikere lines will undoubtedly boost the tourism sector and economy of the

plantation sector to a large extent.

However, BCIC has expressed its disappointment over the absence of any station from the state

for conversion into world class station.

J Crasta, president, Federation of Karnataka Chambers of Commerce and Industry (FKCCI)

commended the railway minister for appreciating Karnataka government’s role in coming

forward for railway projects under a cost sharing basis. However, FKCCI would like the ministry

to take up on an urgent basis the completion of Hubli-Ankola line and the container connectivity

to Mangalore Port which would help the industry and trade immensely, he said.

Railway Budget: Not A Long Term Vision

The Railway Budget 2010 by Mamta Banerjee has just two words in it, concessions and PPP

(Public-Private-Partnership). While concessions were taking the most of the space, the

introduction of PPP route in few of the developments shows a healthy future for the Indian

Railways.

What does it say?

The Railway Budget 2010 was expected with a hike in fares and freight charges due to the rising

inflation. Surprisingly, there were no hikes on passenger fares while the freight charges for food

grains, kerosene and fertilizers were reduced by Rs.100/- per wagon. The maximum limit of

service charges for e-booking of tickets has been slashed by around 50% on sleeper and 3rd AC.

There are concessions of 50% – 100% for different sects of people from journalists to cancer

patients. There are few not-so-interesting and very abstract plans like to setup a special task force

to clear investment proposals within 100 days.

Others are on laying new lines, expanding gauges, new trains, new stations and very few PPP

plans like multi-level parking, new rail axle factory. And plans that would never workout (at

least in the near future) like punctuality of trains and automatic fire and smoke detection system.

The plan outlay is the highest ever at Rs.41,426 crore with a provision of Rs.4,411 crore for new

lines, Rs.1,302 crore for passenger amenities and Rs.1,001 crore for metro projects. India Inc. is

quite content with the budget and terms it as industry-and-people-friendly budget.

Growth & Profits

For the year 2009-10, the projected profit of Indian Railways was Rs.2, 642.26 crore but the

estimate was revised to Rs.951 crore (down to 36% of the estimate), which is again 93% down

from 2007-08 level. Note that the railway minister during 2007-08 was Lalu Prasad Yadav and in

2009 the ministry was shifted to the hands of Mamta Banerjee. I am not sure if this has anything

to do with the slew in profit.

Lacking long term vision

The budget surely lacks a long term vision in improving the overall functioning of the system.

There are a lot of issues that Indian Railways has to address to be a world class railway system.

Maintenance is the foremost concern for all those who travel through train. With the world

nations moving on to faster bullet trains, Indian Railways, being one of the best networked

systems in the world, does not deserve to be left back. The PPP route proposed by Mamta looks

like a good head start but that is not just enough. The Railways should look forward to PPP in

every single development of it to be able to use the latest methods of the industries. What we

might need right now is “Beeching Axe” that British Railways attempted during 1960s to

optimize the system and modernization, more than just concessions.

On the whole, the budget suffices short term needs but lacks long term goals.

Railway Budget 2010-11 with an eye on the common man

Like in the previous years, there have been many different reactions to this year’s Railway

Budget also. But, there is unanimity on one point that this was prepared with an eye on the

common man. Presenting her second budget in eight months, the Railway Minister, Ms Mamata

Banerjee said in the Lok Sabha that between the two objectives of economic viability of projects

and social responsibility of the Railways, she considered the second one more important.

She said that the Indian Railways should provide connectivity to all places and by doing so,

target inclusive growth. Ms Banerjee said that she received more than 5000 requests from

different sections of the people to connect industrial hubs, tourist centers and religious places

but, could not meet all expectations for paucity of funds.

There were a lot of goodies for the common man. Not only the Railway Minister spared the

common man from any increase in passenger fare, but also reduced e-ticketing charge from

rupees 20 to rupees ten for ordinary class and from rupees 40 to rupees 20 for AC class. In

Railway Budget 2010-2011, She is aware that ‘Duranto’ trains, her brain child are quite popular.

Unlike the Rajdhani Expresses that connect different places with the national capital, these trains

connect one important city with another. Not only are these faster than the Rajdhani Expresses

but traveling in these is also cheaper.

Ensuring safety and security of passengers was given top priority. The Indian Railways runs

about 17,000 trains and carries more than 18 million passengers daily. Besides, Auto fire and

smoke alarm systems will be introduced in the Railways. Anti-collision devices which have

already been introduced in the NF Railway will be extended to other Railways. To beef up

security of women passengers, she said that a Mahila Bahini comprising women constables will

be raised.

Drawing satisfaction from the fact that employee-management relation in the Railways remained

cordial, the Railway Minister announced that all railway employees will get houses in the next

ten years. In the same breathe, she announced that the Railways will not be privatized but adopt a

business model to increase efficiency. There is no proposal for freight hike. Instead keeping in

view the common man’s plight because of rising prices of food grains and other essential

commodities, the Railways will reduce freight for food grains, kerosene and fertilizer.

In the last 50 years, the Railways have set up an average of 180 kilometers per year. But, the

Railway Minister set an ambitious target of setting up 25,000 kilo meter of new lines by 2020 in

her Vision document.

Also notable is the emphasis on private sector participation in the Railways. What’s preferred is

a new scheme for industry to invest in wagons–the target is to acquire 18,000 goods wagons, 5

coach factories are to be set up in the public-private partnership (PPP) mode and several projects

are to come up with state governments on a cost-sharing basis. The budget does mention the

intent to set up six high speed passengers corridors via the PPP route, but no firm numbers have

been suggested. Meanwhile, the rail minister has promised to expedite and fast track investment

proposals.

The Budget Estimates for 2010-11 target freight loading of 944 million tonnes (MT), an

increment of 54 MT; passenger traffic is expected to go up by 5.3%. Both targets seem quite

achievable, given the upswing on the growth front. However, instead of merely aiming at

volumes growth, it would be more worthwhile to boost value-added freight services such as

multimodal transport, and also attract upper class passengers with better amenities. The idea of

special tourist trains to be called Bharat Tirth, to start on 16 routes, does make sense but the

scope for value-addition is indeed huge.

Reminding the House that she had fulfilled most of her promises given in her last Railway

Budget, Ms Banerjee announced that she proposed to lay 1000 kilometer of new line in 2010.

She proposed that the Railways will continue with its modernization and expansion plans by

introducing more and more high speed trains and to meet the funds requirement, she said that the

Railways will resort to Private-public partnership in the new projects.

SWOT Analysis of Indian Rail Budget

As we apply this ‘SWOT’ concept on Indian Railways we see that there is a solid strength of

Indian Railways in itself as well as weaknesses of it. It has great opportunities in its circle as well

as threats from other private sector efforts. In other words we can say that Indian Railways is a

widely used term in Indian Economy. It alone covers more than 25% of Indian Economy

Structure. All the four aspects of SWOT in the manner of Indian Railways are explained and

described further.

STRENGTHS

A large network of 7000 stations exists in the country.

A substantial market share exists, in passenger segment. For a country of 1000 million

people with Low purchasing power railway system is more suitable.

For long distance and bulk sector railways is the most economical comparatively safer

mode of transport.

Announced new scheme “House for all Railway Staff” for 14 lakh employees in the next

10 years. To set up 381 diagnostic centers, 101 secondary hospitals and 522 multi-

functional hospitals and multi level parking.

Average length of haul being large break even distance feasible for railway system is

available.

The budget outlay for financial year 2010-2011 is Rs.41,426 crore, with the IR planning

substantial investments in fixed infrastructure and rolling stock to achieve efficiency and

productivity gains in freight operations that could in turn generate significant multiple benefits

for the economy as a whole.

The 2010-11 Railway Budget is likely to focus on improving passenger services extensively.

Indian Railways is looking at significantly improving passenger amenities, including

refurbishment of the design and look of stations. Work to convert 16 major railway stations into

world-class ones is expected to be set into motion in the this fiscal, including separating

passenger handling areas from commercial areas, like in airports.

Greenfield passenger terminals on similar lines are also being contemplated and could

offer more opportunities for development through the PPP route.

Railway lines to be laid down- 1,000 kms. Allocation of funds for setting up new lines is

Rs 44 bn. To launch 10 more Duranto trains and 54 new passenger trains. Plans to

introduce 101 new suburban trains in Mumbai.

WEAKNESSES

In spite of all various advantage and specialties, we can not ignore that there are many serious

drawback of Indian railways. They are as follows:

Outdated technology of locomotive: The rail engines used to run the trains are very old

and outdated technology. So they require much maintains and they do not give proper

return, as they do not perform efficiently. There is immediate need to change the engines

by new and updated ones.

Lacking long term vision: With the world nations moving on to faster bullet trains,

Indian Railways, being one of the best networked system in the world, does not deserve

to be left back. The PPP route proposed by Mamta looks like a good head start but that is

not just enough.

Problem of financial crunch : The railway is facing the problem of financial crunch.

The conventional methods of increasing the net revenue, like rising of tariffs and

expenditure control are inadequate for generating the levels of investment required.

OPPORTUNITIES

Measures To Improve Freight Business:

Reduction in unit cost of freight traffic due to increase in loading capacity of wagons and

some other measures.

Additional loading of 4 to 8 tonnes per Wagons per adds 100 Million Tonnes to loading

capacity with resultant Revenue generation of Rs 5000 Cr.

Validity of brake power certificate for CC rakes increased from 6000 to 7500 km.13

Wagon manufacture to increase by about 25%

Production of electric locomotive to increase by 17% and diesel locomotive by 5%.

Reduction of Losses In Passenger Business:

Increase Volumes reduced unit costs strategy to be adopted in the passenger business

also.

Cut down losses in the coaching services by about Rs 1000 Cr in the coming year and by

50% in the next three years by increasing the number of coaches and occupancy of trains

reducing travel time and reducing losses in the catering and parcel segments.

Over 200 mail/express trains to be made super fast.

Journey time of a majority of the Shatabdis, Rajdhanis and of certain mail/express trains

likely to reduce.

THREATS

The organization is production oriented. There is over emphasis on maximizing PKMS,

NTKMS.

Marketing is peripheral activity and commercial department is basically engaged in

selling business only

Customer focus is missing and customer satisfaction is not an organizational mission.

Indian railways is loosing its market share in passenger and freight business.

There is capacity constraint – how to balance demand against available capacity.

CONCLUSION

Rail minister Mamata Banerjee’s Budget is populist given that there is no revision of passengers

and freight rates yet again never mind inflation, but it is also forward looking in the move to step

up investment in rolling stock and new rail lines. What’s proposed is the introduction of 54 new

pairs of trains in the next financial year, to add to the 120 introduced in the current fiscal. It

would inevitably mean more crowding on the rail tracks.

Instead of simply announcing new trains, what’s required is an audit of the operational logistics,

so as to keep tab of overall passengers’ amenities and also rev up rail safety. That said, the plan

to significantly boost allocations for wagons, new coaches and track renewal is a move in the

right direction. The strategy seems to be to keep freight rates steady, so as to cash in on revenue

buoyancy that can be well expected going forward piggy-back on heightened growth.

In simple words the budget was prepared with an eye on the common man. There were a lot of

goodies for the common man. Ensuring safety and security of passengers was given top priority.

Also notable is the emphasis on private sector participation in the Railways. Proposals are made

to increase the public-private partnership (PPP) mode and several projects are to come up with

state governments on a cost-sharing basis.

BIBLIOGRAPHY

INTERNET

www.google.com www.wikipedia.org www.ecotimes.com