Overview of the Indian railways with the recent budget

1. Indian Railways
Carrying the burden of INDIA
Inline with the Railway budget - Shriram / 01-03-2015

2. Indian Railways is third largest network in
the world and is the lifeline of the country
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• 162 year old
• 115000 km track length
• 131205 railway bridges
• 9000 locomotives
• 51030 passenger coaches
• 19000 trains / day
• 2.65 million tons of freight traffic
• 23 million passengers / day
• 1.36 million employees
• 7th largest commercial employer
The railway possessed India and made her hugeness graspable – Paul Theroux

3. Growing population, urbanization, chronic
under investment causing loss in revenue
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4. Share of railways in total freight traffic
declined and infrastructure investment
directed towards roadways
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100%
80%
60%
40%
20%
0%
1950-51 1978-79 1986-87 2007-08
Railways Highways Others
13th FYP

5. High freight costs and low availability lead to
increased share of roadways
5

6. Cross subsidization of passenger traffic by
freight has increased over years
6
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
2014-15BE
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11
2011-12
2012-13
2013-14
15%
10%
5%
‐50%%
‐10%
80%
70%
60%
50%
40%
30%
20%
10%
0%
% Growth in freight volume % Growth in passenger volume
Source – Railways Budget documents, Railways Annual Report, PRS
Volume growth for freight and passenger Revenue share for freight and passenger
Freight Traffic : Growth 67% in last 10 years, Earnings – 67%
Passenger Traffic : Growth 94% in last 10 years, Earnings – 27%
Relative share remaining same in spite of differential growth indicating subsidy
Loss per passenger KM – 23 Paisa

7. Cash strapped, poor implementation, falling
in to the vicious circle of diminishing
efficiency and eroding share
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• Strike rate - 1/99 planned projects worth 60 000 crores
• 4 projects - 30 years old, still not implemented
• Without Expansion - Increased traffic and less availability
• Less focus on profitable Freight business, losing to other means of transport
• High rolling stock cost – Old engines, railway tracks and instrumentation
• Low train speeds – Averaging 130 km/h as against global fastest of 486 km/h
• Attitude as service provider rather than “Competitive Logistics provider”
Absence of regulatory mechanism, no control over network and tariff
uncertainty of traffic materialization and delay in process have not generated
confidence among the investors – Railway Minister Suresh Prabhu
Operating ratio – 93%
Operating ratio is the money spent to earn Rs. 100

8. Needs huge investment to sustain and
contribute to the national economy
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Indian railways is close to falling in to the vicious circle of diminishing
efficiency, falling safety standards, eroding share in national freight and
passenger traffic and possibly ending up a burden on the national
economy instead of being its bulwark and vital support.
Shri Sam Pitroda, Advisor to Prime minister
India needs to increase its use of rail. In the normal course, the rail
share in freight would decline to 25 %. This is relative to almost 50
% rail share in China, America, similar size of continents.
Mckinsey report
Generation of internal resources is insufficient to take care of the plan
expenditure. Hence other and alternate means of resources are
required to be tapped for funding of bankable projects that can be
executed in a short time span. Railway Minister
Investment of Rs. 560000 crores over next 5 years

9. Increased carrying capacity, low
environmental emission and less land
requirement are the drivers for railway
expansion
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Advantages of Railways over Roadways
• carrying capacity = 2.83 x No. of passengers per hour width
• 13% greater capacity than a 6 lane highway
• Direct/ indirect land consumption – 1/3 Vs 2.5/7.5 hectares/km
• 40% of lesser land area
• Lowest emission of 28 g CO2 per Ton-km Vs 64 g CO2 per Ton
Indian railway is the first to use CNG

10. Govt. budgetary support, internal generation,
monetization of blocked assets, funding raising from
market and PPP model - way forward to growth and
sustenance
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Budget 2015 – Planning
Plans • Track capacity expansion 1,14,000 km >>1,38,000 km
• Emphasis on safety, remove unmanned level crossings
• High-density networks modernization to achieve higher speeds
• Going green - installing 1,000 MW of solar power.
• Improve operating ratio to 88.5 %
• Dedicated freight corridors
Finance • Investment 8.5 lakh crores in the next 5 years
• Tap low-cost pension funds and raise long term debt from domestic and
overseas sources
• Freight rate hiked by 10 percent for urea, 6 percent for coal and 2.7
percent for cement
• Passengers fares untouched

11. Great intentions with no plans of where
such investments will come from
The Journey continues………
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The aim is to make Indian railways reliable, comfortable, safe
mode of travel with self sustainable financials supporting the
Indian Economy. May the dream come true.
References - Shri Sam Pitroda report, Mckinsey report, Indian statistics
report, Railway budget and other websites