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market situation where there is only one provider of a product or service. Monopolies are characterized by a lack of economic competition for the good or service that they provide and a lack of viable substitute goods. Monopoly should be distinguished from monopsony, in which there is only one buyer of the product or service; it should also, strictly, be distinguished from the (similar) phenomenon of a cartel. In a monopoly a single firm is the sole provider of a product or service; in a cartel a centralized institution is set up to partially coordinate the actions of several independent providers (which is a form of oligopoly). Primary characteristics of a monopoly
A pure monopoly is an industry in which a single firm is the sole producer of a good or the sole provider of a service. This is usually caused by barriers to entry.
No Close Substitutes
The product or service is unique in ways which go beyond brand identity, and cannot be easily replaced (a monopoly on water from a certain spring, sold under a certain brand name, is not a true monopoly; neither is Coca-Cola, even though it is differentiated from its competition in flavor).
In a pure monopoly a single firm controls the total supply of the whole industry and is able to exert a significant degree of control over the price, by changing the quantity supplied (an example of this would be the situation of Viagra before competing drugs emerged). In subtotal monopolies (for example diamonds or petroleum at present) a single organization controls enough of the supply that even if it limits the quantity, or raises prices, the other suppliers will be unable to make up the difference and take significant amounts of market share.
The reason a pure monopolist has no competitors is that certain barriers keep would-be competitors from entering the market. Depending upon the form of the monopoly these barriers can be economic, technological, legal (e.g. copyrights, patents), violent (competing businesses are shut down by force), or of some other type of barrier that completely prevents other firms from entering the market. Price setting for unregulated monopolies
In economics a company is said to have monopoly power if it faces a downward sloping demand curve (see supply and demand). This is in contrast to a price taker that faces a horizontal demand curve. A price taker cannot choose the price that they sell at, since if they set it above the equilibrium price, they will sell none, and if they set it below the equilibrium price, they will have an infinite number of buyers (and be making less money than they could if they sold at the equilibrium price). In contrast, a business with monopoly power can choose the price they want to sell at. If they set it higher, they sell less. If they set it lower, they sell more. In most real markets with claims, falling demand associated with a price increase is due partly to losing customers to other sellers and partly to customers who are no longer willing or able to buy the product. In a pure monopoly market, only the latter effect is at work, and so, particularly for inflexible commodities such as medical care, the drop in units sold as prices rise may be much less dramatic than one might expect. If a monopoly can only set one price it will set it where marginal cost (MC) equals marginal revenue (MR) as seen on the diagram on the right. This can be seen on a big supply and demand diagram for many criticism of monopoly. This will be at the quantity Qm; and at the price Pm. This is above the competitive price of Pc and with a smaller quantity than the competitive quantity of Qc. The offensive monopoly gains is the shaded in area labeled profit (note that this diagram looks only at the case where there is no fixed cost. If there were a fixed cost, the average cost curve should be used instead). As long as the price elasticity of demand (in absolute value) for most customers is less than one, it is very advantageous to increase the price: the seller gets more money for less goods. With an increase of the price, the price elasticity tends to rise, and in the optimum mentioned above it will be above one for most customers. A formula gives the relation between price, marginal cost of production and demand elasticity which maximizes a monopoly profit:Â (known as Lerner index). The monopolist’s monopoly power is given by the vertical distance between the point where the marginal cost curve (MC) intersects with the marginal revenue curve (MR) and the demand curve. The longer the vertical distance, (the more inelastic the demand curve) the bigger the monopoly power, and thus larger profits.
The economy as a whole loses out when monopoly power is used in this way, since the extra profit earned by the firm will be smaller than the loss in consumer surplus. This difference is known as a deadweight loss. Introduction to Indian Railways Indian Railways (IR) is the state-owned railway company of India. Indian Railways had, until very recently, a monopoly on the country’s rail transport. It is one of the largest and busiest rail networks in the world, transporting just over six billion passengers and almost 750 million tonnes of freight annually. IR is the world’s largest commercial or utility employer, with more than 1.6 million employees. The railways traverse through the length and width of the country; the routes cover a total length of 63,940 km (39,230 miles). As of 2005 IR owns a total of 216,717 wagons, 39,936 coaches and 7,339 locomotives and runs a total of 14,244 trains daily, including about 8,002 passenger trains. 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 nationalised as one unit, becoming one of the largest networks in the world. Indian Railways operates both long distance and suburban rail systems. Background The development of IR had its roots in the 1800s, when India was a British colony. The British East India Company and later, the British colonial governments were credited with starting a railway system in India. The British found it difficult to traverse great distances between different places in India. They felt the need to connect those places with trains to speed up the journey as well as to make it more comfortable than travel by road in the great heat. They also sought a more efficient means to transfer raw materials like cotton and wheat from the hinterlands of the country to the ports located in Bombay, Madras and Calcutta, from where they would be transported to factories in England. Besides, the mid-1800s were a period of mutiny and struggle for independence in India, with uprisings in several parts of the country. The British leaders wanted to be able to transfer soldiers quickly to places of unrest. Railways seemed to be the ideal solution to all these problems. Work began on the development of railway systems in India in the early 1850s. Initially, trains were used to transport material between different places. The first commercial passenger train in India ran between Bombay and Thane (places in western India) on April 16, 1853. The distance of 34 kilometers was covered in about 75 minutes. Indians were initially apprehensive of accepting railways as a means of travel, but soon overcame that fear and railways gained popularity. Soon, railway lines began to be laid in other parts of the country, mostly by private British companies, and the major regions in India were connected by rail. To promote the construction of railway lines in India, the British Parliament introduced the guarantee system.
Under this system, any company that constructed railway lines in India was given a guarantee of a five percent return per annum on the capital invested. The company also had the right to pull out from the venture and receive compensation from the government at any time if it was not satisfied with the returns. This helped accelerate the development of railways in the country. A number of railway companies were incorporated between 1855 and 1870. Most of them operated at a regional level. By the beginning of the 1870s, the total track coverage in India was 4000 miles. In addition to commercial objectives, railways also began to play a social role in India. When there were famines in several parts of the country between 1870 and 1880, railways played a very important role in providing relief to the affected areas. By the end of 1880, the total track coverage increased to 9000 miles. In 1880, the Darjeeling Steam Tramway started operating (the name was changed to Darjeeling Himalayan Railway in 1881). This railway track was considered one of the greatest engineering feats in the history of IR, crossing as it did, rough and dangerous mountain terrain at a steep gradient. In 1890, the British Government passed the Railways Act, to govern the construction and operation of railways in India. By the beginning of the 20th century, there were nearly 25,000 miles of railway track in the country. Railway zones
The Map of India above shows the different railway zones in India. The zones are numbered in the map.Â The red dots are the zonal headquarters. For administrative purposes, Indian Railways is divided into sixteen zones. Given below is the table showing these 16 zones.Â Konkan Railway* (KR) is constituted as a separately incorporated railway, with its headquarters at Belapur CBD (Navi Mumbai). It comes under the control of the Railway Ministry and the Railway Board. The Calcutta Metro is owned and operated by Indian Railways, but is not a part of any of the zones. It is administratively considered to have the status of a zonal railway. Sr. No. Name Abbr. Headquarters Date Established
1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.
Northern Railway NR North Eastern RailwayNER Northeast Frontier NFR Railway Eastern Railway ER South Eastern Railway SER South Central Railway SCR Southern Railway SR Central Railway Western Railway CR WR
Delhi Gorakhpur Maligaon(Guwahati) Kolkata Kolkata Secunderabad Chennai Mumbai Mumbai Hubli Jaipur Jabalpur Allahabad Bilaspur, CG Bhubaneswar Hajipur Navi Mumbai
April 14, 1952 1952 1958 April, 1952 1955 October 2, 1966 April 14, 1951 November 5, 1951 November 5, 1951 April 1, 2003 Oct 1, 2002 April 1, 2003 April 1, 2003 April 1, 2003 April 1, 2003 Oct 1, 2002 Jan 26, 1998
South Western SWR Railway North Western NWR Railway West Central Railway WCR North Central Railway NCR South East Central SECR Railway East Coast Railway ECoR East Central Railway ECR Konkan Railway* KR
Indian Railways operates 8,702 passenger trains and transports around five billion annually across twenty-seven states and three union territories (Delhi, Pondicherry and Chandigarh). Sikkim is the only state not connected. The passenger division is the most preferred form of long distance transport in most of the country. In South India and North-East India however, buses are the preferred mode of transport for medium to long distance transport.
A standard passenger train consists of eighteen coaches, but some popular trains can have up to 24 coaches. Coaches are designed to accommodate anywhere from 18 to 72 passengers, but may actually accommodate many more during the holiday seasons and on busy routes. The coaches in use are vestibules, but some of these may be dummied on some trains for operational reasons. Freight trains use a large variety of wagons. Each coach has different accommodation class; the most popular being the sleeper class. Up to nine of these type coaches are usually coupled. Air conditioned coaches are also attached, and a standard train may have between three and five air-conditioned coaches. Overcrowding is the most widely faced problem with Indian Railways. In the holiday seasons or on long weekends, trains are usually packed more than their prescribed limit. Ticket-less travel, which results in large losses for the IR, is also an additional problem faced. Production Services
The interior of an Express Train in India. Food is being served by an Indian Railways employee. The Indian Railways manufactures a lot of its rolling stock and heavy engineering components. This is largely due to historical reasons. As with most developing economies, the main reason is import substitution of expensive technology related products. This was relevant when the general state of the national engineering industry was immature. Production Units, the manufacturing plants of the Indian Railways, are managed directly by the ministry. The General Managers of the PUs report to the Railway Board. The Production Units are,
Diesel Locomotive Works, Varanasi
Responsible for manufacturing all the mainline diesel-electrics used for passenger and freight traffic. The plant also produces diesel-electric shunters. Currently the factory is also producing locomotives in collaboration with General Motors, USA.
Chittaranjan Locomotive Works, Chittaranjan
Chittaranjan manufactures Electric Locomotives. Traditionally, the locomotives made by CLW use DC traction. In recent times, CLW has manufactures locomotives with AC-AC transmission.
Diesel-Loco Modernisation Works, Patiala
Earlier called Diesel Component Works, DMW makes key sub-assemblies for Diesel Locomotives. It also does heavy repair and overhaul of engines and locomotives.
Integral Coach Factory, Chennai
The first factory to make coaches for the Indian Railways. The coaches were monocoque structures.
Rail Coach Factory, Kapurthala
The second coach factory is a more modern plant and has a much more flexible automation.
Wheel & Axle Plant, Bangalore
Makes the cast wheels for wagons and other rolling stock. Axles are forged and machined in the same plant. Most output is sent out as finished and pressed wheel & axle sets.
Rail Spring Karkhana, Gwalior
Performance The performance of Production Units during 2004-05, was as under,
• • •
Chittaranjan Locomotive Works, Chittaranjan manufactured 90 BG electric locomotives including 22 state-of-the-art 3-phase 6000 HP electric locos. Diesel Locomotive Works, Varanasi produced 121 BG diesel locomotives including 15 indigenous high power 4000 HP GM locomotives. In addition, 4 diesel locomotives were supplied to Non Railway Customers. Integral Coach Factory, Chennai manufactured 1,119 coaches including 112 Electric Multiple Units (EMUs). Rail Coach Factory, Kapurthala manufactured 1,201 coaches including 77 light weight LHB coaches with higher passenger comfort and amenities. Rail Wheel Factory, Bangalore produced 32,732 wheel-sets. It also manufactured 95,125 wheels and 49,502 axles. It sold products to the tune of Rs.18.39 crore to NCRs thus earning a profit of approx. Rs.173.69 lakh. Diesel Loco Modernisation Workshop, Patiala successfully upgraded 74 nos. 2600 HP WDM-2 diesel electric locomotives to 3100 HP thus increasing the hauling capacity to the extent of 3 to 4 additional coaches. DMW exported spares worth Rs.130.27 lakh to various countries. Import content in the Railway Production Units expressed as percentage of total production cost is roughly 2%. Import substitution is one of the main objectives of the production units.
The New Delhi Metro railway Many cities have their own dedicated suburban networks to cater to commuters. Currently, suburban networks operate in Mumbai (Bombay), Chennai (Madras), Kolkata (Calcutta), Delhi, Lucknow, Hyderabad and Pune. Hyderabad, Mumbai and Pune do not have dedicated suburban tracks but share the tracks with long distance trains. New Delhi, Chennai and Kolkata have their own metro networks, namely the New Delhi Metro, the Chennai MRTS and the Kolkata metro, respectively. Suburban trains that handle commuter traffic are mostly electric multiple units. They usually have nine coaches or sometimes twelve to handle rush hour traffic. One unit of an EMU train consists of one power car and two general coaches. Thus a nine coach EMU is made up of three units having one power car at each end and one at the middle. The rakes in Mumbai run on direct current, while those elsewhere use alternating current. A standard coach is designed to accommodate 96 sitting passengers, but the actual number of passengers can easily double or triple with standees during rush hour. The Kolkata metro has the administrative status of a zonal railway, though it does not come under the seventeen railway zones. The Suburban trains in Mumbai handle more rush then any other suburban network in India. The network has three lines viz, western, central and harbor. It’s considered to be the lifeline on Mumbai. On 11th July 2006 six bomb blasted in these trains targetted at general public. Freight
A single line rail bridge
IR carries a huge variety of goods ranging from mineral ores, agricultural produce, petroleum, milk and vehicles. Ports and major urban areas have their own dedicated freight lines and yards. Many important freight stops have dedicated platforms and independent lines. Indian Railways makes 70% of its revenues and most of its profits from the freight sector, and uses these profits to cross-subsidise the loss-making passenger sector. However, competition from trucks which offer cheaper rates has seen a decrease in freight traffic in recent years. Since the 1990s, Indian Railways has switched from small consignments to larger container movement which has helped speed up its operations. Most of its freight earnings come from such rakes carrying bulk goods such as coal, cement, food grains and iron ore. Indian Railways also transports vehicles over long distances. Trucks that carry goods to a particular location are hauled back by trains saving the trucking company on unnecessary fuel expenses. Refrigerated vans are also available in many areas. The “Green Van” is a special type used to transport fresh food and vegetables. Recently Indian Railways introduced the special ‘Container Rajdhani’ or CONRAJ, for high priority freight. The highest speed notched up for a freight train is 100Â km/h (62Â mph) for a 4,700Â metric tonne load. Recent changes have sought to boost the earnings from freight. A privatization scheme was introduced recently to improve the performance of freight trains. Companies are being allowed to run their own container trains. The first length of an 11,000km freight corridor linking India’s biggest cities has recently been approved. The railways has increased load limits for the system’s 220,000 freight wagons by 11%, legalizing something that was already happening. Due to increase in manufacturing transport in India that was augmented by the increase in fuel cost, transportation by rail became advantageous financially. New measures such as speeding up the turnaround times have added some 24% to freight revenues. Notable trains and achievements The Darjeeling Himalayan Railway is a World Heritage Site, and one of the few steam engines in operation in India.
The Darjeeling Himalayan Railway, a narrow gauge train with a steam locomotive is classified as a World Heritage Site by UNESCO. The route starts at Siliguri in the plains in West Bengal and traverses tea gardens en route to Darjeeling, a hill station at an elevation of 2,134Â metres (7,000Â ft). The highest station in this route is Ghum. The Nilgiri Mountain Railway, in the Nilgiri Hills in southern India, is also classified as a World Heritage Site by UNESCO. It is also the only rack railway in India. The Chatrapati Shivaji Terminus (formerly Victoria Terminus) railway station in Mumbai is another World Heritage Site operated by Indian Railways.
The Rajdhani Express is a series of trains that journey to and from the Capital New Delhi. Shown here are two Rajdhani Trains approaching each other The Palace on Wheels is a specially designed train, lugged by a steam engine, for promoting tourism in Rajasthan. The Maharashtra government did try and introduce the Deccan Odyssey along the Konkan route, but it did not enjoy the same success as the Palace on Wheels. The Samjhauta Express was a train that ran between India and Pakistan. However, hostilities between the two nations in 2001 saw the line being closed. It was reopened when the hostilities subsided in 2004. Another train connecting Khokhrapar (Pakistan) and Munabao (India) is the Thar Express that restarted operations on February 18, 2006 since being closed down after the 1965 Indo-Pak war. The Kalka Shimla Railway till recently featured in the Guinness Book of World Records for offering the steepest rise in altitude in the space of 96 kilometers. The Lifeline Express is a special train popularly known as the “Hospital-on-Wheels” which provides healthcare to the rural areas. This train has a compartment that serves as an operating room, a second one which serves as a storeroom and an additional two that serve as a patient ward. The train travels around the country, staying at a location for about two months before moving elsewhere. Among the famous locomotives, the Fairy Queen is the oldest running locomotive in the world today, though the distinction of the oldest surviving locomotive belongs to John Bull. Kharagpur railway station also has the distinction of being the world’s longest railway platform at 1072Â m (3,517Â ft). The Ghum station along the Toy Train route is the second highest railway station in the world to be reached by a steam locomotive.  Indian Railways operates 7,566 locomotives; 37,840 Coaching vehicles and 222,147 freight wagons. There are a total of 6,853 stations; 300 yards; 2,300 goods-sheds; 700 repair shops and a total workforce of 1.54 million.
The Deccan odyssey is a new line of tourist trains that travel across the Indian State of Maharashtra The shortest named station is Ib and the longest is Sri Venkatanarasimharajuvariapeta. The Himsagar Express, between Kanyakumari and Jammu Tawi, has the longest run in terms of distance and time on Indian Railways network. It covers 3,745Â km (2,327Â miles) in about 74 hours and 55 minutes. The Trivandrum Rajdhani, between Delhi’s Nizamuddin Station and Trivandrum, travels non-stop between Vadodara and Kota, covering a distance of 528Â km (328Â miles) in about 6.5 hours, and has the longest continuous run on Indian Railways today. The Bhopal Shatabdi Express is the fastest train in India today having a maximum speed of 140Â km/h (87Â mph) on the Faridabad-Agra section. The fastest speed attained by any train is 184Â km/h (114Â mph) in 2000 during test runs. This speed is much lower than fast trains in other parts of the world. One reason attributed for this difference is that the tracks are not suited for higher speeds. Organisational structure
The headquarters of the Indian Railways in Delhi Indian Railways is a publicly owned company controlled by the Government of India, via the Ministry of Railways. The ministry is currently headed by Lalu Prasad Yadav, the Union Minister for Railways and assisted by two junior Ministers of State for Railways, R. Velu and Naranbhai J. Rathwa. Reporting to them is the Railway Board, which has six members and a chairman. Each of the sixteen zones 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). The divisional officers of engineering, mechanical, electrical, signal & telecommunication, accounts, personnel, operating, commercial and safety branches report to the respective Divisional Manager and are in charge of operation and maintenance of
assets. 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. In addition to the zones, there are six production units (PUs) each headed by a General Manager (GM), who also report directly to the Railway Board. These production units are: 1. 2. 3. 4. 5. 6. Chittaranjan Locomotive Works: Chittaranjan Diesel Locomotive Works: Varanasi Integral Coach Factory: Perambur (Near Chennai) Rail Coach Factory: Kapurthala Rail Wheel Factory: Yelahanka (Near Bangalore) Diesel Modernisation Works: Patiala
In addition to this the Central Organisation for Railway Electrification (CORE) is also headed by a GM. This is located at Allahabad. This organisation undertakes electrification projects of Indian Railway and monitors the progress of various electrification projects all over the country. Apart from these zones and production units, a number of Public Sector Undertakings (PSU) are under the administrative control of the ministry of railways. These PSUs are: 1. 2. 3. 4.
6. 7. 8.
Indian Railways Catering and Tourism Corporation Konkan Railway Corporation Indian Railway Finance Corporation Mumbai Rail Vikas Corporation Railtel Corporation of India â€“ Telecommunication Networks RITES Ltd. â€“ Consulting Division of Indian Railways IRCON International Ltd. â€“ Construction Division Rail Vikas Nigam Limited
Centre for Railway Information Systems is an autonomous society under Railway Board, which is responsible for developing the major software required by Indian Railways for its operations. Rail budget and finances The Railway Budget deals with the induction and improvement of existing trains and routes, the modernisation and most importantly the tariff for freight and passenger travel. The Parliament discusses the policies and allocations proposed in the budget. The budget needs to be passed by a simple majority in the Lok Sabha (India’s Lower House). The comments of the Rajya Sabha (Upper House) are non binding. Indian Railways are subject to the same audit control as other government revenue and expenditures. Based on the anticipated traffic and the projected tariff, the level of resources required for railway’s capital and revenue expenditure is worked out. While the revenue expenditure is met entirely by railways itself, the shortfall in the capital (plan) expenditure is met partly from borrowings (raised by Indian Railway Finance Corporation) and the rest from Budgetory support from the Central Government. Indian Railways pays dividend to the Central Government for the capital invested by the Central Government.
As per the Separation Convention, 1924, the Railway Budget is presented to the Parliament by the Union Railway Minister, two days prior to the General Budget, usually around 26 February. Though the Railway Budget is separately presented to the Parliament, the figures relating to the receipt and expenditure of the Railways are also shown in the General Budget, since they are a part and parcel of the total receipts and expenditure of the Government of India. This document serves as a balance sheet of operations of the Railways during the previous year and lists out plans for expansion for the current year. The formation of policy and overall control of the railways is vested in Railway Board comprising the Chairman, Financial Commissioner and other functional Members for Traffic, Engineering, Mechanical, Electrical and Staff matters. As per the 2006 budget, Indian Railways earned Rs. 54,600 crores (Rs. 546,000 million or US$12,300 million). Freight earnings increased by 10% from Rs. 30,450 cr (US$7,000 million) in the previous year. Passenger earnings, other coaching earnings and sundry other earnings increased by 7%, 19% and 56% respectively over previous year. Its year end fund balance is expected to stand at Rs. 11,280 cr (US $2.54 billion). Around 20% of the passenger revenue is earned from the upper class segments of the passenger segment (the air-conditioned classes). The overall passenger traffic grew 7.5% in the previous year. In the first two months of India’s fiscal year 2005-06 (April and May), the Railways registered a 10% growth in passenger traffic, and a 12% in passenger earnings. A new concern faced by Indian Railways is competition from low cost airlines that has recently made its dÃ©but in India. In a cost cutting move, the Railways plans to minimise unwanted cessations, and scrap unpopular routes. Current problems
Level crossings like these usually see a high accident rate Indian railways suffers from deteriorating finances and lack the funds for future investment. Last year, India spent $28 billion, or 3.6% of GDP, on infrastructure. 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. Indian Railways have accepted the fact that given the size of operations, eliminating accidents is an unrealistic goal, and at best they can only minimise 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. Contributing to the Railways’ problems are the antiquated communication, safety and signalling equipment. One area of upgrading badly required is an automated signalling system to prevent crashes. A number of train accidents happened due to a manual system of signals between stations. However, the changeover to a new system would require a substantial investment. It is felt that this would be required given the gradual increase in train speeds and lengths, that would make accidents more dangerous. In the latest instances of signalling control by means of interlinked stations (e.g., Chennai – Washermanpet), failure-detection circuits are provided for each track circuit and signal circuit with notification to the signal control centres in case of problems . However, this is available in a very small subset of the total Railways. Aging colonial-era bridges and century-old tracks also require regular maintenance and upgrading. In many places, pedestrians, vehicles or cyclists may cut across the tracks to save time, causing a safety hazard to the railways. 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. AN OVERVIEW OF MUMBAI RAILWAYS Two zonal Railways, the Western Railway (WR) and the Central Railway (CR), operate the Mumbai Suburban Railway system running in form of 9-car and 12-car rakes of Electric Multiple unit (EMU) trains. Two corridors (one local and other through) on Western Railway run northwards from Churchgate terminus parallel to the west coast up to Virar (60 Kms). Two corridors (one local and other through) on Central Railway run from Chhatrapati Shivaji Terminus (CST) to Kalyan (54 Kms), from where it bifurcates into Kalyan-Kasara (67 Kms) in the north-east and Kalyan-Karjat-Khapoli (61 Kms) in south-east. The 5th corridor on Central Railway runs as the Harbour line starting from CST to Raoli Junction (11 Kms) from where the line splits. One line goes north-west to join WR at Bandra and goes up to Andheri (11 Kms) and the other goes eastward to terminate at Panvel (39 Kms) via New-Mumbai. The pressure onÂ the Mumbai Suburban Railway system has reached alarming proportions. Overcrowding has grown to such an extent that 5,000 passengers are travelling per 9-car train during peak hours, as against the rated carrying capacity of 1,710. Also, there is an acute problem of encroachment by slum dwellers on the property of Indian Railways which has created the problem of safety of commuters. The rail network is the principal mode of mass transport in Mumbai. To enable the Mumbai Suburban Railway System to meet the demands of the ever-growing passenger traffic, the Ministry of Railways and the State Government of Maharashtra joined hands to face the challenge and formed MRVC. However, the organisation has not been able fulfil the aims and objectives for which it was set up. The researcher shall try to find out whether transfer of this organisation into private hands can improve its performance and can lead to a better future for commutersâ€™ travel in the city.
The Corporation is not only executing the projects identified so far, but also involved in the further planning and development of Mumbai Suburban Rail system for improved rail services in close coordination with Indian Railways and Government of Maharashtra. The geographical jurisdiction of MRVC is from Churchgate to Dahanu Road on Western Railway and from CSTM to Kasara, Karjat/ Khopoli and Panvel on Central Railway. Apart from execution of Railway projects in Mumbai, the main functions of MRVC are:
• • • • •
Develop coordinated plans and implement the rail infrastructure projects. Integrate urban development plan for Mumbai with rail capacity and propose investments. Undertake commercial development of Railway land and air space in Mumbai area. Coordinate and facilitate improvements of track drainage and removal of encroachments and trespassers. Coordinate with organizations operating the train services and responsible for protection of Railway’s right of way and urban development for purposeful resolution of allied issues and problems.
Mumbai cityâ€™s public transport comprises of Buses operated by Brihanmumbai Electric Supply and Transport (BEST) and trains operated Central Railway and Western Railway, the two zonal railways of Indian Railways. However, railway transport is the quickest and cheapest mode of transport among the two. The map of Mumbai Suburban Railway
RECENT PLANS Indian Railways plans 3 trillion rupees ($65.8 billion) of investment by 2012 to develop private container trains, freight corridors and upgrade stations. More private companies will be allowed to run freight trains and they will also be allowed to improve facilities at railway stations, J.P. Batra, chairman of the Indian Railway Board, said at an infrastructure conference in New Delhi today. India wants to get rid of infrastructure bottlenecks so that the pace of economic growth can be accelerated to as much as 10 percent in the next decade from an average 6 percent since 1980. Construction of dedicated freight corridors will allow companies such as refiner Indian Oil Corp. to move gasoline and diesel faster to consumers across the world’s seventh-biggest landmass.
Indian Railways last month began constructing 220 billion rupees of freight-only lines aimed at improving infrastructure in the world’s second-fastest growing major economy. Prime Minister Manmohan Singh opened the construction work in northern India’s Punjab state, according to an e-mailed statement from his office. The project, the railways’ biggest since India’s independence in 1947, will lay almost 10,000 kilometers (6,215 miles) of tracks connecting the financial hub of Mumbai on the west coast and Kolkata in the east to the capital New Delhi. The freight corridor will eventually be 11,500 kilometers, Batra said. The government in February said it granted licenses to 14 companies to run private trains, ending the monopoly of the government in the business. Indian Railways expects to carry 750 million tons of freight this year, more than the 726 million tons that had been targeted, Batra said. The utility expects to carry 6.5 billion people in the year ending March 31, 2007, compared with 6 billion people in the previous year, the official said. Indian Railways may have a surplus of 200 billion rupees ($4.4 billion) this year, from a surplus of 136 billion rupees last year, he said.
The financial performance of the Indian Railways for the period from 1998-99 to 2002-03 is shown below:
(Rupees in crore)
1. Total Receipts 2. Total Expenditure 3. Net Revenue (1 – 2) (a) Dividend payable to General Revenues 4. 1742.08 for current year (b) Provision for payment of deferred dividend (c) Less Dividend deferred 5. Net Dividend paid 1742.08 Net Surplus available for appropriation 6. 399.08 (3 – 5)
1998-99 1999-00 2000-01 2001-02 2002-03 29975.76 33579.66 35738.57 38630.74 41855.98 27834.60 30843.99 34667.34 36293.21 38025.75 2141.16 2735.67 1071.23 2337.53 3830.23 1889.78 2130.94 2337.18 2664.83 50.00
1823.30 1000.00 1889.78 307.64 1337.18 2714.83 845.89 763.59 1000.35 1115.40
The trend of growth in receipts and expenditure on Indian Railways is depicted in the following chart:
The net revenue, which was Rs.2141.16 crore in 1998-99 and Rs.2735.67 crore in 1999-2000, declined sharply to Rs.1071.23 crore in 2000-01. Due to shortfall in net revenue, the Railways had to defer payment of dividend of Rs.1823.30 crore in 2000-01. Net revenue registered a growth in 2001-02, but was not adequate to meet the requirements of other funds and the dividend liability for the year. Railways, therefore, decided to defer dividend of Rs.1000 crore in 2001-02. Though the financial results of 2002-03, showed a marked improvement over previous years, the net revenue was not sufficient to entirely set off the deferred dividend of the previous years.
Gross Traffic Receipts
The detailed break-up of the traffic receipts of Railways for the years 2002-03 along with the details of BE, RE and actuals of previous yearâ€™s receipts is shown below:
(Rupees in crore)
Traffic Earnings (1) Passenger Goods Other Coaching Sundries including Suspense Total Passenger Earnings
Actuals 2001-02 (2) 11196.45 24845.40 872.24 923.50 37837.59
Budget EstimatesRevised 2002-03 Estimates 2002-03 (3) (4) 13450.00 12730.00 26118.00 26658.00 920.00 950.00 1050.00 529.00 41538.00 40867.00
Actuals 2002-03 (5) 12575.44 26504.82 987.95 1000.01 41068.22
The passenger earnings target was fixed at Rs.13450 crore in the BE. The target was, however, scaled down by Rs.720 crore in the RE to Rs.12730 crore. The actual passenger earnings were Rs.12575.44 crore. Passenger earnings, thus fell short of both the BE and RE projections. The earnings, however, registered a growth of about 12.32 per cent as compared to 2001-02. Goods Earnings
Earnings from goods traffic were estimated to yield Rs.26118 crore in the BE and Rs.26658 crore in the RE. The actual earnings of Rs.26504.82 crore were more than BE by Rs.386.82 crore but fell short of the RE by Rs.153.18 crore. The originating revenue earning goods traffic was projected at 510 million tonnes for 2002-03. This was increased to 515 million tonnes in RE. Railways actually lifted 518.74 million tonnes of revenue earning goods thereby exceeding the targets. The target for volume of revenue earning goods traffic was projected at 334213 million net tonne kilometres (NTKMs) which was increased to 357163 million NTKMs in RE. The actuals during 2002-03 was 353194 million NTKMs, which was more than BE by 18981 million NTKMs but less than the RE by 3969 million NTKMs.
The increase / decrease in originating tonnage of various commodities in 2002-03 over 2001-02 is shown in the following chart:
The offering of â€˜POLâ€™ and â€˜Fertilizerâ€™ declined by 1.57 million tonnes and 0.74 million tonnes respectively, as compared to the actuals of 2001-02. The average lead for coal traffic, which was 614 kms in 2001-02, had decreased to 601 kms in 2002-03. Thus, while the Railways have been able to bring in additional coal traffic, they have actually suffered loss of long lead traffic at the cost of short lead traffic. There was a shortfall in goods earnings from â€˜Other Goodsâ€™ (Rs.409.63 crore), â€˜Iron Ore for Exportâ€™ (Rs.155.07 crore), â€˜POLâ€™ (Rs.148.81 crore), â€˜Cementâ€™ (Rs.147.77 crore), â€˜Fertilizersâ€™ (Rs.59.91 crore), â€˜Miscellaneous Goodsâ€™ (Rs.26.63 crore) and â€˜Raw Material for Steel Plantsâ€™ (Rs.3.63 crore). There was a shortfall in originating tonnage in respect of â€˜Other Goodsâ€™, â€˜POLâ€™, â€˜Fertilizersâ€™, â€˜Iron Ore for Exportâ€™ and â€˜Cementâ€™ by 4.75 million tonnes, 2.55 million tonnes, 2.04 million tonnes, 1.84 million tonnes and 0.25 million tonnes, respectively.
Unrealised Earnings The total amount outstanding against the State Electricity Boards/ Power Houses which stood at Rs.1616.45 crore at the end of 2001-02, increased by Rs.137.42 crore (8.5 per cent) bringing the balance to Rs.1753.87 crore at the end of 2002-03.
The outstanding dues against the main defaulting Power Houses/ State Electricity Boards was as under:
(Rupees in crore)
Sr. No. 1. 2. 3. 4. 5. 6. 7. 8.
Outstanding Electricityas on March 2002 Badarpur Thermal Power Station 957.61 Punjab State Electricity Board 325.31 Delhi Vidyut Board 160.86 Rajasthan State Electricity Board 105.75 Uttar Pradesh State Electricity 8.27 Board Damodar Valley Corporation 4.75 West Bengal State Electricity Board 4.21 Madhya Pradesh State Electricity 2.99 Board Name of State Board/ Power House
duesOutstanding dues 31as on March 2003 966.63 424.05 179.88 109.92 27.36 7.94 8.11 6.29
Increase in dues during 31 the year 9.02 98.74 19.02 4.17 19.09 3.19 3.90 3.30
Operating Ratio The Operating Ratio represents the percentage of working expenses (including the expenses not yet paid) to traffic earnings (including the earnings not yet realised). The operating ratio, which was 96.02 per cent in 2001-02, improved to 92.34 per cent (by 3.68 per cent) in 2002-03 for the Railways as a whole. The operating ratio of Indian Railways during the last five years is shown in the following chart:
Plan Expenditure Details of the plan expenditure met from Central Government support and internal resources during 2002-03 were as follows: (Rupees in crore)
Budget Actual Estimate Sources of Finance Expenditure 2001-02 No 2002-03 Central 1. Government Support (i)Â Budgetary Support (a) Borrowed Capital from4376.89 4040.00 General Revenues (b) Transfer to Special Railway1000.00 1350.00 Safety Fund (ii) Contribution from Central Road 140.28 450.00 Fund to Railway Safety Fund Total Central Government 5517.17 5840.00 Support 2. Internal Resources i) Depreciation 1569.61 2045.00 Reserve Fund ii) Development 449.47 550.00 Fund iii) Capital Fund iv) Special Railway 434.28 860.00 Safety Fund # v) Open Line Works 31.53 35.00 -Revenue Total Internal Resources 2484.89 3490.00 Grand Total of Plan Funds 8002.06 9330.00 (1+2) Sr.
Revised Estimate 2002-03
Actual Expenditure 2002-03
1886.00 550.00 960.00 35.00 3431.00 9435.00
1464.75 483.86 1136.31 28.32 3113.24 8891.06
#Â Â Â Expenditure borne out of the SRSF financed by levy of safety surcharge and from Railways allocation to the fund from its own resources.
The Railways are required to pay dividend at a fixed rate on the Capital advanced by the Government of India. The Railway Convention Committee (RCC) of Parliament determines the rate of dividend payable by the Railways to the General Revenues periodically. In accordance with the recommendation of the RCC:
A moratorium is given on the payment of interest (dividend) on investments made on new lines out of borrowed capital during the period of construction and for five years
after a line is opened to traffic. The cumulative liability on this account is payable when the line shows surplus after meeting the current dividend. The liability is written off, if not paid within 20 years of opening of a line, to traffic. Any shortfall in the payment of current dividend, when the net revenue is not adequate to meet current dividend, is treated as deferred dividend liability.
Pension Fund: Railway-wise analysis of the Pension Fund balances on 31 March 2003 has revealed that the following Railways had adverse (debit) balances in the fund:
(Rupees in crore)
Sr. No. 1. 2. 3. 4. 5. 6.
Name of Railway Eastern Southern Central North Eastern South Central Northern
Amount 2933.78 1375.12 839.55 737.91 709.76 81.79
It implies that these Railways have not appropriated to the fund, the amount needed to meet their pensionary charges. These Railways have, thus, been able to depict a better/ improved operating ratio over the years. On the other hand, Northeast Frontier, South Eastern, Western Railways, Metro Railway Kolkata and all the Railway Production Units have appropriated more to the fund than the amount required for meeting the pensionary charges of 2002-03. Depreciation Reserve Fund: For replacement and renewal of assets, the Railways maintain Depreciation Reserve Fund (DRF) financed by transfers from Revenue. The balances in DRF for the last five years is shown in the following table:
(Rupees in crore)
Year 1998-99 1999-2000 2000-01 2001-02 2002-03 Notes:
Withdrawals Accretion during Opening Balance during the year the year 1434.27 1276.39 2033.94 676.72 1795.23 2421.14 50.81 2429.25 2402.02 78.10 2124.49 1569.61 632.90 2585.30 1464.75
Closing Balance 676.72 50.81 78.04 632.98 1753.45
1. Difference between closing balance of 2000-01 & 2001-02 and opening balance of 2001-02 & 2002-03 amounting to Rs.0.06 crore and Rs.0.02 crore respectively is due to transfers made between DRF and Capital Fund. 2. Accretion includes interest on the balance in the fund. Development Fund: This fund is financed by appropriation from surplus and/ or loans from General Revenues to the extent required to meet expenditure on works relating to amenities for users of Railway transport, labour welfare works, safety works and unremunerative operating improvement works. Appropriation from surplus to Development Fund (DF) was projected at Rs.550 crore in the BE and RE. Ministry actually appropriated Rs.550 crore as planned to this fund. The balances in DF for the last five years is shown in the following table: (Rupees in crore) Year 1998-99 1999-2000 2000-01 2001-02 2002-03 Note: Difference between closing balance of 1998-99 and opening balance of 1999-2000 is due to rounding off while difference between closing balance of 2000-01 and opening balance of 2001-02 is due to transfer of Rs.226.84 crore to Railway Safety Fund and transfer of Rs.0.04 crore from Capital to DF. Difference between closing balance of 2001-02 and opening balance of 2002-03 is due to transfer of Rs.0.06 crore from Capital and DRF. Capital Fund: This fund was created with effect from 1 April 1993 to finance the Capital works of the Railways. The balance amount of surplus left after appropriation to Development Fund is credited to this fund. Since the Railways have not been able to generate adequate surplus for appropriation to Capital Fund, the operation of Capital Fund has ceased for the time being. Appropriation from surplus to Capital Fund (CF) was projected at Rs.17.43 crore at the BE stage. In the RE there was no proposal to appropriate any surplus into the fund. An amount of Rs.0.94 crore was credited to the fund as interest at 7 per cent per annum on the fund balance during the year 2002-03. The balances in CF for the last five years is shown in the following table: (Rupees in crore) Opening Balance 0.39 0.42 0.45 0.52 0.62 Accretion during the year 395.89 497.02 744.98 449.51 553.85 Withdrawals during the year 395.87 496.99 518.11 449.47 483.86 Closing Balance 0.41 0.45 227.32 0.56 70.61
Year 1998-99 1999-2000 2000-01 2001-02 2002-03 Note:
Opening Balance 1200.63 262.88 21.55 21.56 13.47
Accretion during the year 52.71 358.50 282.23 249.62 0.94
Withdrawals during the year 990.46 600.25 282.38 257.71 0
Closing Balance 262.88 21.13 21.40 13.47 14.41
Difference between closing balance of 1999-2000 & 2000-01 and opening balance of 2000-01 & 2001-02 amounting to Rs.0.42 crore and Rs.0.16 crore respectively is due to transfer between Capital and Capital Fund. Railway Safety Fund: This fund was created with effect from 1 April 2001 to finance works relating to Road Safety works viz. (i) manning of un-manned level crossings and (ii) conversion of level crossings into road over/ under bridges. The fund is to be funded from three sources viz. (i) contribution from Central Road Fund, (ii) Railway surplus left after payment of dividend and (iii) contribution which is made by the Ministry of Railways to the Railway Safety Works Fund (maintained by the Ministry of Finance) out of the Dividend payable to General Revenues. During the year 2002-03, the Ministry received an amount of Rs.264 crore from the Central Road Fund and Rs.2.74 crore being contribution payable to Railway Safety Works Fund. The BE provided Rs.452.73 crore to be appropriated from the surplus during 2002-03. However no amounts were appropriated from the surplus to the fund. The balance in Railway Safety Fund (RSF) is shown in the following table: (Rupees in crore) Opening Balance 2001-02226.84 2002-03392.03 Year Note: The opening balance of Rs.226.84 crore represents the transfer from DF on 1April 2001. Special Railway Safety Fund: A new fund, namely Special Railway Safety Fund (SRSF) was set up in 2001-02, to wipe out the arrears of replacements/ renewals of vital safety equipment on Railways in fixed time schedule of 5 to 7 years. This fund was to be financed partly through Railway Revenues by levy of safety surcharge (Rs.5000 crore) and balance (Rs.12000 crore) through additional financial assistance (dividend free Capital) from General Revenues. During the year 2002-03 this fund received Rs.1350 crore by transfer from Capital and appropriation of Rs.1167.91 crore (inclusive of Rs.602.51 crore of safety surcharge receipts) from Revenue. The outgo on account of plan expenditure chargeable to this fund amounted to Rs.2486.31 crore leaving a balance of Rs.52.42 crore in the fund on 31 March 2003. Accretion during theWithdrawals during theClosing year year Balance 305.47 140.28 392.03 266.74 164.08 494.69
The balance in SRSF is shown in the following table: (Rupees in crore) Opening Balance 2001-02– 2002-0320.82 Year Accretion during theWithdrawals during theClosing year year Balance 1455.10 1434.28 20.82 2517.91 2486.31 52.42
NET REVENUE RECEIPTS TREND YEAR 1950-51 1960-61 1970-71 1980-81 1990-91 1993-94 Net Revenue Receipts 47.56 87.87 144.73 127.49 1,113.78 3,102.13 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 4,135.07 3,624.52 3,024.43 2,141.16 2,735.67 1,071.23 2,337.53 3,830.23 1994-95 3,808.11
Lalu’s railways: An IIM case study
There are few political leaders in the country who have been more sharply criticised than Railways Minister Lalu Prasad Yadav.Â But now, there is a genuine sense of respect for what Lalu has been able to achieve for Indian railways, which is looking healthier than it has in years. In fact, Lalu and his Railways Ministry have been so impressive that they are now a case study for the Indian Institute of Management (IIM). When he wrestled the Railways Ministry from Ram Vilas Paswan, many had written the obituary of the Indian railways, saying Lalu would drive it into the ground. But he’s proved the skeptics wrong. Amazing feat The Indian railways, an organisation heading towards bankruptcy three years ago when he took over, now has a surplus revenue of Rs. 11,000 crore, a feat that has won grudging respect for Lalu. And with success has come recognition. IIM-A is taking the railways success as a case study. Effective steps Lalu achieved the feat by taking simple steps like competitive passenger fares and reducing the wagons’ turnaround time from seven to five days. He also raised the carrying capacity of goods trains from 3,200 tonnes to 4,000 tonnes, which led to higher freight earnings. “This is just the start. We will soon have a surplus of Rs 20,000 crore. We will do more, you see our profits will climb even further,” added a confident Lalu. Railways officials are in a celebratory mood, as they know their organisation has turned the corner and the architect of this success is the railways minister. Turning to the Aam Aadmi slogan, the minister said the railways will soon create economic opportunities for the farmers. â€œWe plan to create a public-private partnership model, wherein retail stores would be set up at around 7,500 stations across the country. It will facilitate procurement, distribution and marketing. We plan to involve corporates in this project. Global tenders will be invited,â€ he said. He also talked about providing rail connectivity to all the ports in the country. â€œWe intend to ease the congestion on the road. This would mainly facilitate the car exports from India,â€ he
said. While the minister termed the bullet train project unviable for the country, he told media persons that the ministry plans to take measures to tighten security in the system. â€œWe plan to introduce close circuit TVs and metal detectors at all the major stations. We also plan to restrict entry at the platforms. Only passengers will be allowed to enter the platforms,â€ he said. The minister also stated that he had big plans to enable travellers to get a worldclass experience. Starting with stations at major cities like Ahmedabad, Delhi, Chennai, Mumbai and Patna the new station will have underground cross-over system to reach different platforms instead of an overbridge. Taking a dig at his predecessor Nitish Kumar, Lalu Prasad said, â€œI am aware what he has been saying about our turnaround story and the situation in Bihar. Let us see if he is able to deliver. I donâ€™t think he can.â€ However, he steered clear of making any controversial statements. When asked about his views on reservation, he said, â€œToday is not the day to discuss it.â€
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