Introduction of

Indian Railways
“A Super
Navratna”

Type: Departmental undertaking of The Ministry of Railways, Government of

India.

Founded: 26th April 1853

Headquarter: New Delhi, India.

Area server: India

Union Railway Minister: Mamata Banerjee.

Ministers of State for Railways: E. Ahamed and K. H. Muniyappa.

Chairman, Railway Board: S. S. Khurana.

Industry: Railways and Locomotives.

Services: Rail transport.

Revenue: ▲ Rs. 107.66 billion (US$19.13 billion).

Employees: 1,406,430 (2007)

Parent: Ministry of Railways, Government of India.

Divisions: 16 Railway Zones, further divided into 67 divisions.

*** www.indianrailways.gov.in

India is the land of diverse culture and Indian Railways play a key
role in not only meeting the transport needs of the country, but also
in binding together dispersed areas and promoting national
integration.Railways in India provide the principal mode of
transportation for freight and passengers. The Indian Railways have
been a great integrating force during the past 150 years and more. It
has bound the economic life of the country and helped in accelerating
the development of industry and agriculture. From a very modest
beginning in 1853 it has played a vital role in the economic, industrial
and social development of the country.

The Indian Railways operates the world’s second largest rail network
under a single management. The network runs multi-gauge
operations extending over 63,327 route kilometres. In terms of
infrastructure it operates more than 14,444 trains backed by 7,739
locomotives and 39,263 coaches. Thus it is one of the largest and
busiest railway networks in the world carrying sixteen million
passengers on a daily basis. It also carries more than one million
tonnes of freight on a daily basis and with the employee strength
surpassing 1.6 million is also one of the biggest commercial
employers and is only next to Chinese Army in terms of people
recruited by it.

The main characteristic of the Indian Railways is that it is an

independent, corporatized, customer focused, and financially viable
railway; run along commercial principles and subject to generally
accepted corporate accounting principles and reporting. The Indian
Railways Corporation (IRC) is responsible for managing railway assets
and resources to meet the objectives of Indian Railways. The Indian
Railway Executive Board (IREB) manages IRC and is responsible for
restructuring process.The functions of the Indian Railways can be
divided into core and non-core activities.

# The core activities comprise transportation of freight and

passengers (Running of trains and owning of assets).

# The non-core activities comprises catering, running schools and

colleges for the children of the railway staff, medical healthcare
facilities for the railway staff production units and workshops,
protection force for the safety of railway assets & maintenance of an
exclusive telecommunications network etc.

History
Indian Railways.... the golden Era
16th April, 1853...............The Beginning

The novel plan for the introduction of a rail

system, transformed the whole history of
India. This innovative plan was first proposed
in 1832; however no auxiliary actions were
taken for over a decade. In the year 1844,
private entrepreneurs were allowed to launch
a rail system by Lord Hardinge, who was the
Governor-General of India. By the year 1845, two companies were
formed and the East India Company was requested to support them
in the matter. 

The credit from the UK investors led to the hasty construction of a rail
system over the next few years. On 22nd Dec' 1851, the first train
came on the track to carry the construction material at Roorkee in
India. On September 22, 1842, British civil engineer Charles Blacker
Vignoles, submitted a Report on a Proposed Railway in India to the
East India Company.[1] By 1845, two companies, the East Indian
Railway Company operating from Calcutta, and the Great Indian
Peninsula Railway (GIPR) operating from Bombay, were formed. With
a passage of one and a half years, the first passenger train service
was introduced between Bori Bunder, Bombay and Thana on the
providential date 16th Apr' 1853. This rail track covered a distance of
34 kms (21 miles). Ever since its origin, the rail service in India never
turned back. 

The British Government approached private investors and persuaded

them to join the race with a system that would promise an annual
return of 5% during the early years of operation. Once finished, the
company would be transferred under the Government ownership, yet
the operational control will be enjoyed by the original company. In
1880, the rail network acquired a route mileage of about 14,500 km
(9,000 miles), mostly working through Bombay, Madras and Calcutta.

By 1895, India had started manufacturing its own locomotives. In no

time, different kingdoms assembled their independent rail systems.
In 1900, the GIPR became a government owned company. The
network spread to modern day states
of Assam, Rajasthan and Andhra Pradesh and soon various
independent kingdoms began to have their own rail systems.
 In 1901, an early Railway Board was constituted, but the powers
were formally invested under Lord Curzon. It served under the
Department of Commerce and Industry and had a government
railway official serving as chairman, and a railway manager from
England and an agent of one of the company railways as the other
two members. For the first time in its history, the Railways began to
make a profit.. In 1901, a Railway Board was formed though the
administrative power was reserved for the Viceroy, Lord Curzon. The
Railway Board worked under the guidance of the Deptt of Commerce
and Industry. It was comprised of three members - a Chairman, a
Railway Manager and an Agent respectively. 
For the very first time in its history, the
Railways instigated to draw a neat profit. In 1907, most of the rail
companies were came under the government control. Subsequently,
the first electric locomotive emerged in the next year. During the First
World War, the railways were exclusively used by the British. In view
of the War, the condition of railways became miserable. In 1920, with
the network having expanded to 61,220 km, a need for central
management was mooted by Sir William Acworth. Based on the East
India Railway Committee chaired by Acworth, the government takes
over the management of the Railways and detaches the finances of
the Railways from other governmental revenues.

The period between 1920 to 1929 was a period of economic boom.

Following With the Second World War, the railways got incapacitated
since the trains were diverted to the Middle East ( the Great
Depression, the company suffered economically for the next eight
years). The Second World War severely crippled the railways. Trains
were diverted to the Middle East and the railways workshops were
converted to munitions workshops. By 1946 all rail systems were
taken over by the government.
On the occasion of India's Independence in
1947, the maximum share of the railways went under the terrain of
Pakistan. The existing rail networks were forfeited for zones in 1951
and 6 zones were formed in 1952. With 1985, the diesel and electric
locomotives took the place of steam locomotives. In 1995, the whole
railway reservation system was rationalized with computerization.

Growth
 Start of Indian Railways
Following independence in 1947, India inherited a decrepit rail
network. On the whole, 42 independent railway systems with thirty-
two lines were merged in a single unit and were acknowledged as
Indian Railways & hence it earned the distinction of being one of the
largest railway networks in the world.. About 40 per cent of the
railways then passed through the newly independent republic
of Pakistan. A large number of lines had to be rerouted through
Indian territory, and new construction had to be undertaken.

Underinvestment and unproductive management and

maintenance practices have sharply curtailed growth in route length.
A total of forty-two separate railway systems, including thirty-two
lines owned by the former Indian princely states existed at the time
of independence spanning a total of 55,000 km. These were
amalgamated into the Indian Railways.

In 1951, the rail networks were abandoned in favour of zones. A total

History of Railway in India- Important Years
of six zones came into being in 1952. As India developed its
economy, almost
 1832- Plans wereall railway
proposed production
to introduce a railunits
networkstarted
in India.to be built
 1844- Private
indigenously. entrepreneurs
Broad set up a private
Gauge became rail systemand
the standard, in India.
the Railways
 1851- Trains became operational.
began to electrify most lines to AC. In 1985, steam locomotives were
 1853- Passenger trains were introduced.
phased
 1875-out.
95 million pounds were invested into Indian railways by British
companies.
 1895- Indian locomotives began to operate in the country.
Under Rajiv Gandhi,
 1901- A Railway Board reforms in the railways were carried out. In
was established.
 1907-
1987, The governmentofobtained
computerisation total control
reservation over carried
first was most of the
outrail
in companies.
Bombay
 1908-
and Firstthe
in 1989 electric
trainlocomotive
numbers was introduced.
were standardised to four digits. In
 1947- 40% of the railway network came under Pakistan's possession.
1995 the entire railway reservation was computerised through the
railways
History intranet.
of Indian In 1998,
Railways- the Konkan
Important Years Railway was opened, spanning
difficult terrain through the Western Ghats. Few of the recent
After India obtainedinclude
developments independence from the
construction ofBritish, the rail
Calcutta network in
Metro and the country
Delhi Metro. was
christened as the Indian Railways.

 1951- Nationalization of the rail system in India took place.

 1952- Six railway zones were introduced.
 1995- Steam locomotives became obsolete. Only diesel and electric
locomotives were operational.
 1987-1995- The Indian Railways reservation system was computerised.
Railways (Post Reforms)
Post reforms in the 1990's the progress of the railways was not
satisfactory. The Rakesh Mohan Committee report suggested that the
railways needed a complete overhaul if any progress had to be made.
Since it was not that easy from a political point of view, it was not
given due importance by the inner circle in the railways. But with the
appointment of Mr. Lalu Prasad in 2004 as railway minister, things
changed dramatically. In the next five years the minister and his
team worked out a strategy to bring about a complete turnaround in
the working of the railway. Currently Mamata Banerjee has chalked
out future plans for railways which seem optimistic and achievable.

The economic turn-around was a result of :-

 Higher freight volumes.
 Increased occupancy in passenger trains.
 Monitor costs and reduce tariffs.

The railways have managed to improve their

market share and operating margins. The government has been
credited with pursuing inclusive reforms, without comprising on the
social obligation. The railways have been applauded for improved
customer service and for reducing passenger fares.

Some of the salient features of the reform are:

 A well planned strategy to build around capacity generation
through optimization of the existing infrastructure and assets.
 Adopting a different approach to the social and commercial
segment of the traffic.
 Increasing the passenger carrying capacity of important trains.
Improved operational efficiency meant the unit cost of operation
reduced.
 Dynamic and market driven tariff policy linked to seasonality and
price elasticity of demand.
 The policy of overhaul increase in freight rates has been replaced
by a system of differential tariff based on market conditions.
 Tremendous growth in traffic volumes, revenues and surpluses
has proven the fact that the process of globalization has brought
positive results for everyone concerned.
The Future Prospects
 The railways have devised a planned strategy to remove
bottlenecks and increase capacity to meet the demand. The key areas
of focus would be up gradation of infrastructure, modernization of
wagons technology, advanced signaling and telecommunication,
induction of high horse power locomotives, grade separation and
usage of information technology to decrease transit times and reduce
unit operational cost. The railways also propose to construct state of
the art passenger and freight terminals bench.
 Over the next 5 to 10 year the government plans to give utmost
priority to low cost, rapid pay back and high return investments with
the view of speeding up works on doubling railway line, port
connectivity, gauge conversion, signaling and telecom, renewal of
assets and modernization of passenger terminals.
 The government has initiated private investments in major
stations to create world class passenger amenities and services.

 There is an increase in demand for coaches. The government has

proposed to meet the increase in demand partly through increase in
the capacity in the existing production units and partly by setting up
a new manufacturing unit through a joint venture under Public Private
Partnership (PPP).

 The railways are also planning to build a super specialty hospital

in Patna. If successful, the concept would be extended to other parts
of the country.

HUMAN RESOURCE
Human Resource
Manpower is the most valuable asset in any
organization, more so in IR which is highly labour intensive. The
Indian Railways with a work force of nearly 1.5 million is one of the
biggest employers in the world. To have the optimum output from the
workforce, higher motivation level and stress free environment is to
be ensured. Suiting the job requirements, skills of manpower have to
be suitably developed requiring adequate attention in their training
facilities.

Organisational structure
Indian Railways is a department owned and controlled by the
Government of India, via the Ministry of Railways as on May 2009,
the Railway Ministry is headed by Mamata Banerjee, the Union
Minister for Railways and assisted by two ministers of State for
Railways. Indian Railways is administered by the Railway Board,
which has a financial commissioner, five members and a chairman.
Indian Railways is divided into zones, which are further sub-divided
into divisions. The number of zones in Indian Railways increased from
six to eight in 1951, nine in 1952, and finally 16 in 2003. Each zonal
railway is made up of a certain number of divisions, each having a
divisional headquarters. There are a total of sixty-seven divisions.

Each of the sixteen zones, as well as the Kolkata Metro, is headed by

a General Manager (GM) who reports directly to the Railway Board.
The zones are further divided into divisions under the control of
Divisional Railway Managers (DRM). 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.

There are six production units (PUs) each headed by a General Manager

(GM), who also report directly to the Railway Board.

The production units are:

1. Chittaranjan Locomotive Works: Chittaranjan

2. Diesel Locomotive Works: Varanasi

3. Integral Coach Factory: Perambur (Near Chennai)

4. Rail Coach Factory: Kapurthala

5. Rail Wheel Factory: Yelahanka (Near Bangalore)

6. 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 in Ministry of Railways are:

1. Indian Railways Catering and Tourism Corporation

2. Konkan Railway Corporation

3. Indian Railway Finance Corporation

4. Mumbai Rail Vikas Corporation

5. Railtel Corporation of India – Telecommunication Networks

6. RITES Ltd. – Consulting Division of Indian Railways

7. IRCON International Ltd. – Construction Division

8. 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.

 Personnel
The number of regular employees in Indian Railways as on 31.3.2007
stood at 1,406,430. The Indian Railways with such a work a huge
workforce is one of the biggest employers in the world. To have the
optimum output from the workforce, higher motivation level and
stress free environment is to be ensured. Suiting the job
requirements, skills of manpower have to be suitably developed
requiring adequate attention in their training facilities.

Now when we talk about workforce, we are including both executives

as well as labourers. The Management personnel (Groups A & B )
constitute up 1.1% of the total strength, while Group C and D
account for 64.5% and 34.4% respectively. Of the employees in
Group C and D, 4.44 lakhs (31.96%) are workshop employees and
artisans and 9.46 lakhs (68.04%) from other categories including
running staff. Railway Protection Force/RPSF personnel totalled
60,704. In the non-gazetted cadres, the ratio of Group C to D
changed from 25:75 in 1950-51 to 65:35 in 2006-07, indicating a
shift towards induction of skilled manpower.

PERSONNEL

Group
A+B
Group C
Group D
 Wage bill including pension etc. during 2006-07 was
Rs.24,354.6 crores registering an increase of Rs.434.7 crores over
the previous year. The average wage per employee was up by 2.6 %
from Rs.1,69,770 per annum in 2005-06 to Rs.1,74,112 per annum in
2006-07. The ratio of staff cost on open line (excluding payment
towards pension and gratuity) to ordinary working expenses
(excluding appropriation to DRF and Pension Fund) was 46.7%.
Recruitment and Training

Indian Railways is the largest civilian

employer in the world at approximately 1.6 million employees. 1200
officers form the line and staff management organisation. The
recruitment of the Officers (Group 'A' service) is done through the
Indian Engineering Services examination conducted by the Union
Public Service Commission (UPSC); and also through the Special
Class Railway Apprentices (S.C.R.A.) exam conducted by UPSC. The
recruitment to Group 'C' and 'D' employees on the Indian Railways is
done through 19 RRBs (Railway Recruitment Boards) which are
controlled by the Railway Recruitment Control Board (RRCB). The
training of all cadres is entrusted and shared between six centralised
training institutes.

Recruitment and Training

There have been dynamic change in the
technology and modernisation, electrification, computerisation,
mechanisation of track maintenance etc. are taking place at fast rate
to meet the challenges of traffic requirements in Indian Railways.  To
meet the challenges of the changing environment, systematic
manpower planning is essential. Therefore a category-wise analysis of
staff should be carried out, to identify surplus and to arrange
manpower in the areas of need. This adjusts the surplus in one
category to other categories, where there is demand. Manpower
planning ensures that the existing manpower is utilised to the
maximum possible extent.

The Research, Design and Standards Organisation (RDSO) at

Lucknow is the research and development wing of the Indian
Railways.It functions as a consultant to the Indian Railways on
technical matters. It also provides consultancy to other organisations
connected with railway manufacture and design. RDSO has been
reorganized with effect from January 1, 2003 by elevating its status
from ‘Attached Office’ to ‘Zonal Railway’ to give it greater flexibility
and a boost to the research and development activities.

Modernisation and Up gradation of Training Centres

As main Training Centres have already been granted Rs.73.5 crores

out of the SRSF for up gradation, remaining training centres,
including Basic Training Centres spread all over the Indian Railways
are also proposed to be modernized with provision of necessary
infrastructure at an overall outlay of Rs. 220 crores (inclusive of
allotment under SRSF). Modernisation of training centres would cover
institutions imparting training of various disciplines viz. Civil,
Mechanical, Signalling and Electrical Engineering etc. Special
emphasis shall be laid on training of bridge engineers and supervisors
on regular and continuous basis, at least for next 5 to 6 years to
adapt technologies appropriately.

Following seven Centralized Training Institutes (CTI) cater to the

training needs of railway officers:-

(i) Railway Staff College, Vadodara.

(ii) Indian Railways Institute of Civil Engineering, Pune.
(iii) Indian Railways Institute of Signal Engineering
&Telecommunications, Secunderabad.
(iv) Indian Railways Institute of Mechanical & Electrical
Engineering, Jamalpur.
(v) Indian Railways Institute of Electrical Engineering, Nasik.
(vi) Indian Railways Institute of Transport Management, Lucknow.
(vii) Jagjivan Ram Railway Protection Force Academy, Lucknow

ISO certification
In the long run it is desirable that all staff training centres and work
centres would obtain ISO _ 9002 certification and the concept will be
extended to all divisional control offices and stations and other work
centres.

Promotion rules and procedure

Over a period of time, a question bank containing objective type
questions with multiple-choice answers covering the entire syllabus
will be built up. Data bank containing questions covering the entire
syllabus will be made available to trainees. At Training Centres,
written examinations/test papers will contain objective type questions
covering the entire syllabus in random order with multiple-choice
answers.

When any staff belonging to a safety category becomes overdue for

periodic medical examination, refresher course or safety camp, he
would not be permitted to continue on duty until he completes the
stipulated training/examination.

After recruitment, for initial training at ZTCs/STCs, pass marks may

be upgraded. For promotional course training also, pass marks may
be revised.

Strength of staff and vacancies

Staff requirement are proposed to be worked out afresh for zero-

based assessment of manpower. Based on the exercise, sanctioned
strength of staff may be revised and made uniform. Concept of multi-
skilling would be adopted.

Categories having difficulties in filling up of promotional posts,

existing AVCs may be revised.

All Safety category vacancies would be filled up on urgency basis .

Accountability for filling up of vacancies in safety categories will be

clearly assigned at appropriate level.

Inspections
To improve quality of inspections, detailed check list of various types
of inspections would be made out and circulated.

The quality and compliance of inspections would be made an

important plank of the management tools.

Special safety audits by multi-disciplinary teams would be intensified.

A computer data base would be prepared at the Divisional and Zonal

Headquarters to assess the efficacy of field inspections.
Safety critical checks would be conducted by all inspecting officials.

Safety test checks will be intensified as vigilance-like powers have

been given to the safety organisation.

As the element of surprise and the opportunity to observe

performance of staff under actual working conditions in the field is of
prime importance, surprise inspections give an accurate indication of
health of the particular unit. Surprise inspections would be intensified,
specially between 0 hrs. and 4 hrs. at night.

Test checking of inspections of subordinate officers.

Maintenance depots and other activity centres would also be covered

by night inspection.

Periodical Safety Drives

Certain activities in the railway working, which are seasonal in nature,
are neither required to be performed by staff nor required to be
checked by supervisors during the course of normal working for the
most part of the year. It is for these kind of activities that safety
drives are generally targetted.

Safety drives would be launched in order to correct a system failure,

whenever detected.

In the safety drives, all equipment that are to be attended would

undergo a cyclic inspection before a particular season. Number,
duration and contents of particular safety drives would be selectively
decided to retain their focus and value.

Safety Audit
Inspections generally single out individual failures, safety audits are
expected to identify system failures and generic shortcomings.

Periodic safety audits would be undertaken at various levels for

making an in-depth assessment of safety systems. These safety
audits may be of many types viz, multi-disciplinary team from
Railway Board, inter-Railway, multi- disciplinary headquarters team,
inter-divisional, etc. The main purpose behind conducting safety audit
is to check only safety critical items and identify system failures or
generic shortcomings.

Railways will identify the worst sections on the divisions with

unsatisfactory safety record. Teams would thoroughly audit different
units pinpointing deficiencies including ancillary activities viz. staff
training, material supply, availability of funds, defective policies/rules
etc.

Safety audits would be carried out at a number of installations within

the target area.

To promote devotion, dedication and sincerity towards duties, Human

Resource Development (HRD) Cells are proposed to be constituted at
Zonal, Divisional Headquarters involving dynamic and knowledgeable
supervisors to study :

(i) Working habits of ground level staff

(ii) Factors leading to short cuts
(iii) To reduce fatigue, minimize monotony and improve safety
consciousness.

Strengthening of Railway Protection Force

To combat outside interference with railway installations like track
and signalling equipments etc., it is proposed to equip Railway
Protection Force/Railway Protection Special Force with specialized
training, weaponry, vehicles and wireless communications and
necessary backup support in terms of manpower and barracks. These
personnel will also help in guarding railway bridges, microwave
towers, route relay cabins and track in identified vulnerable sections.

Conclusion
In our railway system, though the system of recruiting, training,
placing or posting and promotion are inherited from the system of
British Railways, yet manpower planning is given importance only in
late 70’s, which envisages making of quality human resource towards
attaining the goals of the organization duly giving importance as a
service organization for transporting of goods and passenger services
to all sorts of the people across the country.
 Major Player

Monopoly of Indian Railways :

In economics, a monopoly (from the Latin word
monopolium – Greek language monos, one + polein, to sell) is defined as a
persistent 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

Single Sellers - 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 monopolyon 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).

Price Maker

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) asingle 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.

Blocked Entry

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 monopolymarket, 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:  (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.

Suburban rail
 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 than any other suburban

network in India. The network has three lines viz, western, central and

harbour. It’s considered to be the lifeline on Mumbai. Delhi Metro has been

one of the recent additions in the suburban rail services systems available

today in India.
KOLKATA METRO
Kolkata Metro

Info

Locale Kolkata,
India

Transit type Rapid transit

Number of lines 1

The Kolkata Metro or Calcutta Number of 17

Metro কলকাতা মেট্রো Kolkata Metro) stations
is the underground rail network
in Kolkata (Calcutta), India. It is Operation
considered to have the status of
a zonal railway . It is run by Began operation 1984
the Indian Railways. It was the
first underground railway to be Operator(s) Metro
built in India, with operations Railway,
starting in 1984; the New Delhi Kolkata
Metro, which opened in 2002, is
Technical
the second.

The line runs from Dum Dum in System length 16.5 km

the north and continues south
through Park Track gauge Broad
Street,Esplanade in the heart of Gauge
the city till the southern end
to Tollygunge.

The burgeoning transport problem of Kolkata drew the attention of

the city planners, the State Government and also the Government of
India. It was soon realised that something had to be done and done
quickly to cope with the situation

A survey was done by a team of French experts without any concrete

results. Efforts to solve the problem by augmenting the existing fleet
of public transport vehicles barely touched the fringe of the problem
as the roads account for only 4.2% of the surface area in Calcutta,
compared to 25% in Delhi and even 30% in other cities.[

With a view to finding an alternative

solution, the Metropolitan Transport Project (Rlys)(i.e., Railways) was
set up in 1969. After detailed studies, the MTP (Rlys) came to the
conclusion that there was no other alternative but to construct a Mass
Rapid Transit System. The MTP (Rlys) had prepared a Master Plan in
1971 envisaging construction of five rapid-transit lines for the city of
Kolkata, totalling a route length of 97.5 km.

Of these, the highest priority was given to the busy North-South axis
between Dum Dum and Tollygunge over a length of 16.45 km, and
the work on this project was sanctioned on June 1, 1972. The
foundation stone of the project was laid by Smt. Indira Gandhi, the
then Prime Minister of India, on December 29, 1972, and the
construction work started in 1973.

Delhi Metro
Much of Delhi Metro runs on elevated tracks along road medians

The Delhi Metro is a rapid transit system in the Indian city

of Delhi that was built and is operated by the Delhi Metro Rail
Corporation Limited (DMRC).

The first section of the Delhi Metro was opened on December

24, 2002. It became the second underground rapid transit system in
India, after Kolkata. The Delhi Metro has a combination of elevated,
at-grade and underground lines.

The Delhi Metro has won numerous awards for its environmentally
friendly practices from many renowned organisations including
the United Nations, RINA, and ISO. Delhi Metro was the first metro in
the world to be ISO 14001 certified for environmentally friendly
construction.

The concept of a metro for Delhi was first formalized in the Delhi
Master Plan of 1960, and the legal framework for the metro was laid
out in the Metro Railways (Construction of Works) Act of 1978.

Actual work towards building the metro, however, only started

in March 5,1995, when the DMRC was established. After the previous
problems experienced by the Calcutta Metro, which was badly
delayed and 12 times over budget due to "political meddling,
technical problems and bureaucratic delays", the DMRC was given full
powers to hire people, decide on tenders and control funds.

Mumbai Suburban Railway

The Mumbai Suburban Railway system, part of the public
transportation system of Mumbai, is provided for by the state-
run Indian Railways' two zonal Western Railways and Central
Railways. The system carries more than 6.6 million commuters on a
daily basis and constitutes more than half of the total daily passenger
capacity of the Indian Railways itself. It has one of the highest
passenger densities of any urban railway system in the world. The
trains plying on its routes are commonly referred to as local trains or
simply as locals by the general populace.

The Mumbai Suburban Railway, as well as Indian Railways, are an

offshoot of the first railway to be built by the British in India in April
1853. This was also the oldest railway system in Asia. The first train
ran between Mumbai and Thane, a distance of 34 km. The Bombay
Railway History Group[1] has been striving to document railway
heritage along this line.

Given the geographical spread of the population and location of

business areas, the rail network is the principal mode of mass
transport in Mumbai.

A metro system and a monorail system are under construction to

ease the travelling conditions in the Suburban network.
Passenger services

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 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.

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.

 Budget and Finances
The Railway Budget deals with planned infrastructure expenditure on
the railways as well as with the operating revenue and expenditure
for the upcoming fiscal years, the public elements of which are
usually the induction and improvement of existing trains and routes,
planned investment in new and existing infrastructure elements, and
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 (Lower House).

The comments of the Rajya Sabha (Upper House)

are non-binding. Indian Railways is subject to the same audit control
as other government revenue and expenditures. Based on anticipated
traffic and the projected tariff, requirement of resources for capital
and revenue expenditure of railways 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 Budgetary
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 (on the

recommendations of the Acworth Committee), 1924, the Railway
Budget is presented to the Parliament by the Union Railway Minister,
two days prior to the General Budget, usually around 26th 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, the Financial
Commissioner and other functional members of Traffic, Engineering,
Mechanical, Electrical and Staff departments.

Indian Railways, which a few years ago was operating at a loss, has,
in recent years, been generating positive cash flows and been
meeting its dividend obligations to the government. The railway
reported a cash surplus of INR 9000 cr in 2005, INR 14000 cr in
2006, INR 20,000 cr in 2007 and INR 25,000 cr for the 2007-2008
fiscal year. Its operating ratio improved to 76% while, in the last four
years, its plan size increased from INR 13,000 cr to INR 30,000 cr.
The proposed investment for the 2008-2009 fiscal year is INR 37,500
cr, 21% more than for the previous fiscal year. [2] Budget Estimates-
2008 for Freight, Passenger, Sundry other Earnings and other
Coaching Earnings have been kept at INR 52,700 cr, INR 21,681 cr,
INR 5,000 cr and INR 2,420 cr respectively.

Maintaining an overall double digit growth, Gross

Traffic Earnings have been projected as INR 93,159 crore in 2009-10
(19.1 billion USD at current rate), exceeding the revised estimates for
the current fiscal by INR 10,766 crore. Around 20% of the passenger
revenue is earned from the upper class segments of the passenger
segment (the air-conditioned classes).

On 3rd July 2009 Railway Minister Mamata Banerjee presented the

Railway Budget 2009-2010, which included many improvements.

The Ministry of Railways in India is in charge of the Indian Railways,

the state-owned company that enjoys a monopoly in Rail transport in
India. The Railway Board which is the apex body of the Indian
Railways reports to this ministry. Shri. S.S.Khurana took over as the
Chairman of the Railway Board recently.
Thanks to historical reasons, the Ministry of Railways presents a
budget separate from the general budget of India. The practice
started in 1924. At that time, the Railway Budget formed about 70%
of the country's budget. So separating it out allowed better focus on
each budget's priorities. The Railway Budget now is less than 15% of
the national budget. Though the Railway budget can no longer be
justified as a separate budget presentation, it is still watched eagerly
as the annual fare and tariff setting event.

It was in the historic year of 1921, when the recommendation of the

Acworth Committee ratified through the Resolution for separation in
1924 when for the first time the Indian Railway finances were
separated from the General Finances. This segregation of Railway
Finances together with acceptance in principle at least of the
responsibility for the direct operation of its Railways was a watershed
moment in the history of Railways as a whole.

With the recommendations not only was the segregation of Railway

Finance clearly established, but the office of the Financial
Commissioner was envisaged in an embryonic manner, and
accordingly, the first Financial Commissioner was appointed on 1st
April 1923. The necessity of such an appointment was thus
emphasized by the Acworth Committee, The large financial
responsibility of the department being perhaps sufficient justification
in itself for the addition to the organization of a member competent
to advise on the questions of great financial magnitude.
Accordingly, from 1st April 1929, the responsibility for the compilation
of accounts for the Railways was taken over by the Financial
Commissioner, Railways from the Auditor General. The Accounts
organisation was thus brought under the control of the Financial
Commissioner, Railways, and the Indian Railway Accounts
Service was constituted simultaneously.
Budgetary Details

A. Budget Terms

1. Budget Estimates.—Every Railway Administration has to prepare

estimates of expenditure expected to be incurred by it in a year and
submit them on prescribed dates well in advance of the beginning of
that year to the Railway Board for obtaining the sanction of the
Parliament or the President. Such estimates are called '" Budget
Estimates ".

2. Demands for Grants.—On the basis of the Budget Estimates

received from the various Railway Administrations and other spending
units, the Railway Board prepare their " Demand for Grants " and
present them to the Parliament or the President, as the case may be,
for sanction.

3. Grants and Appropriations.—The ' Demands for Grants ' as finally

approved by the Parliament are called the Budget ' Grants ' and those
sanctioned by the President without reference to the Parliament are
called ' Appropriations '.

4. (i) Budget Orders and Allotments.—The Railway Grants and

Appropriations for a year are distributed by the Railway Board to the
various Railway Administrations and other spending units directly
under the Railway Board through what are known as ' Budget Orders'.
The Budget Orders are accompanied by the Budget Documents.

(ii) The Grants and Appropriations distributed to the various Divisions

and spending units are called Budget ' Allotments '.

5. Re-appropriation.—The transfer of funds originally assigned for

expenditure on a specific object to supplement the funds sanctioned
for another object is called " Re-appropriation ". The powers of the
Railway Board and Railway Administration in respect of re-
appropriation are detailed in Chapter III of the Indian Railway
Financial Code Volume I (extracts at Annexure ' 11 ').

6. Review of Expenditure.—The sufficiency or otherwise of the

sanctioned budget allotments shall be reviewed periodically by each
Railway Administration on the basis of expenditure actually incurred
upto the time of review and the anticipated expenditure during the
remaining portion of the financial year. The detailed procedure in
regard to review of Expenditure is contained in Chapter III of the
Indian Railway Financial Code, Volume I (extracts at Annexure ' 12 ').

B. Demands for Grants.—All revenue working expenses of the Railway

are classified under 13 sub major heads with separate abstract for
each sub major head. The sub major heads are divided into minor,
sub and detailed heads as detailed in Volume II of the Indian Railway
Financial Code

Estimates for Working Expenses or Revenue Budget

C. Works, Machinery and Rolling Stock Budget 

Detailed instructions for preparation and submission

of Works, Machinery and Rolling Stock Budget are contained in
Chapter III of Indian Railway Financial Code, Volume I). The
classification of expenditure by primary units of expenditure are
contained in Volume II of the Financial Code.
Frequently Asked Railway Budget Questions:
Is it necessary to have a separate budget for the Railways ?

The Indian Railways is one of several arms of the government. It is

like any other government department engaged in commercial
activity (such as telecommunications, posts and telegraph). There is a
ministry of railways, headed by a minister answerable to Parliament.
The fund requirements of the Indian Railways are mentioned in the
annual financial statement tabled in Parliament in pursuance of Article
112.

Also, Article 114 dealing with the Appropriations Bill applies to the
Indian Railways. Strictly speaking, there is no constitutional
requirement for a separate Rail Budget. All the mandatory things
which the Rail Budget seeks to do can be done by the Union Budget.

Why then do we need a separate Rail Budget?

First, owing to tradition. railway finances were separated from

general finances in the government budget of 1924. The Railway
Board was expanded to have a financial commissioner in pursuance of
a resolution, popularly known as the ‘Separation Convention’,
adopted by the then Central Legislative Assembly. The first Railway
Budget was presented in 1925.

The second reason for a separate Rail Budget is the scale of

operations and quantum of funds involved. The network of Indian
Railways covers 63,000 km of rail route. It runs around 15,000 trains
everyday and is of great strategic importance for the nation.

What does the Rail Budget seek to do?

Like any other budget, it too seeks to align receipts and expenditure,
and also find resources for the modernisation of the organisation,
keeping in view future requirements. In addition to meeting the
operating expenses, the Rail Budget will be required to find resources
for the Integrated Railway Modernisation Plan (2005-2010),
estimated to cost Rs 24,000 crore, spread over five years. As a major
portion of the funds will flow to the Railways in the form of
borrowings and support from the Union Budget, the Railways will
need to generate adequate resources for servicing the inflows.
What are the main sources of earnings for the Railways?

The two basic sources are freight charges and passenger fares. The
Railways also generates some income from other operations, but it is
neither significant nor related to the core operations of the
organisation. The Railways generates a bulk of its revenue by
transporting goods. During 2005-06, it was expected to earn Rs
33,480 crores as freight charges. The target is likely to be exceeded.
From passenger traffic, the Railways is estimated to earn Rs 15,080
crore, which is almost half the amount it earns from freight. Although
the Railways earns more from freight, it accords greater focus to
passenger services.

What is cross-subsidy?

The practice of undercharging from passengers, especially at the

lower end of the spectrum, and overcharging on freight transport is
broadly called cross subsidisation. Basically, it means that freight is
overcharged to make up for losses on account of low realisation from
passenger fares. While the Railways does so to make a journey
affordable to a larger number of people, the industry feels the heat,
as higher freight charges make manufactured goods dearer. Railway
minister will have to balance the expectations of the two sections of
rail users.

What is operating ratio?

It is a standard measure for judging the financial health of the

Railways. What it means is how many units the Railways spends to
earn 100 units. In the Indian context, it would mean the rupees
needed by the Indian Railways to earn Rs 100. The lower the ratio,
the better the health of the Railways.

The Indian Railways’ operating ratio has been decreasing after

touching an alarming high of 98.3% in 2000-01. It is expected to
improve from 91.2% (March 2005) to 90.8% at the end of the
current fiscal. It would be the lowest operating ratio in the last eight
years. In the recent past, the best operating ratio, of 82.5%, was
witnessed in 1995-96.
 Product Profile

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

toDarjeeling, a hill station at an elevation of 2,134 metres (7,000 ft). The

highest station in this route is Ghum. The Nilgiri Mountain Railway, in

theNilgiri 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 IR.

 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 Expresswas 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 1072 m

(3,517 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.[5] 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 3,745 km (2,327 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

528 km (328 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 140 km/h (87 mph) on

the Faridabad-Agra section. The fastest speed attained

by any train is 184 km/h (114 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.

Challenges Facing Indian Railways

 To increase operational efficiency

 Improve productivity from existing systems
 Streamline and optimize business procedures
 To be responsive to business constituents
 Create end-to-end visibility into the business
 Make the information accessible and actionable
 To provide adaptability to change
 Re-act quickly to threats and opportunities
 Turn I.T. into a competitive business asset
 To support higher demand for Freight and
Passenger transport, with planned economic
growth
 Need for capacity enhancement in the Railway
network over the next 10-15 years
 Technological up gradation for better
maintenance of railway assets
 To fight back the greater competition from
Roadways, with major investments in Highway
network up gradation
 Increase freight market share through higher
availability of services at competitive prices
 Greater attention to passenger services and
safety
 To manage heavily subsidised passenger fares &
distorted passenger fares pricing
 Up gradation of the Railway Production units for
improved efficiency and productivity