The government is continuing to provide liberal support for Indian Railways in its 2024-25 budget unveiled on July 23, but Raghu Dayal suggests that this largesse is not enough. IR is in need of transformative restructuring if it is to reverse the long decline in its market share.
Presenting the first national budget for FY25, after the Narendra Modi-led administration was returned to power for a third term in the recent general election, on July 23 Finance Minister Nirmala Sitharaman highlighted the government’s ‘Viksit Bharat’ vision of India becoming a developed country by the centenary of its independence in 2047.
Within an overall allocation for capital expenditure in the 2024-25 financial year of Rs11·11tr (3·4% of GDP), she confirmed the railway’s allocation at the level set in the interim budget on February 1.
Record levels of funding for IR in recent years have underscored the government’s recognition that rail is a vital engine for economic development and enhanced connectivity, and its commitment to fostering further expansion of transport infrastructure as the country experiences rapid economic growth.
In terms of specific railway investment, Sitharaman focused on three initiatives aimed at supporting economic activity: energy, mineral and cement corridors; port connectivity; and the expansion of high density corridors. She also announced plans for a logistics strategy for key industrial sectors to ease supply side constraints.
As an example, the cement industry in south India has a production surplus, but needs raw materials from other parts of the country, which cannot be delivered for lack of rail capacity. A dedicated cement corridor is therefore to be developed as part of a so-called ‘Energy Economic Corridor’, while a ‘Sagar Corridor’ will aim to improve port connections.
These three economic corridor programmes ‘have been identified under the PM Gati Shakti for enabling multi-modal connectivity’, the minister explained, suggesting that ‘they will improve logistics efficiency and reduce cost. The resultant decongestion will also help in improving the operation of passenger trains, resulting in safety and higher speed for passengers.’
Meanwhile, the ‘Amrit Chaturbhuj’ programme envisages extensive multi-tracking on IR’s seven busiest ‘High Density Network’ corridors (Table I).
Table I. IR’s High Density Network corridors | |
---|---|
HDN1 |
Delhi – Kolkata (Howrah) via Allahabad, Mughalsarai and Gaya |
HDN2 |
Kolkata – Mumbai via Jalgaon, Nagpur and Bilaspur |
HDN3 |
Delhi – Mumbai via Kota and Ratlam |
HDN4 |
Delhi – Guwahati via Rosa, Gorakhpur and Kumedpur |
HDN5 |
Delhi – Chennai via Bhopal, Nagpur, Vijayawada and Gudur |
HDN6 |
Kolkata – Chennai |
HDN7 |
Mumbai – Chennai |
Funds will also be allocated for essential infrastructure under the Andhra Pradesh Reorganisation Act. For rail, this includes strategic nodes such as Kopparthy on the Vishakhapatnam – Chennai Industrial Corridor and Orvakal on the Hyderabad – Bengaluru Industrial Corridor.
Noting that ‘we have a fast-expanding middle class and rapid urbanisation is taking place’, Sitharaman added that metro and suburban rail expansion ‘can be the catalyst for the required transformation. Expansion of these systems will be supported in large cities, focusing on transit-oriented development’.
According to Railway Minister Ashwini Vaishnaw, the upgrading or addition of 40 000 track-km across the seven corridors would require an investment of Rs11tr over nine years, with the work to be implemented through 434 separate projects.
Meanwhile, 40 000 loco-hauled passenger coaches will be upgraded to Vande Bharat standards to enhance safety, convenience and passenger comfort across the network. This is costed at Rs150bn over five years.
Expanding on the budget announcement, Vaishnaw said a significant portion of IR’s FY25 budget would be dedicated to enhancing safety. ‘A big chunk of this allocation — Rs1 087·95bn — is meant for safety-related activities, such as replacement of old tracks with new ones, improvement in the signalling system and construction of flyovers and underpasses’; rolling out the Kavach train protection system would be the highest priority, he added.
Railway finances
As shown in Table II, IR’s revenue is budgeted to increase by 7·7%, from Rs2 586bn in 2023-24 to Rs 2 785bn in 2024-25, while expenditure will rise by 7·4%, from Rs2566bn to Rs2 757bn. Freight revenues are expected to yield Rs1 800bn in 2024-25, up by 6·5%, from the latest estimate of Rs1 690bn for the year to March 31. In fact, last year’s final figures were expected to be around Rs100bn below budget, due to a scaling back in freight volumes from 1 600 to 1 580 million tonnes. Originating tonnage for the next financial year has been set at 1 650million.
Table II. Indian Railways’ income and expenditure profile: Rs bn | ||||
---|---|---|---|---|
2021-22 |
2022-23 |
2023-24 |
2024-25 |
|
Actual |
Actual |
Estimate |
Budget |
|
Gross traffic receipts |
1 912·1 |
2 399·8 |
2 579·0 |
2 781·0 |
From passengers |
392·1 |
634·2 |
730·0 |
800·0 |
From freight |
1 411·0 |
1 622·9 |
1 690·0 |
1 800·0 |
Total revenue |
1 913·7 |
2 401·8 |
2 586·0 |
2 785·0 |
Capital support |
1 175·1 |
1 592·6 |
2 402·0 |
2 522·0 |
Extra budgetary resources |
710·7 |
413·3 |
170·0 |
100·0 |
Total receipts |
3 799·4 |
4 407·6 |
5 158·0 |
5 407·0 |
Expenditure from revenue |
2 063·9 |
2 376·6 |
2 566·0 |
2 757·0 |
Expenditure from budget and EBR |
1 885·7 |
2 005·8 |
2 572·0 |
2 622·0 |
Total expenditure |
3 949·6 |
4 382·4 |
5 138·0 |
5 379·0 |
Net revenue |
-150·3 |
25·2 |
20·0 |
28·0 |
Operating ratio |
107·4 |
98·1 |
98·7 |
98·2 |
Meanwhile, passenger revenues are budgeted to jump by 9·6% from a record Rs730bn in 2023-24 to no less than Rs800bn in 2024-25.
Despite the projected growth in revenue, IR’s operating ratio is only expected to improve slightly from 98·65% to 98·22%, as its outgoings are also increasing rapidly. Revenue expenditure primarily consists of salaries (40%), pensions (24%), energy (13%), and asset maintenance (23%). According to the latest estimate, IR was only expected to record a marginal surplus of Rs20bn in 2023-24, less than 1% of its projected capital expenditure.
The railway is still suffering from the after effects of the Covid-19 pandemic, which resulted in a revenue deficit of Rs150bn in 2021-22. IR managed to report a slight surplus in 2019-20 and 2020-21 by reducing its pension fund appropriation, but the resulting gap then had to be filled by a special government loan of Rs794bn.
As well as revenue from train operations, IR has ancillary earnings from other activities including property rental, catering and advertising. Until 2016-17 this included dividends from IR’s production plants and related public sector undertakings, but since the abolition of the separate railway budget these are now credited to central government revenues.
Sundry earnings of Rs93bn in 2023-24 represented an increase of 9% over the previous year. However, they only amount to 3·6% of total revenue, down from 4·9% in 2017-18. India’s Comptroller & Auditor General has suggested that there is considerable scope to increase revenue generation from the commercial utilisation of railway land in particular.
Capital expenditure boosted
IR’s capital expenditure covers investment in new lines, multi-tracking, electrification and track renewals, as well as the procurement of rolling stock (Table III). Expenditure has been running at near record levels in recent years, and is projected to increase by a further 2%, from Rs2 602bn in 2023-24 to Rs2 652bn in 2024-25.
Table III. IR investment plans | |||||
---|---|---|---|---|---|
2021-22 |
2022-23 |
2023-24 |
2024-25 |
||
Actual |
Actual |
Estimate |
Budget |
||
New line construction |
Rsbn |
212·5 |
246·6 |
344·1 |
346·0 |
Route-km |
289 |
200 |
600 |
700 |
|
Multi-tracking |
Rs bn |
322·2 |
300·4 |
350·5 |
293.1 |
Route-km |
1 948 |
2 200 |
2 800 |
2 900 |
|
Rolling stock |
Rs bn |
414·1 |
442·9 |
503·2 |
523·1 |
Electric locos |
No. |
1 110 |
1 290 |
1 218 |
1600 |
Diesel locos |
No. |
100 |
100 |
100 |
100 |
Coaches |
No, |
7 151 |
7 520 |
7000 |
8405 |
Wagons |
No. |
8 386 |
21 000 |
23 000 |
38000 |
Track renewals |
Rs bn |
140·9 |
163·3 |
168·3 |
176·5 |
Route-km |
4 275 |
4 200 |
4 800 |
5 000 |
|
Electrification |
Rs bn |
69·6 |
66·6 |
83·6 |
64.7 |
Route-km |
6 366 |
6 500 |
6 500 |
0 |
|
Leased assets: payment of capital component |
Rs bn |
145·8 |
174.6 |
213·0 |
242·7 |
Investment in public undertakings/JVs/SPVs |
Rs bn |
257·5 |
275·3 |
328·0 |
327.6 |
Customer amenities |
Rs bn |
19·9 |
21·6 |
96·2 |
155·1 |
Total, including others |
Rs bn |
1902·7 |
2039·8 |
2 602·0 |
2 652·0 |
Much of the funding comes from government support, which is budgeted to increase from Rs2402bn to Rs2 522bn (Table IV). The remainder mostly comes from extra-budgetary resources such as borrowings through Indian Railway Finance Corp, borrowings from banks, institutional finance and external contributions. These sources covered more than 50% of IR’s capital expenditure between 2017-18 and 2020-21, but that significantly increased the railway’s debt servicing obligations.
Table IV. IR capital expenditure Rsbn | ||||
---|---|---|---|---|
2021-22 |
2022-23 |
2023-24
|
2024-25 |
|
Actual |
Actual |
Estimate |
Budget |
|
Gross budgetary support |
1 172·7 |
1 592·6 |
2 402·0 |
2 522·0 |
Extra budgetary resources |
710·7 |
413·3 |
170·0 |
100·0 |
Internal resources |
19·3 |
44·9 |
42·1 |
41·0 |
Total |
1 902·7 |
2 050·3 |
2 614·1 |
2 663·0 |
Market share challenge
If it is to meet the government’s objective of supporting economic development, IR urgently needs to raise its game, and increase its traffic volumes, revenues and profits from both freight and passenger businesses.
Table V. India’s freight transport by mode | ||||
---|---|---|---|---|
Tonnes lifted (million) |
Share % |
Net tonne-km (billion) |
Share % |
|
Rail |
1 162·7 |
26% |
616·4 |
29% |
Road |
2 911·8 |
65% |
1 521·0 |
71% |
Coastal shipping |
234·0 |
5% |
n/a |
n/a |
Inland waterways |
72·0 |
2% |
n/a |
n/a |
Pipelines |
84·0 |
2% |
n/a |
n/a |
Total |
4 464·5 |
100% |
2 137·4 |
100% |
Rail’s share of the national freight market has been falling steadily from 89% in 1950 to 61% in the early 1980s, and 37% by the end of the 1990s. It is currently estimated to be closer to 20% (Table V). Similarly, in the passenger sector IR’s market share has dropped from 74% in 1950 to between 6% and 8% now.
Rethinking IR’s passenger strategy
In the passenger sector, IR touches the lives of many people. Any large railway station is a kaleidoscope of the country’s social and cultural life. It is through its passenger operations that people come to appreciate the significance of the railway, as well as its faults. And yet passenger services on IR have long been viewed as a financial drag and a necessary evil. As the Minister of Railways informed Parliament, passenger losses are running at around Rs600bn per annum, and cross-subsidising this from freight revenues means IR is pricing itself out of key markets.
Today, more Indians are travelling, and they are travelling more. Per capita travel propensity is higher than in most countries across the region. The demand for rail travel far outstrips supply, and looks set to grow substantially, given the country’s sprawling geography, its burgeoning middle class, and rapid urbanisation, not to mention environmental concerns.
There is an almost insatiable clamour for more trains, even though IR’s services are far from satisfactory. The seven HDN corridors in particular are clogged, keeping overall speeds low.
IR’s accounts suggest that all classes except the AC-3 and Chair Car categories make losses, particularly the non air-conditioned services. In 2023-24, for example, Upper Class passengers were just 4·7% of total ridership, but travelling an average of 750km they accounted for 22% of passenger-km and contributed 52% of total passenger earnings.
TableVIII shows how IR’s ridership has been recovering after the Covid-19 pandemic, returning towards the levels seen in 2018-19. But rail is facing increased competition, particularly from low cost airlines which pose a particular challenge to upper class rail travel. With the expansion of the national highway and expressway network, IR also faces more competition from private cars, as well as fleets of modern high-capacity buses.
As I have commented before, IR needs a concerted strategy to reorganise and rationalise its passenger sector, reorienting its services and tariffs to position rail as a preferable alternative to car or air travel. Essential changes would include managing the passenger and freight services as two distinct business segments.
IR’s core business lies in the
inter-city sector, both with seating accommodation for day trains and sleeping facilities for overnight services. The entire gamut of inter-city rail services, both medium and long distance, needs to be expanded, accelerated, and modernised, with commensurate pre-boarding and on-board facilities.
The growing fleet of Vande Bharat trainsets is helping to develop the air-conditioned inter-city product, augmenting the established Shatabdi and Rajdhani expresses. But an unwarranted clamour has been created for Vande Bharat trains everywhere. A more rational move would be to deploy them on routes where they could use their higher speeds to slash end-to-end journey times, making best use of their potential.
Conversely, IR cannot afford to be saddled with the ‘Second Class Ordinary’ services, which in 2023-24 recorded an average trip length of 57km. They accounted for 10·5% of all rail journeys, but only 3·8% of passenger-km and just 0·8% of revenues. Stopping passenger trains have been a drag on IR’s finances, as well as taking up valuable track and terminal capacity.
Short distance ‘regional’ stopping train services would be better managed by a separate entity, working closely with the various state governments to provide an integrated multi-modal network of local rail and road services.
At the same time, IR needs to explain properly the necessity of rationalising its fare and freight pricing in the overall interest of the economy as much as its own viability. It must remain committed to discreetly and gradually raising passenger fares as it seems to have been doing lately (Table VII).
Two-speed dilemma
In December 2022, The Economist commented that the TGV network had created a ‘two-speed France’, linking lucky hyper-connected cities to the capital, while leaving swathes of the country at the mercy of poorly maintained railways. IR similarly faces a ‘two-India’ dilemma. In 2023-24, upper classes accounted for less than 11% of all passenger journeys, but well over 50% of revenues, while passengers travelling in second class accounted for three-quarters of all trips and a quarter of the revenue.
This is also reflected in the proportion of reserved travel. Of the 3655million non-suburban passengers carried in 2018-19, only 599million tickets were issued through the Passenger Reservation System, representing just 7·2% of the total. An overwhelming majority of passengers travel without reservations in a limited number of heavily crowded general coaches. Year after year, there are reports of mayhem at stations and passengers packed into coaches like sardines, especially during festivals.
In order to minimise its passenger losses, IR has been adjusting capacity on selected inter-city trains, raising the number of AC coaches from eight or nine to about 15, requiring a corresponding reduction in the non-AC coaches from 11 or 12 to half that number. Not surprisingly, there has been a spate of complaints about acute overcrowding, and of unreserved passengers squeezing into sleeper and higher class coaches.
In the 2024-25 budget, Mail & Express Second Class is forecast to account for 54% of non-suburban journeys. This segment clearly deserves more attention to ensure a far better quality of service.
An important ingredient must be the provision of ‘confirmed’ accommodation on demand. Passengers may be willing even to pay extra for ‘assured’ accommodation, and some intrepid traffic managers might seek to trial the concept on a popular yet underserved route such as Delhi – Darbhanga. Reducing the perception of ‘cattle class’ travel would surely make for good optics, as well as good economics for the railway.
IR is still operating far fewer passenger services post-Covid, and with the Eastern Dedicated Freight Corridor now open throughout there should be capacity to run additional trains. The rapid introduction of Vande Bharat trainsets should have freed up conventional rolling stock, and if more motive power is needed it may be possible to tap the growing number of mothballed diesel locomotives.
Table VII. Average revenue per passenger paise per km | ||||
---|---|---|---|---|
2013-14 |
2018-19 |
2021-22 |
2022-23 |
|
Suburban |
15·0 |
19·2 |
19·6 |
23·1 |
Non-suburban |
||||
AC-1 |
282·6 |
278·8 |
333·6 |
316·4 |
AC-2 |
140·6 |
166·20 |
182·6 |
186·1 |
AC-3 |
106·4 |
128·70 |
135·1 |
137·0 |
AC Chair Car |
115·7 |
142·40 |
176·2 |
186·9 |
Sleeper Class Mail & Express |
38·1 |
49·2 |
56·9 |
56·8 |
Sleeper Class Ordinary |
32·2 |
41·5 |
63·7 |
64·9 |
Second Class M&E |
25·4 |
30·9 |
45·1 |
41·8 |
Second Class Ordinary |
17·2 |
21·3 |
21·8 |
15·2 |
Total non-suburban |
34·6 |
47·8 |
72·7 |
72·0 |
* Figures for 2022-23 provisional |
In its 2014 report, the National Transport Development Policy Committee advocated that IR should aim for a 50% market share by the end of the country’s 15th Five Year Plan period (2031-32). This would require freight volumes to grow at a CAGR of 12% over the next 20 years. Given India’s rapidly expanding economy, Ntdpc estimated that, even to retain its then share of 30%, IR would have to grow its volumes at more than 10% per annum. But the stark reality is that IR has been steadily losing share.
As well as lacklustre performance and endemic capacity constraints on tracks and terminals, IR also suffers from a generally bureaucratic service regime. It has prioritised revenue over volume, with high freight tariffs, resulting in an incremental growth trajectory far below the levels required to support the economy.
Today, India’s logistics sector represents 5% of GDP, and employs 22 million people. According to a study by Niti Aayog and RMI-India, commercial activities produce about 4·6 billion tonnes of freight per year, generating a demand for more than 3 trillion tonne-km of transportation. GDP is predicted to grow at 7% to 8% over the next few years, thanks to rising income levels, higher exports, a rapidly growing e-commerce sector and an expanding retail sales market. So the demand for goods movement is expected to increase at about 8% to 10% CAGR (Fig 2).
Table VI. Rail freight growth against GDP | |||||
---|---|---|---|---|---|
GDP: Rsbn at constant prices |
CAGR %* |
Rail freight tonne-km: million |
CAGR %* |
||
1970-71 |
11 071 |
?? |
110 696 |
?? |
|
1980-81 |
15 524 |
3·4% |
147 652 |
2·9% |
|
1990-91 |
25 411 |
5·1% |
235 785 |
4·8% |
|
2000-01 |
45 355 |
5·9% |
312 371 |
2·8% |
|
2010-11 |
87 363 |
6·8% |
625 723 |
7·2% |
|
2017-18 |
131 446 |
6·8% |
693 281 |
11·6% |
|
2018-19 |
139 929 |
6·5% |
738 923 |
6·6% |
|
2019-20 |
145 160 |
3·7% |
708 034 |
-4·2% |
|
2020-21 |
135 586 |
-6·6% |
720 054 |
1·7% |
|
2021-22 |
147 355 |
8·7% |
872 112 |
21·12% |
|
2022-23 |
159 710 |
8·4% |
959 566 |
10·0% |
|
2023-24 estimate |
171 790 |
7·6% |
922 554 |
-3·9% |
|
2024-25 budget |
958 784 |
3·9% |
|||
* For 1971-2011, CAGR% averaged over a 10-year period; for 2017-18 to 2023-24 period it is the percentage increase over previous year. |
Meanwhile, in the light of the overarching global concern about climate change, India is targeting a 35% reduction in the emissions intensity of its GDP by 2030, compared to the 2005 level, as part of its Intended Nationally Determined Contribution for 2021-30. And modal shift to rail is seen as the most effective lever to decarbonise freight transport.
Table VI shows how IR’s net freight output (net tonne km) has been lagging behind GDP growth over the past five decades.
National Rail Plan
In a bid to determine projected future transport demand for major commodity groups, the National Rail Plan published in 2021 analysed aggregate volumes in 2017-18 and 2018-19. A total of 4 464 million tonnes was moved in 2017-18 across all modes, with IR carrying 1 163 million tonnes, equating to a market share of 26%. Analysis of the 2018-19 data showed that 1 829·2 million tonnes had been moved over distances up to 300 km, while 2 245 million tonnes travelled further. Rail was carrying a similar volume of longer haul freight as it had in 2007-08, but over the decade its market share had fallen from 51·5% to 32·4%.
IR remains overwhelmingly dependent on captive customers in the bulk commodities sector, for whom rail is the only practical mode. But more than 1 500 million tonnes of originating freight is non-bulk, and most of this is transported by road, often over distances of 300 km or more. Estimates suggest that there is at least 1 billion tonnes of less than trainload freight travelling more than 700 km on average, which could be moved by rail (preferably unitised or containerised), but this opportunity remains largely unaddressed.
For this to happen, IR needs to work in partnership with other logistics players to develop a minimum critical mass to support regular rail flows. Instead of simply viewing other modes as competitors, IR needs to co-operate with them to deliver cost-effective and time-definite end-to-end multimodal services.
The way forward
Looking to the longer term, the government needs to decide how it wants to run the railways. Prime Minister Narendra Modi has constantly reiterated his commitment to modernising and revolutionising India’s rail network. Recently, while inaugurating a series of railway projects, he talked of the next five years as ‘a new era of transforming India’s rail sector’.
Paradoxically, Table IX indicates clearly how the ground has been slipping away from under the national operator over the past decade. Despite all the rhetoric, it has been a story of missed opportunities.
IR has been living beyond its means, with working expenses rising unchecked ahead of revenues. A recent report by the Standing Committee on Railways noted that ‘…the persistent decline in internal resource generation was an indicator towards internal deficiencies in overall planning and management of the Indian Railways’. Dependence on support from the national budget is clearly not the best way forward.
Malaise well diagnosed
The past decade has seen some bold initiatives, such as the elimination of the anachronistic separate railway budget and endorsement of a reform agenda, with clear diagnosis of the problems which have sapped IR’s energy since the 1980s. Given this unprecedented government support, one has to ask why none of the promised reforms have come to fruition.
By comparison, China Railways went through some transformative reforms 20 years ago, with the distancing of the passenger and freight enterprises from government and a dramatic streamlining of its administrative structure. These allowed CR to deliver a programme of expansion and modernisation at an incredible pace.
Among numerous expert bodies diagnosing IR’s ailments and prescribing remedial measures, a high level committee headed by Bibek Debroy recommended in 2019 an organisational restructuring and the setting up of an autonomous regulator to ensure the pricing of services commensurate with costs. This would require sharper tariff optimisation, efficient resource allocation, market development, better HR policies, and the creation of profit centres.
IR clearly needs to escape from its political straitjacket, if it is to move beyond its increasingly outdated monopoly vision and become a dynamic and successful business in a changing world. I envisage a number of key changes:
1. The railway must be run as a business. Both passenger and freight customers are increasingly demanding a personalised service that is attractive and easy to buy. IR can ill afford to remain stuck in its bureaucratic quagmire, and must shed its perceived role of a departmental undertaking with public service obligations.
The Minister of Railways often cites IR’s ‘social obligation’, but the government has an extensive social services sector, with its own ministries and organisations to handle such tasks. The railway needs to concentrate on its core role of providing effective transport for passengers and, more importantly, freight. Increasing rail’s modal share and enhanced efficiency to reduce overall logistics costs would be a much better way of serving the social cause.
2. IR needs to prioritise its investments, and manage them better. Scarce resources have been spread thinly across many projects, providing little tangible relief for congested routes or terminals.
As with other parts of the country’s infrastructure sector, cost and time overruns have been endemic. Data from the Ministry of Statistics & Programme Implementation show that as of April1 2024, it was monitoring 1873 different projects (of which 612 were ‘mega’ projects of more than Rs10bn and 1261 major projects over Rs1·5bn). Of these, 449 had overshot their sanctioned cost by as much as 18·7%, from Rs26·9tr to Rs31·9tr. Railway projects were among the biggest culprits: the cost of 249 railway projects ballooned from Rs4·44tr to Rs6·85tr, an increase of 54%. Likewise with delays. Of the total 1873 projects, 779 had been delayed by an average of more than 36 months, and 119 by more than 60 months.
Project teams need to be allocated the resources for specific tasks, together with appropriate incentives and penalties to ensure delivery to an agreed timescale.
3. Resources must be managed optimally to minimise costs. IR needs to keep a firm eye on productivity, and optimise utilisation through better maintenance and asset management. The vast web of 45 workshops, 100 locomotive depots and 260 repair facilities for carriages and wagons needs to be rationalised, along with zonal, divisional and departmental management structures.
The Bibek Debroy committee reported that ‘IR’s efficiency was better with nine zones than with 16’. A holistic restructuring of the organisation could see a streamlining from four to three tiers, as China did in 2005. By revising the geographical areas of its 16 zonal administrations, and empowering local area managers in charge of large stations, freight terminals and depots, it may be possible to eliminate the current 68 divisions.
The world over, there seems to be increasing pressure to eliminate the traditional role of the middle manager, which could help to increase efficiency, agility and employee engagement. It is perhaps worth noting that the Indian army has increased its combat force ratio by slashing non-operational roles and downsizing the headquarters directorates, as well as reconfiguring of its divisions and corps into agile integrated battle groups.
4. Personnel policies need reviewing. Although railways are essentially a people business, it is important to note that IR is heavily overstaffed, which has been a drag on its efficiency, while the pay and pension bill keeps ballooning.
Parliament was informed recently that 189000 GroupC and D vacancies had been filled in the last five years, while IR was looking to hire another 2177 management and 263370 other grades to fill so-called vacant posts. In July, the Railway Minister informed parliament that IR had recruited more than 500000 staff in 2014-24. But as long ago as 1990 a study by Rites identified that IR could potentially trim 568000 employees out of its then workforce of 1·577million.
Over the years, there have been various attempts to tinker with the structure, through the ‘rationalisation’ of cadres. In 2019 the government decided to integrate the senior roles into a unified Indian Railways Management Service. But little meaningful progress has been made in breaking down IR’s departmental silos.
The IR structure remains much the same as it was decades ago — hierarchical and feudal; it has added layers when it needed to become far flatter, nimble, and lean.
Meanwhile, the pace of change continues to accelerate as markets are moving faster. The future will be more volatile, and no organisation or country can afford to get stuck in time, history or geography.
IR has a rare opportunity with previously unimagined support and encouragement from the highest levels of government. Can it take the opportunity to grasp the nettle of reform and live up to the aspirations? Indian railwaymen and women have weathered storms, in peace and war, scourges and pandemics, emerging stronger out of conflagrations. Given the right leadership, shorn of any undue distraction, they have always delivered with distinction.
Capacity conundrum
The National Rail Plan underscored IR’s looming capacity constraint on significant traffic growth, noting that the 11 000 km of the High-Density Network accounted for 16% of total route length but carried 41% of all traffic. The second-tier Highly Utilised Network totalling 35% of the network handled another 40% of the traffic.
Considering projected passenger and freight demand, the plan suggested that the existing infrastructure would not be able to accommodate the predicted volumes even if the upgrading works already sanctioned were completed. Freight volumes were predicted to exceed available capacity on the Delhi – Kolkata, Mumbai – Kolkata, Delhi – Guwahati and Mumbai – Chennai corridors by 2021, and on the Mumbai – Delhi, Palwal – Chennai and Kharagpur – Vijayawada routes too.
The Indian Railway Board therefore endorsed the start of feasibility studies for three more DFCs as proposed in the NRP:
- a 2328km East-West DFC from Palghar (on the Western DFC) to Kamarkundu, near Kolkata;
- a 2327km North-South DFC from Pirthala, near Delhi to Arakkonam near Chennai;
- a 1115km East Coast DFC from Hijli near Kharagpur to Vijayawada.
More recently, however, some confusing signals about these mega-projects have been emanating from the Board. Rather than focusing on new lines, the Ministry of Railways has reportedly submitted proposals to the Union Cabinet to invest Rs4·2tr over 10 years to 2033-34 for multitracking key segments of existing lines. In total, 213 projects are planned to address congestion on the seven HDN corridors, which is expected to facilitate the operation of faster passenger trains as well as expediting freight movements.
Table VIII. IR’s passenger business in profile | |||||||||
---|---|---|---|---|---|---|---|---|---|
2018-19 |
2020-21 |
2021-22 |
|||||||
Passengers million |
Pass-km million |
Revenue Rs tr |
Passengers million |
Pass-km million |
Revenue Rs tr |
Passengers million |
Pass-km million |
Revenue Rs tr |
|
Suburban |
4 784·0 |
146 678 |
28·1 |
917·0 |
30075 |
5·9 |
2 169·0 |
69 798 |
13·7 |
Non-suburban |
|||||||||
AC-1 |
4·4 |
2 494 |
6·9 |
1·1 |
743 |
2·6 |
3·2 |
1 905 |
6·4 |
AC-2 |
29·9 |
23 252 |
38·6 |
8·4 |
7 609 |
14·7 |
23·2 |
18 535 |
33·9 |
AC-3 |
105·4 |
87 207 |
112·2 |
32·4 |
32 174 |
47·5 |
103·2 |
90 488 |
122·2 |
AC Chair Car |
34·9 |
13 291 |
18·9 |
6·7 |
2 153 |
3·9 |
21·9 |
6 602 |
11·6 |
Sleeper Class M&E |
357·7 |
291 144 |
143·2 |
110·9 |
98 462 |
54·4 |
293·3 |
225 637 |
128·5 |
Second Class M&E |
1 127·0 |
369 835 |
114·2 |
113·1 |
55 447 |
21·3 |
589·9 |
158 819 |
71·7 |
Second Class Ordinary |
1976·7 |
219 352 |
46·7 |
60·4 |
4 456 |
2·2 |
314·3 |
18 355 |
4·0 |
Total non-suburban |
3 655·0 |
1 010 496 |
482·5 |
333·0 |
201 051 |
146·6 |
1 350·0 |
520 419 |
378·4 |
Total |
8 439·0 |
1 157 174 |
510·7 |
1 250·0 |
231 126 |
152·5 |
3 519·0 |
590 216 |
392·1 |
2022-23 |
2023-24 (estimate) |
2024-25 (budget) |
|||||||
Passengers million |
Pass-km million |
Revenue Rs tr |
Passengers million |
Pass-km million |
Revenue Rs tr |
Passengers million |
Pass-km million |
Revenue Rs tr |
|
Suburban (Total) |
3 792·0 |
114 350 |
26·4 |
3 853·0 |
118 435 |
26·3 |
4 101·0 |
126 136 |
28·6 |
Non-suburban |
|||||||||
AC-1 |
4·1 |
2 935 |
9·3 |
5·4 |
3 882 |
12·3 |
5·9 |
4 277 |
13·6 |
AC-2 |
39·5 |
31 472 |
58·6 |
45·5 |
36 254 |
68·0 |
49·0 |
39 051 |
73·3 |
AC-3 |
180·4 |
155 765 |
213.45 |
219.50 |
187050 |
261.67 |
223.00 |
190032 |
265.84 |
AC Chair Car |
40·5 |
12 286 |
23·0 |
51·7 |
16 179 |
31·6 |
63·0 |
19 700 |
38·5 |
Sleeper Class M&E |
382·5 |
280 260 |
159·3 |
391·4 |
282 792 |
161·4 |
425·0 |
307 108 |
175·3 |
Second Class M&E |
1 312·3 |
323 628 |
135·3 |
1 550·5 |
414 533 |
156·7 |
1 832·0 |
506 548 |
191·8 |
Second Class Ordinary |
640·2 |
37 289 |
5·7 |
721·0 |
41 773 |
5·9 |
760·0 |
44 266 |
6·2 |
Total non-suburban |
2 604·0 |
844 569 |
607·8 |
2 991·0 |
1 083 972 |
703·7 |
3 365·0 |
1 112 768 |
714·4 |
Total |
6 396·0 |
958 919 |
6342 |
6 844·0 |
1 102 407 |
730·0 |
7 466·0 |
1 238 904 |
800·0 |
Table IX IR performance indicators | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
As on March 31 |
2013-14 |
2014-15 |
2015-16 |
2016-17 |
2017-18 |
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
CAGR: % over 10 years (2013-14 to 2022-23 |
Volume of traffic |
|||||||||||
Passenger |
|||||||||||
No. of passengers originating: million |
8 397 |
8 224 |
8 107 |
8 116 |
8 286 |
8 439 |
8 086 |
1 250 |
3 519 |
6 395.76 |
-2.69 |
Passenger km: million |
1 140 412 |
1 147 190 |
1 143 039 |
1 149 835 |
1 177 699 |
1 157 174 |
1 050 738* |
231 126 |
590 217 |
958 919 |
-1.72 |
Passenger earnings: Rs bn |
365·3 |
421·9 |
442·8 |
462·8 |
486·4 |
510·7 |
506·7 |
152·5 |
392·1 |
634·2 |
5.68 |
Average lead: km |
135·8 |
139·50 |
141·0 |
141·7 |
142·1 |
137·1 |
129·9 |
184·8 |
167·7 |
150·0 |
0.99 |
Average rate per passenger-km. paise |
32 |
36.8 |
38.7 |
40.3 |
41.3 |
44.1 |
48.2 |
65.97 |
66.44 |
66.13 |
7.51 |
Freight |
|||||||||||
Tonnes originating: million |
1 058·8 |
1 101·1 |
1 108·6 |
1 110·9 |
1 162·6 |
1 225·3 |
1 212·2 |
1 233·8 |
1 415·9 |
1 509·1 |
3.60 |
Net tonne km: million |
666 728 |
682 612 |
655 605 |
620 858 |
693 281 |
738 923 |
708 034 |
720 054 |
872 112 |
959 566 |
3.71 |
Earnings Rs. Bn |
915·7 |
1 031·0 |
1 069·4 |
1 020·3 |
1 135·2 |
1 225·8 |
1 114·7 |
1 157·4 |
1 392·9 |
1 622·6 |
5.88 |
Average lead: km |
630 |
620 |
591 |
559 |
596 |
603 |
584 |
584 |
616 |
636 |
0.09 |
Average rate per tonne km: paise |
137·3 |
151·2 |
163·4 |
164·5 |
163·8 |
166 |
158 |
161 |
160 |
169 |
2.12 |
Operating revenue and expenditure: Rs. Bn |
|||||||||||
Gross revenue receipts |
1 432·1 |
1 610·2 |
1 683·8 |
1 653 8 |
1 789·3 |
1 905·1 |
1 746·9 |
1 382·4 |
1 912·1 |
1 912·1 |
5.30 |
Working expenses |
1 314·6 |
1 441·8 |
1 491·5 |
1 604·7 |
1 772·6 |
1 867·4 |
1 731·1 |
1 407·8 |
2 062·3 |
2 062·3 |
6.00 |
Net revenue receipts |
117·5 |
168·4 |
192·3 |
49·1 |
16·7 |
37·7 |
15·9 |
25·5 |
-150·3 |
-150·3 |
|
Net revenue receipts to the Capital-at-charge: % |
5·6 |
6·9 |
7·0 |
1·6 |
0·5 |
1·1 |
0·4 |
0·7 |
-3·2 |
-3·2 |
|
Operating ratio |
93·6 |
91·3 |
90·5 |
96·5 |
98·4 |
97·3 |
98·4 |
97·4 |
107·4 |
107·4 |