Free Essay

Regulation in Indian Railways Sector

In: Social Issues

Submitted By skolasani
Words 1074
Pages 5
Railways sector in India

Indian railways started its 53km journey between Mumbai and Thane on April 16, 1853 and is today one of the largest railways in the world. Indian railway is spread over 109,221km covering 6906 stations. Operating three gauges, trains in India carry over 481 billion ton kilometers and 695 billion passenger kilometers of goods and traffic respectively. Indian railway carries 40% of freight traffic and 20% of the passenger traffic in country. IR is one of the premier infrastructural wings of the economy combining all major functions of a conventional Railway system. It builds and maintains infrastructure assets like Track, Electric traction, Signaling Systems, Telecom network, Stations / Terminals etc. Apart from operating goods and passenger trains, it operates suburban trains in various metros. It manufactures locomotives, coaching stock, wagon and components of rolling stock like Wheel & Axle. It runs workshops to maintain its rolling stock & is also involved in ancillary activities like catering, tourism etc. All the above activities are managed through a strong work force of 1.41 million.

Indian Railway’s operations are characterized by mixed traffic –both passenger and Freight trains share the same track and infrastructure. Passenger trains constitute nearly 70% of the trains run but contribute to less than 35% of the revenue earned, while freight trains constituting only 30% of the trains, make up 65% of the revenue. Like most of the other railways in the world, IR faced a very challenging environment towards the closing years of the 20th century characterized by severe competition from road in freight and airlines, luxury buses and personal vehicles in the passenger segments. Indian railway has been a success story; however, IR needs to be alive to the fact that its freight traffic stands on a narrow base of a few commodities. The traffic is also concentrated on certain high-density routes; in particular, the routes connecting the four metropolitan cities of the country which constitute 16% of the network but carry more than 50% of the traffic.

The current legal framework under the Railways Act 1989 allows private railway systems in all forms. However, the government policy enunciated under Industrial Policy
Resolution of 1991 as amended from time to time, reserves railway transportation for the public sector. It means that train operation can only be done by the public sector, while all other activities of design, construction, financing, and maintenance can be undertaken through private participation through award of concessions by Government of India. Presently, the Railways are managed through 17 Railway Administrations which are legal entities. In addition there are six port and other railways. The Railway Board was constituted under the Railway Board Act, 1905 and it is also a railway regulator, dealing with a large number of issues including tariff regulation. Railway Board and the Commissioner of Railway Safety, whose office is under administrative control of Ministry of Civil Aviation, jointly work as safety regulator.

There are only two kinds of rail systems that lie outside the integrated IR network. The first includes the close circuit systems that is, the Merry- Go-Round systems created and operated by the NTPC for super thermal power plants. The other kind includes standalone metro rail systems which are planned for and financed by the Ministry of Urban Development. The private sector has been largely associated in design, financing, construction, and maintenance of fixed infrastructure in railways. Construction activity in rail sector is normally undertaken by the private sector through contracts.

Unlike ports, highways & airports, where a regulator offers certain level of stable returns to private investors, railways by virtue of their monopolistic nature of operation, do not offer an alternative to customers among various Railways. The tariff policy is also fixed by the Government. There is thus a need for separate accounting for infrastructure and train operations for initiating any long term PPP regulatory framework.

As per the Economic Survey 0f 2008 – 2009, the plan outlay in FY08 on Railways was
Rs 29,983 cr while the budget estimate for FY -09 is placed at Rs. 36,726 cr

Alternative financing initiatives of Indian railways are as follows:


Other efforts of Indian railways are introducing some tourist trains like Place on Wheels and another tourist train Deccan Odyssey is being run by Maharastra State Tourist Corporation. Privatization of some more tourist trains including the Kisan Tourist Train to cater to common people is on the anvil.

Regarding PPP in Indian railway several models of Private - Public Partnership are now being used in various infrastructure projects in the Transport Sector including Railways. The spectrum of projects varies from leasing out of Government owned facilities to BOO (Build, Own, Operate) and BOT (Build, Operate and Transfer). While it is possible for other infrastructure projects in ports, highways & airports to be an independent system which could be operated and maintained independently of the existing system, the same is not possible for Railways.

Some of the PPP project initiatives undertaken by Railways are follows:





Indian railways is promoting PPPs as well as playing the role of a regulator. Creating an enabling environment for PPPs is of paramount importance. Corporatization of IR is the best way to take the restructuring of the IR forward. The IR should also adopt Generally Accepted Accounting Principles (GAAP), the role of the IR Regulatory Authority should be strengthened and it should be allowed to decide the fares to be charged from the passengers with a provision for adequate compensation from the Union Budget for keeping fares cheaper to fulfill its objective of social welfare. Understandably, for the slow approach is the fear of emergence of private monopolies in the place of state monopoly in case right policies are not adopted. The characteristics of the railways are such that private monopolies will mushroom in place of state monopoly in case the right policy is not adopted. This again brings us to the need for an independent regulator on the lines of TRAI. The strategies implemented by the IR have really worked to its benefit and have allowed the railways to also be a profit making business keeping in mind the welfare of citizens.

Similar Documents

Free Essay


...Sarah Allmond, Kamal Assaf, Doug Bice, and Renee Burkart Dr. Mike Marzano Logistics Management February 21, 2013 Infrastructure in India India’s port, road, and rail networks need massive capital investment. The ports in India are operating beyond their intended capacity in spite of the construction of a number of new sites. Moreover, there are bottlenecks when clearing goods from customs: the time required to clear goods in India is twice that of South Korea and Thailand and three times that of the average for members of the Organisation for Economic Co-operation and Development (OECD). Since most ports are overstretched and the time taken to obtain customs clearance is quite long, companies in India hold large inventories. Poor road and rail networks exacerbate these problems. India is presently ranked 17th in the maritime nations of the world. About 95% by volume and 70% by value of the contry’s trade is carried on through meritime transport. The country’s coastline comprises 12 major ports (Chennai, Ennore, Haldia, Pradip, Kandla, Kochi, Kolkata, Marmagao, Mumbai, New Manglaore, Tuticorin and Visakhapatnam) and 187 minor and intermediate ports. FDI up to 100% under the automatic route is permitted in the construction and maintenance of prots and harbours, maritime transport services and internal waterways transport services. The department of Shipping is also planning to enact a Shipping Trade Practices Act, which is presently in the daraft stage. The......

Words: 4315 - Pages: 18

Free Essay


...cost. For ex: If a container is 40% loaded and another container is 30% loaded, CCI will consolidate both to transport a 70% loaded container. • Bonded warehouse and truck operations • ETMS – Exim Terminal Mgmt. Sys. – container tracking service • Handling of customized non-std. containers • Hazardous material handling • Exim customs handling: CCI handles all the export- import custom documentation for the international orders. The client should remain completely hands-free; all the transactions between port’s terminal, customs handling will be taken care by CONCOR. Industry analysis Overview: Name of Force Force score Implications on future Profitability Substitutes 2 Decreasing Complements & Govt Regulation 1 Decreasing Barriers to entry & Govt Regulation 5 Decreasing Bargaining Power of Suppliers 2 Decreasing Bargaining Power of Customers 2 - Competitors 3 Decreasing The overall industry profitability is very high with barriers to entry being high and the bargaining power of the suppliers/buyers being very low. CCI almost holds monopoly in the industry. But recent developments and trends suggest...

Words: 2428 - Pages: 10

Premium Essay

Papers on Customer Loyalty in Cellular Services have also evinced signs of recovery with easing of supply bottlenecks in certain sectors and demand recovery in others. The robust growth momentum in telecommunications, particularly the wireless segment, continues with monthly additions exceeding 17.6 million connections. In the midst of the worstever slowdown in the history of world civil aviation, even the modest levels of growth in India are indicative of resilience. Core industries like power, coal and other infrastructure like ports and roads are also reviving. Available evidence points to a steady revival of flows of investible resources. However, the levels of broadband penetration, capacity creation in some crucial infrastructure sectors and the state of development of markets for longterm finance remain causes for concern. There is need to develop infrastructure to complement and sustain the economic growth momentum. Efforts—legislative, administrative and executive—are on to minimize the infrastructure deficit, ameliorate bottlenecks in completion of projects and nurture core industrial intermediates and infrastructure services. 10 CHAPTER 10.2 The stimulus measures announced by the national authorities worldwide to combat the economic slowdown contained infrastructure buildup plans. In line with the rest of the world, the Union Budget for 2009-10 substantially stepped up allocation for many infrastructure sectors over the Budget estimates for the previous year, especially for the National Highways......

Words: 24084 - Pages: 97

Free Essay


...Services, RITES. Prologue RITES Journal 22.1 July 2009 Indian Infrastructure : Role of RITES Introduction Much of the industrialized world is currently in the grip of recession due to the ongoing global financial crises (GFC) – allegedly triggered by the subprime mortgage crisis of USA in 2007. According to some analysts the recession is the worst since the great depression of 1930s. The world output and trade is forecast to shrink in 2009 – the first such contraction since the end of World War II. The recession is inflicting job losses and wealth loss on an unprecedented scale. In an era of globalization, the GFC has impacted the economies of practically all countries in varying degrees and India is no exception. After a long spell of growth, the Indian economy is experiencing a downturn. Industrial growth is faltering, the current account deficit is widening, foreign exchange reserves are depleting and the Rupee is depreciating. There is gloom in the job market and stock markets have registered a sharp downward spiral. RITES - the Infrastructure People. The Company has come a long way from its inception in 1974 and, apart from India, has operated in 62 countries. The Authors, who have a wide experience in international consultancy, have forcefully brought out the present spread of its consultancy areas and as also its road map for the future. RITES’ contribution in the infrastructure sector has also been highlighted. A must read for all......

Words: 6436 - Pages: 26

Premium Essay


...CONSTRUCTION SECTOR IN INDIA HISTORY Indian Construction Industry is highly fragmented. There are mostly unorganized players in the industry which work on the subcontracting basis. As the Construction activity being labor intensive, construction companies have been mainly focusing on mechanization over past few years. Consequently, growth in quantum of labourers required has declined from 1.6% in FY 04 to 0.9% in FY 08. Projects in Construction industry are mostly working capital intensive. | | The Indian construction industry forms an integral part of the economy and a conduit for a substantial part of its development investment, is poised for growth on account of industrialization, urbanization, economic development and people's rising expectations for improved quality of living. Construction constitutes 40% to 50% of India's capital expenditure on projects in various sectors such as highways, roads, railways, energy, airports, irrigation, etc and is the second largest industry in India after agriculture. It accounts for about 11% of India's GDP. For the first five-year plan, construction of civil works was allotted nearly 50 % of the total capital outlay. In 1954 National Industrial Development Corporation (NIDC), was set up in the public sector which is the first professional consultancy company. Then later many architectural, design engineering and construction companies were set up in the public sector (Indian Railways Construction Limited (IRCON), National......

Words: 4246 - Pages: 17

Premium Essay

Analysis of Infrastructure Sector in India

...Analysis of Infrastructure Sector Infrastructure refers to the fundamental facilities and systems serving a country, city or area, including the services and facilities necessary for its economy to function. Infrastructure is the backbone of an economy. The various types of infrastructure are roads, airports, ports, housing, cold chain, warehousing, telecom towers and allied services, container freight stations etc. In the World Economic Forum’s Global Competitiveness Report for 2011-2012, India was ranked 89th out of 142 countries for its infrastructure. The report also criticized the transport, ICT and energy infrastructure labelling it as “largely insufficient and ill adapted to the needs of business”. Market Size: The Indian power sector has an investment potential of $US 250billion in the next 4-5 years, providing immense opportunities in power generation, distribution, transmission and equipment. The Indian railways have had an increase of 12.57% in revenues from last year. FDI received in construction development sector from April 2000 to January 2015 stood at US$ 24,028.19 million. The number of export and import containers moving through major ports in India expanded 7.34% year over year from April to October 2014. Government Estimation and Plans: Sustained increase in infrastructure is expected to be one of the crucial factors for sustaining strong growth in the economy. Infrastructure investment is expected to surge from 8.9% of GDP in FY15 to 12.1% of GDP......

Words: 700 - Pages: 3

Free Essay

Financial Analysis

...for the company and for all of us. It has been a continuous process of learning and today we are comfortably placed among our peers with a diversified and substantial order book. We have grown multifold and have been able to sustain this growth because of the dedicated and committed efforts of the entire team. From a small construction company we have matured ourselves in a large and diversified infrastructure organization. We have shown stellar business and financial performance year-on-year and have forayed into different business segments of the infrastructure sector. Economic and Industry Overview Supported by strong fundamentals and the Central Government's proactive measures India has been the most resilient and efficient economy to come out of the economic crisis. India's GDP growth for 2009-10 is estimated at 7.2 per cent. With an assumption of sustainable good performance of the industry and services sectors, the latest RBI projection placed the real GDP growth at 8.0 per cent for the year 2010-11. According to the latest IMF projection, India will grow at 8.8 percent during the year 2010. Central and State Governments are also realizing the need of good infrastructure. In the next 10-year period, if we take the estimates of the Union Government, India needs US$1 trillion (from 2007-2017 spread over the 11th and 12th Plan periods) for building new...

Words: 4742 - Pages: 19

Premium Essay

Distribution Channel Email: Web: Email: ANALYSIS & EVALUATION OF DISTRIBUTION CHANNELS IN VARIOUS SECTORS The project involved analyzing and evaluating distribution channels of various companies belonging to sectors like: 1. Precious and semi precious stones, 2. White goods, 3. Cement, 4. FMCG Methodology: This research comprised of activities like listing down various agencies like manufacturers, distributors, etc and also chambers and libraries like the Indian merchant chambers and interacting with them in order to gather first hand information. PRECIOUS AND SEMI PRECIOUS STONES The Indian Gems and Jewellery industry is an age old industry and comprises mainly of two types of markets, viz the organized sector and the unorganized sector. The organized sector with branded jewelers, Public Sector Units (PSUs), etc forms only 10% of the precious and semi-precious stones market, whereas, the unorganized sector forms 90% of the gems and jewellery market in India. The unorganized sector employs around 1.5 million workers serving over 0.1 million gold jewelers and over 8000 diamond jewelers. Precious and semi-precious stones industry is a significant earner of foreign exchange. This sector contributes around 17% of India’s exports. The bulk of the Indian gems and jewellery exports comprise imports of rough diamonds, cutting and polishing in India, and re -exports. Cut and Polished Diamonds (CPD) and gold......

Words: 3682 - Pages: 15

Premium Essay

Indian Logistic Industry

...INDIAN LOGISTICS INDUSTRY 2009 PROJECT REPORT ON INDIAN LOGISTICS INDUSTRY FOR PARTIAL FULFILLMENT OF POST GRADUATE DIPLOMA IN MANAGEMENT SUBMITTED TO: Ms. Gunjeet Kaur Lect. of SVSM SUBMITTED BY: Rajnish Kumar Roll No. SVPG/07/05 PGDM – 6th Trimester SWAMI VIVEKANAND SCHOOL OF MANAGEMENT Ramnagar (near Banur), Patiala 1 | Page SVSM RAJNISH THAKUR (PGDM) INTERNATIONAL BUSINESS & MARKETING INDIAN LOGISTICS INDUSTRY 2009 Punjab LOGISTICS MANAGEMENT - INTRODUCTION Logistics management is that part of the supply chain which plans, implements and controls the efficient, effective, forward and backward (reverse) flow and storage of goods, services and information between the point of origin and the point of consumption in order to meet customers' requirements rather to the customers’ delight. A professional working in the field of logistics management is called a logistician. Logistics, as a business concept, evolved only in the 1950s. This was mainly due to the increasing complexity of supplying one's business with materials, and shipping out products in an increasingly globalized supply chain, calling for experts in the field who are called Supply Chain Logisticians. This can be defined as having the right item in the right quantity at the right time at the right place for the right price and to the right target customers (consumer); and it is the science of process having its presence in all sectors of the industry. The goal of logistics work is to manage...

Words: 20387 - Pages: 82

Premium Essay

Deloitte Logistics Report 2012

...Logistics Sector Present situation and way forward January 2012 2 Contents About Deloitte About ICC Overview I. Challenges faced by the Logistics industry in India II. Impact of challenges faced III. The way forward Bibliography Websites Contacts 4 5 6 8 13 14 16 18 19 Logistics Sector Present situation and way forward 3 About Deloitte Deloitte is one of the largest professional services organizations in the world with a worldwide presence of over 182,000 professionals in over 150 countries, with $28.8 billion in annual revenue (FY11). Deloitte’s global presence is highlighted below. the right combination of local insight and international expertise. Deloitte in India provides a full range of management consulting, financial advisory services, Accounting, Tax and IT solutions delivery to clients, tailored to Deloitte: Global network - 150 countries : 182,000 people Europe 297 offices in 47 countries Key Offices: London, Frankfurt, Paris, Rome, Dusseldorf, Madrid, Moscow, Prague Asia Pacific 113 offices in 26 countries Key Offices: Pakistan, Singapore, Thailand, Vietnam, Indonesia North America 131 offices 2 countries Key Offices: New York, San Francisco, Los Angeles, Denver, Toronto, Montreal South America 69 offices in 28 countries Key Offices: Sao Paulo, Mexico City, Buenos Aires, Santiago, Caracas Africa & Middle East 46 offices in 35 countries Key Offices: Johannesburg, Cape Town, Kenya, Tel Aviv India 15000......

Words: 6051 - Pages: 25

Premium Essay


...refund in case of cancellation, In-flight Entertainments and many more • Quality- World class service provider, comfortable seats, etc • PESTEL Analysis Political Regulators: Directorate General of Civil Aviation(DGCA) - controls flying Licenses, pilots, certifying aircrafts and procedures to govern airports & airspace. Airport Authority of India(AAI) • Assigned the responsibility of managing National and International airports and administration through Air Traffic Control(ATC). FDI ceiling in Airlines sector is 49% currently. FDI limits: - 100% for Greenfield airports - 74% for the existing airports - 100% for NRI’s. • Economic Factors Contribution to the Indian Economy Rising cost of fuel Investment in the sector of Aviation. The growth of middle income group family affects the Aviation sector Shortage of Infrastructure capacity Social Factors Development of cities leads to better services and airports Employment opportunities Safety regulations Technological Factors The growth of e-commerce and e-ticketing Mobile and online check-in Modernization and privatization of airports. Upgradation of ATC. • Environmental Factors The increase in the global warming The...

Words: 762 - Pages: 4

Premium Essay

Global Production Network Impact on Developing Countries

...Workshop (5 ECTS) and synopsis): 48-hours essay Question number: 1 Student’s name: Edda Maria von Wildenradt Study card no./Birthday: 51970 Keystrokes/characters including spaces (Please look at the supplementary provisions for maximum-value): 14359 Submission date: 03-06-2015 Roskilde Universitet Den samfundsvidenskabelige bacheloruddannelse 2 In the following essay I will address some specific issues in the global South that are influenced by international trade and trade regulation. This essay will provide a critical perspective on how international trade and trade regulations function and by this rise following questions: Which consequences have the international trade and trade regulation had in the given periods? Who benefits from the international trade and trade regulation? And lastly, is international trade and trade regulation only designed to benefit one part of the world - the West? Why are some people rich and some poor? This question raises a debate with several of arguments of why that is. Some people believe it to be due to the poor’s behaviour and others sees it as a result of the relationship between the poor and the rich (O’Brian & Williams 2014: 43). I do not believe that poor people’s behavior is the one to blame. I think we need to go back in time and see what marks...

Words: 2460 - Pages: 10

Free Essay

Www World Labour

...Chidambaram #Service sector #Unorganised Sector 22 0 8 16 CommentsEmailPrint By R Vaidyanathan The growth rate of our economy has declined from around 8-9 percent in the middle of the decade to around 5-6 percent now. Experts are wondering why this is happening. Government economists such as C Rangarajan and Raghuram Rajan ascribe this to the global slowdown as well as delayed decisions in acquiring land and providing clearances for major infrastructure projects. They are right – but only to a very small extent. The main drivers of growth in our economy are services, whose share in GDP is around 65 percent. Whenever the term ‘service sector’ is mentioned, the immediate recall is about information technology and companies like Infosys or Wipro. Factually, all software-related activities come under business services, which itself is less than 5 percent per cent of our national income. The services sector covers a much larger canvas and is not only the fastest growing, but also a big generator of jobs. In Table 1, we have shown the activities that constitute the services sector. As can be seen, this sector encompasses diverse activities carried on by large multinationals as well as roadside entrepreneurs. Normally construction is included in the secondary sector along with manufacturing in developed countries. But given the labour-intensive nature of the construction business and the use of small contractors to build houses, we have included it in the service sector;......

Words: 1083 - Pages: 5

Premium Essay

Logistics Industry

...INDIAN LOGISTICS INDUSTRY May 2012 Index I. II. Executive Summary Market Overview – – – – – – – – Industry Overview Structure of the Industry Five Forces Model Growth Drivers Trends in the Industry Government Initiative Opportunities in the sector Challenges in the sector III. Industry Analysis III. Major Players – Major Companies – Common Stock Comparables IV. Organized Players in Logistics Segment – – – – – Container Rail Business Multimodal Transport Operation Container Freight Station Third Party Logistics Express Logistics 1 Index V. Investment in the Sector – Private Equity Deals – Recent Joint Venture – Recent Private Equity Funding VI. Profile of Listed Companies – – – – – – – – – – Container Corporation of India Limited Allcargo Logistics Limited Gateway Distriparks Limited Aegis Logistics Limited Transport Corporation of India Limited Arshiya International Limited GATI Limited Blue Dart Express Limited Shreyas Shipping and Logistics Limited Sical Logistics Limited VII. Corporate Profile (Dinodia Capital Advisors) 2 Executive Summary The logistics sector in India is evolving rapidly and its growth is dominated by the interplay of infrastructure, technology and new types of service providers that will determine whether the industry is able to help its customers to reduce logistics costs and provide effective services or not Changing government policies on taxation and regulation of service providers is going to play an......

Words: 6615 - Pages: 27

Premium Essay

Pakisan Railway

...Abstract Pakistan Railways is a national transport service of Pakistan. It’s head-quartered is in Lahore and is working under the Ministry of Railways. Pakistan Railway provides an important mode of transportation throughout Pakistan. It is commonly referred to as the "life line of the country", by aiding in large scale movement of people and freight throughout Pakistan. A railway all over the world is considered, cheapest, safest and efficient mode of passenger and freight carrier. Pakistan is no exception to this. Till 1970’s Pakistan railways used to be a profit earning entity. Due to successive governments tilt towards road network affected the railway operations. By introducing NLC (National Logistic Cell) during Zia’s regime railways started sliding downwards and till date has not been able to stand upon its legs. Railways need huge investments which was not forth coming by the governments who remain power one after the other. This not only affected the railway operation both in passenger as well as freight. The much needed investment in shape of infrastructure, equipment and material was not forth coming. The railway assets due to lack of repair and maintenance started becoming inoperative and obsolete. The lack of Government attention and apathy Pakistan railways has reached at its lowest ebb. The rolling stock and locomotives have outlived their utility. The only way through which Pakistan Railways can be broad back to its past glory if the Government injects......

Words: 5040 - Pages: 21