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 c

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).

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ÔY 
  

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.

ÔY 0



 

The product or service is unique in ways which go beyond brand identity, and cannot be easily replaced
(a monopoly on water from a certain spring, sold under a certain brand name, is not a true monopoly;
neither is Coca-Cola, even though it is differentiated from its competition in flavor).

ÔY ¦
 
In a pure monopoly a single firm controls the total supply of the whole industry and is able to exert a
significant degree of control over the price, by changing the quantity supplied (an example of this would
be the situation of Viagra before competing drugs emerged). In subtotal monopolies (for example
diamonds or petroleum at present) a single organization controls enough of the supply that even if it
limits the quantity, or raises prices, the other suppliers will be unable to make up the difference and take
significant amounts of market share.

ÔY £   
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.

¦
 

     

In economics a company is said to have monopoly power if it faces a downward sloping demand curve
(see supply and demand). This is in contrast to a price taker that faces a horizontal demand curve. A
price taker cannot choose the price that they sell at, since if they set it above the equilibrium price, they
will sell none, and if they set it below the equilibrium price, they will have an infinite number of buyers
(and be making less money than they could if they sold at the equilibrium price). In contrast, a business
with monopoly power can choose the price they want to sell at. If they set it higher, they sell less. If they
set it lower, they sell more.
In most real markets with claims, falling demand associated with a price increase is due partly to losing
customers to other sellers and partly to customers who are no longer willing or able to buy the product.
In a pure monopoly market, only the latter effect is at work, and so, particularly for inflexible
commodities such as medical care, the drop in units sold as prices rise may be much less dramatic than
one might expect.

If a monopoly can only set one price it will set it where marginal cost (MC) equals marginal revenue
(MR) as seen on the diagram on the right. This can be seen on a big supply and demand diagram for
many criticism of monopoly. This will be at the quantity Qm; and at the price Pm. This is above the
competitive price of Pc and with a smaller quantity than the competitive quantity of Qc. The offensive
monopoly gains is the shaded in area labeled profit (note that this diagram looks only at the case where
there is no fixed cost. If there were a fixed cost, the average cost curve should be used instead).

As long as the price elasticity of demand (in absolute value) for most customers is less than one, it is very
advantageous to increase the price: the seller gets more money for less goods. With an increase of the
price, the price elasticity tends to rise, and in the optimum mentioned above it will be above one for
most customers. A formula gives the relation between price, marginal cost of production and demand
elasticity which maximizes a monopoly profit: (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.
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Indian Railways (IR) is the state-owned railway company of India. Indian Railways had, until very
recently, a monopoly on the country¶s rail transport. It is one of the largest and busiest rail networks in
the world, transporting just over six billion passengers and almost 750 million tonnes of freight
annually. IR is the world¶s largest commercial or utility employer, with more than 1.6 million employees.

The railways traverse through the length and width of the country; the routes cover a total length of
63,940 km (39,230 miles). As of 2005 IR owns a total of 216,717 wagons, 39,936 coaches and 7,339
locomotives and runs a total of 14,244 trains daily, including about 8,002 passenger trains.

Railways were first introduced to India in 1853. By 1947, the year of India¶s independence, there were
forty-two rail systems. In 1951 the systems were nationalised as one unit, becoming one of the largest
networks in the world. Indian Railways operates both long distance and suburban rail systems.

£  
The development of IR had its roots in the 1800s, when India was a British colony. The British East
India Company and later, the British colonial governments were credited with starting a railway system
in India.

The British found it difficult to traverse great distances between different places in India. They felt the
need to connect those places with trains to speed up the journey as well as to make it more comfortable
than travel by road in the great heat. They also sought a more efficient means to transfer raw materials
like cotton and wheat from the hinterlands of the country to the ports located in Bombay, Madras and
Calcutta, from where they would be transported to factories in England. Besides, the mid-1800s were a
period of mutiny and struggle for independence in India, with uprisings in several parts of the country.

The British leaders wanted to be able to transfer soldiers quickly to places of unrest. Railways seemed to
be the ideal solution to all these problems.
Work began on the development of railway systems in India in the early 1850s. Initially, trains were
used to transport material between different places. The first commercial passenger train in India ran
between Bombay and Thane (places in western India) on April 16, 1853.

The distance of 34 kilometers was covered in about 75 minutes. Indians were initially apprehensive of
accepting railways as a means of travel, but soon overcame that fear and railways gained popularity.
Soon, railway lines began to be laid in other parts of the country, mostly by private British companies,
and the major regions in India were connected by rail. To promote the construction of railway lines in
India, the British Parliament introduced the guarantee system.

Under this system, any company that constructed railway lines in India was given a guarantee of a five
percent return per annum on the capital invested. The company also had the right to pull out from the
venture and receive compensation from the government at any time if it was not satisfied with the
returns. This helped accelerate the development of railways in the country.

A number of railway companies were incorporated between 1855 and 1870. Most of them operated at a
regional level. By the beginning of the 1870s, the total track coverage in India was 4000 miles. In
addition to commercial objectives, railways also began to play a social role in India. When there were
famines in several parts of the country between 1870 and 1880, railways played a very important role in
providing relief to the affected areas.

By the end of 1880, the total track coverage increased to 9000 miles. In 1880, the Darjeeling Steam
Tramway started operating (the name was changed to Darjeeling Himalayan Railway in 1881). This
railway track was considered one of the greatest engineering feats in the history of IR, crossing as it did,
rough and dangerous mountain terrain at a steep gradient.

In 1890, the British Government passed the Railways Act, to govern the construction and operation of
railways in India. By the beginning of the 20th century, there were nearly 25,000 miles of railway track
in the country.

›
 

The Map of India above shows the different railway zones in India. The zones are numbered in the map.
The red dots are the zonal headquarters. For administrative purposes, Indian Railways is divided into
sixteen zones.

Given below is the table showing these 16 zones. †   
 † is constituted as a
separately incorporated railway, with its headquarters at Belapur CBD (Navi Mumbai). It comes under
the control of the Railway Ministry and the Railway Board.
The Calcutta Metro is owned and operated by Indian Railways, but is not a part of any of the zones. It is
administratively considered to have the status of a zonal railway.

Date
Sr. No.Y NameY Abbr.Y HeadquartersY
EstablishedY

Y Northern Railway Y
Y
 Y
Y  Y Y

Y North Eastern Y 
 Y Y
 RailwayY

Northeast Frontier

Y Y   Y
Railway
Y


Y Eastern Railway Y

Y ! Y
 Y Y
South Eastern

Y "Y ! 
Railway
Y Y

South Central (%'Y  Y

#
Y "$Y "%&'&
Railway ##Y
Y

)
Y Southern Railway "Y Y $ Y

Y  Y  Y
+*'Y  Y

Y Central Railway $Y *'
 Y
Y
Y

+*'Y  Y

Y Western Railway ,Y *'
 Y
Y
Y

South Western
-
Y ",Y .'
Y Y--Y
Railway
Y

North Western

Y ,Y /
 (%Y Y--Y
Railway
Y


Y West Central Railway ,$Y Y

/'
 Y
Y Y--Y

Y North Central Railway $Y Y
'& Y
Y Y--Y
South East Central

Y "$Y 01
 Y$Y
Y Y--Y
Railway Y


Y East Coast Railway $Y Y

0'1Y
Y Y--Y
#
Y East Central Railway $Y Y
.2
Y (%Y Y--Y
)
Y Konkan Railway3Y !Y +Y*'Y /Y# Y  Y
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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.

¦  
  


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,

ÔY Ñ


  
  


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.
ÔY 
   
  

  
Chittaranjan manufactures Electric Locomotives. Traditionally, the locomotives made by CLW use DC
traction. In recent times, CLW has manufactures locomotives with AC-AC transmission.

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!


  
¦

Earlier called Diesel Component Works, DMW makes key sub-assemblies for Diesel Locomotives. It also
does heavy repair and overhaul of engines and locomotives.

ÔY ?   "  

The first factory to make coaches for the Indian Railways. The coaches were monocoque structures.

ÔY 
" † 

The second coach factory is a more modern plant and has a much more flexible automation.

ÔY  #$% ¦ £ 

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.

ÔY 

†  &


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The performance of Production Units during 2004-05, was as under,

ÔY Chittaranjan Locomotive Works, Chittaranjan manufactured 90 BG electric locomotives including 22

state-of-the-art 3-phase 6000 HP electric locos.
ÔY 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.
ÔY Integral Coach Factory, Chennai manufactured 1,119 coaches including 112 Electric Multiple Units
(EMUs).
ÔY Rail Coach Factory, Kapurthala manufactured 1,201 coaches including 77 light weight LHB coaches
with higher passenger comfort and amenities.
ÔY 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.
ÔY Diesel Loco Modernisation Workshop, Patiala successfully upgraded 74 nos. 2600 HP WDM-2 diesel
electric locomotives to 3100 HP thus increasing the hauling capacity to the extent of 3 to 4 additional
coaches. DMW exported spares worth Rs.130.27 lakh to various countries.
ÔY Import content in the Railway Production Units expressed as percentage of total production cost is
roughly 2%. Import substitution is one of the main objectives of the production units.


  

 0 Ñ 
   

Many cities have their own dedicated suburban networks to cater to commuters. Currently, suburban
networks operate
in Mumbai (Bombay), Chennai (Madras), Kolkata (Calcutta), Delhi,Lucknow, Hyderabad and
Pune. Hyderabad, Mumbai and Pune do not have dedicated suburban tracks but share the tracks with
long distance trains. New Delhi, Chennai and Kolkata have their own metro networks, namely the New
Delhi Metro, the Chennai MRTS and the Kolkata metro, respectively.
Suburban trains that handle commuter traffic are mostly electric multiple units. They usually
have nine coaches or sometimes twelve to handle rush hour traffic. One unit of an EMU train consists of
one power car and two general coaches. Thus a nine coach EMU is made up of three units having one
power car at each end and one at the middle. The rakes in Mumbai run on direct current, while
those elsewhere use alternating current. A standard coach is designed to accommodate 96 sitting
passengers, but the actual number of passengers can easily double or triple with standees during rush
hour. The Kolkata metro has the administrative status of a zonal railway, though it does not come under
the seventeen railway zones.
The Suburban trains in Mumbai handle more rush then any other suburban network in India. The
network has three lines viz, western, central and harbor. It¶s considered to be the lifeline on Mumbai. On
11th July 2006 six bomb blasted in these trains targetted at general public.

"

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IR carries a huge variety of goods ranging from mineral ores, agricultural produce, petroleum, milk and
vehicles. Ports and major urban areas have their own dedicated freight lines and yards. Many important
freight stops have dedicated platforms and independent lines.

Indian Railways makes 70% of its revenues and most of its profits from the freight sector, and uses these
profits to cross-subsidise the loss-making passenger sector. However, competition from trucks which
offer cheaper rates has seen a decrease in freight traffic in recent years. Since the 1990s, Indian Railways
has switched from small consignments to larger container movement which has helped speed up its
operations. Most of its freight earnings come from such rakes carrying bulk goods such as coal, cement,
food grains and iron ore.

Indian Railways also transports vehicles over long distances. Trucks that carry goods to a particular
location are hauled back by trains saving the trucking company on unnecessary fuel expenses.
Refrigerated vans are also available in many areas. The ³Green Van´ is a special type used to transport
fresh food and vegetables. Recently Indian Railways introduced the special µContainer Rajdhani¶ or
CONRAJ, for high priority freight. The highest speed notched up for a freight train is 100 km/h
(62 mph) for a 4,700 metric tonne load.
Recent changes have sought to boost the earnings from freight. A privatization scheme was introduced
recently to improve the performance of freight trains. Companies are being allowed to run their own
container trains. The first length of an 11,000km freight corridor linking India¶s biggest cities has
recently been approved. The railways has increased load limits for the system¶s 220,000 freight wagons
by 11%, legalizing something that was already happening. Due to increase in manufacturing transport in
India that was augmented by the increase in fuel cost, transportation by rail became advantageous
financially. New measures such as speeding up the turnaround times have added some 24% to freight
revenues.

0
  

 
  

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.
TheNilgiri Mountain Railway, in the Nilgiri Hills in southern India, is also classified as a World
Heritage Site by UNESCO. It is also the only rack railway in India. TheChatrapati Shivaji
Terminus (formerly Victoria Terminus) railway station in Mumbai is another World Heritage Site
operated by Indian Railways.

The Rajdhani Express is a series of trains that journey to

and from the Capital New Delhi. Shown here are two Rajdhani Trains approaching each other
The ¦

is a specially designed train, lugged by a steam engine, for promoting tourism
in Rajasthan. The Maharashtra government did try and introduce the
    along
the Konkan route, but it did not enjoy the same success as the Palace on Wheels. The    
 was a train that ran between India and Pakistan. However, hostilities between the two nations
in 2001 saw the line being closed. It was reopened when the hostilities subsided in 2004. Another train
connecting Khokhrapar (Pakistan) and Munabao (India) is the    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 
 is a special train popularly known as the ³Hospital-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    is the oldest running locomotive in the world today,
though the distinction of the oldest surviving locomotive belongs to  

. Kharagpurrailway
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        !   .
The " #  , 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 !  $  , 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
  % 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.
] 


 
 

The headquarters of the Indian Railways in Delhi

Indian Railways is a publicly owned company controlled by the Government of India, via the Ministry of
Railways. The ministry is currently headed by   ¦ 
 ', the Union Minister for Railways
and assisted by two junior Ministers of State for Railways, R. Velu and Naranbhai J. Rathwa. Reporting
to them is the Railway Board, which has six members and a chairman.
Each of the sixteen zones is headed by a General Manager (GM) who reports directly to the Railway
Board. The zones are further divided into divisions under the control of Divisional Railway Managers
(DRM). The divisional officers of engineering, mechanical, electrical, signal & telecommunication,
accounts, personnel, operating, commercial and safety branches report to the respective Divisional
Manager and are in charge of operation and maintenance of assets. Further down the hierarchy tree are
the Station Masters who control individual stations and the train movement through the track territory
under their stations¶ administration. In addition to the zones, there are six production units (PUs) each
headed by a General Manager (GM), who also report directly to the Railway Board.
These production units are:

1.Y Chittaranjan Locomotive Works: Chittaranjan

2.Y Diesel Locomotive Works: Varanasi
3.Y Integral Coach Factory: Perambur (Near Chennai)
4.Y Rail Coach Factory: Kapurthala
5.Y Rail Wheel Factory: Yelahanka (Near Bangalore)
6.Y Diesel Modernisation Works: Patiala
In addition to this the Central Organisation for Railway Electrification (CORE) is also headed by a GM.
This is located at Allahabad. This organisation undertakes electrification projects of Indian Railway
and monitors the progress of various electrification projects all over the country.
Apart from these zones and production units, a number of Public Sector Undertakings (PSU) are under
the administrative control of the ministry of railways. These PSUs are:

1.Y Indian Railways Catering and Tourism Corporation

2.Y Konkan Railway Corporation
3.Y Indian Railway Finance Corporation
4.Y Mumbai Rail Vikas Corporation
5.Y Railtel Corporation of India ± Telecommunication Networks
6.Y RITES Ltd. ± Consulting Division of Indian Railways
7.Y IRCON International Ltd. ± Construction Division
8.Y 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.



  
 

The Railway Budget deals with the induction and improvement of existing trains and routes, the
modernisation and most importantly the tariff for freight and passenger travel. The Parliament
discusses the policies and allocations proposed in the budget. The budget needs to be passed by a simple
majority in the Lok Sabha (India¶s Lower House). The comments of the Rajya Sabha (Upper House) are
non binding. Indian Railways are subject to the same audit control as other government revenue and
expenditures. Based on the anticipated traffic and the projected tariff, the level of resources required for
railway¶s capital and revenue expenditure is worked out. While the revenue expenditure is met entirely
by railways itself, the shortfall in the capital (plan) expenditure is met partly from borrowings (raised by
Indian Railway Finance Corporation) and the rest from Budgetory support from the Central
Government. Indian Railways pays dividend to the Central Government for the capital invested by the
Central Government.
As per the Separation Convention, 1924, the Railway Budget is presented to the Parliament by the Union
Railway Minister, two days prior to the General Budget, usually around 26 February. Though the
Railway Budget is separately presented to the Parliament, the figures relating to the receipt and
expenditure of the Railways are also shown in the General Budget, since they are a part and parcel of the
total receipts and expenditure of the Government of India. This document serves as a balance sheet of
operations of the Railways during the previous year and lists out plans for expansion for the current
year.
The formation of policy and overall control of the railways is vested in Railway Board comprising the
Chairman, Financial Commissioner and other functional Members for Traffic, Engineering, Mechanical,
Electrical and Staff matters. As per the 2006 budget, Indian Railways earned Rs. 54,600 crores (Rs.
546,000 million or US$12,300 million). Freight earnings increased by 10% from Rs. 30,450 cr
(US$7,000 million) in the previous year. Passenger earnings, other coaching earnings and sundry other
earnings increased by 7%, 19% and 56% respectively over previous year. Its year end fund balance is
expected to stand at Rs. 11,280 cr (US $2.54 billion).

Around 20% of the passenger revenue is earned from the upper class segments of the passenger
segment (the air-conditioned classes). The overall passenger traffic grew 7.5% in the previous year. In
the first two months of India¶s fiscal year 2005-06 (April and May), the Railways registered a 10%
growth in passenger traffic, and a 12% in passenger earnings.
A new concern faced by Indian Railways is competition from low cost airlines that has recently made its
début in India. In a cost cutting move, the Railways plans to minimise unwanted cessations, and scrap
unpopular routes.
  
 

Level crossings like these usually see a high accident rate

Indian railways suffers from deteriorating finances and lack the funds for future investment. Last year,
India spent $28 billion, or 3.6% of GDP, on infrastructure. The main problem plaguing the Railways is
the high accident rate which stands at about three hundred a year. Although accidents such
as derailment and collisions are less common in recent times, many are run over by trains, especially
in crowded areas. Indian Railways have accepted the fact that given the size of operations, eliminating
accidents is an unrealistic goal, and at best they can only minimise the accident rate. Human error is the
primary cause (83%) blamed for mishaps. The Konkan Railway route suffers from landslides in
the monsoonseason, which has caused fatal accidents in the recent past.
Contributing to the Railways¶ problems are the antiquated communication, safety and signalling
equipment. One area of upgrading badly required is an automated signalling system to prevent crashes.
A number of train accidents happened due to a manual system of signals between stations. However, the
changeover to a new system would require a substantial investment. It is felt that this would be required
given the gradual increase in train speeds and lengths, that would make accidents more dangerous. In
the latest instances of signalling control by means of interlinked stations (e.g., Chennai ±
Washermanpet), failure-detection circuits are provided for each track circuit and signal circuit with
notification to the signal control centres in case of problems [12]. However, this is available in a very
small subset of the total Railways. Aging colonial-era bridges and century-old tracks also require regular
maintenance and upgrading.
In many places, pedestrians, vehicles or cyclists may cut across the tracks to save time, causing a
safety hazard to the railways. Most railway land in India is not fenced or restricted in any way, allowing
free trespass. In rural areas, cattle and other animals may stray onto the tracks, posing a much more
serious safety hazard to fast-moving trains.
$0]?]"(£$?$?$'
Two zonal Railways, the Western Railway (WR) and the Central Railway (CR), operate the
Mumbai Suburban Railway system running in form of 9-car and 12-car rakes of Electric Multiple unit
(EMU) trains. Two corridors (one local and other through) on Western Railway run northwards from
Churchgate terminus parallel to the west coast up to Virar (60 Kms). Two corridors (one local and other
through) on Central Railway run from Chhatrapati Shivaji Terminus (CST) to Kalyan (54 Kms), from
where it bifurcates into Kalyan-Kasara (67 Kms) in the north-east and Kalyan-Karjat-Khapoli (61 Kms)
in south-east. The 5th corridor on Central Railway runs as the Harbour line starting from CST to Raoli
Junction (11 Kms) from where the line splits. One line goes north-west to join WR at Bandra and goes
up to Andheri (11 Kms) and the other goes eastward to terminate at Panvel (39 Kms) via New-Mumbai.
The pressure on the Mumbai Suburban Railway system has reached alarming proportions.
Overcrowding has grown to such an extent that 5,000 passengers are travelling per 9-car train during
peak hours, as against the rated carrying capacity of 1,710. Also, there is an acute problem of
encroachment by slum dwellers on the property of Indian Railways which has created the problem of
safety of commuters. The rail network is the principal mode of mass transport in Mumbai. To enable the
Mumbai Suburban Railway System to meet the demands of the ever-growing passenger traffic, the
Ministry of Railways and the State Government of Maharashtra joined hands to face the challenge and
formed MRVC. However, the organisation has not been able fulfil the aims and objectives for which it
was set up. The researcher shall try to find out whether transfer of this organisation into private hands
can improve its performance and can lead to a better future for commuters¶ travel in the city.
The Corporation is not only executing the projects identified so far, but also involved in the further
planning and development of Mumbai Suburban Rail system for improved rail services in close
coordination with Indian Railways and Government of Maharashtra. The geographical jurisdiction of
MRVC is from Churchgate to Dahanu Road on Western Railway and from CSTM to Kasara, Karjat/
Khopoli and Panvel on Central Railway.

Apart from execution of Railway projects in Mumbai, the main functions of MRVC are:

ÔY Develop coordinated plans and implement the rail infrastructure projects.

ÔY Integrate urban development plan for Mumbai with rail capacity and propose investments.
ÔY Undertake commercial development of Railway land and air space in Mumbai area.
ÔY Coordinate and facilitate improvements of track drainage and removal of encroachments and
trespassers.
ÔY Coordinate with organizations operating the train services and responsible for protection of
Railway¶s right of way and urban development for purposeful resolution of allied issues and
problems.
Mumbai city¶s public transport comprises of Buses operated by Brihanmumbai Electric Supply and
Transport (BEST) and trains operated Central Railway and Western Railway, the two zonal railways of
Indian Railways. However, railway transport is the quickest and cheapest mode of transport among the
two.

  



 


0¦$0
Indian Railways plans 3 trillion rupees ($65.8 billion) of investment by 2012 to develop private
container trains, freight corridors and upgrade stations.
More private companies will be allowed to run freight trains and they will also be allowed to improve
facilities at railway stations, J.P. Batra, chairman of the Indian Railway Board, said at an infrastructure
conference in New Delhi today.

India wants to get rid of infrastructure bottlenecks so that the pace of economic growth can be
accelerated to as much as 10 percent in the next decade from an average 6 percent since 1980.
Construction of dedicated freight corridors will allow companies such as refiner Indian Oil Corp. to
move gasoline and diesel faster to consumers across the world¶s seventh-biggest landmass.

Indian Railways last month began constructing 220 billion rupees of freight-only lines aimed at
improving infrastructure in the world¶s second-fastest growing major economy.

Prime Minister Manmohan Singh opened the construction work in northern India¶s Punjab state,
according to an e-mailed statement from his office. The project, the railways¶ biggest since India¶s
independence in 1947, will lay almost 10,000 kilometers (6,215 miles) of tracks connecting the financial
hub of Mumbai on the west coast and Kolkata in the east to the capital New Delhi.
The freight corridor will eventually be 11,500 kilometers, Batra said.

The government in February said it granted licenses to 14 companies to run private trains, ending the
monopoly of the government in the business.
Indian Railways expects to carry 750 million tons of freight this year, more than the 726 million tons
that had been targeted, Batra said.

The utility expects to carry 6.5 billion people in the year ending March 31, 2007, compared with 6 billion
people in the previous year, the official said.

Indian Railways may have a surplus of 200 billion rupees ($4.4 billion) this year, from a surplus of 136
billion rupees last year, he said.
o



  

The financial performance of the Indian Railways for the period from 1998-99 to 2002-03 is shown
below:
R
YY 
Y

‰
 Y ‰ Y ‰Y ‰Y Y

Y Y

Y4Y%
1Y )
)#Y)
##Y)
)Y #-
)Y 
 Y

Y4Y5
&Y ) 
#-Y- 
Y##)
Y#
 Y -
)Y

YNet Revenue (‰ ± Y ‰‰.‰Y  
. Y ‰ ‰.Y  .
Y 
.Y
Y+&&Y
6'YYY+1Y7Y

Y )
- Y 
) Y  -
Y )
Y ##
Y
%Y6Y
'Y 8+1Y 7Y
6*Y 7Y &7&Y
9Y 9Y 9Y 9Y -
--Y
Y &+&&Y
%Y
Y+&&Y&7&Y 9Y 9Y 
-Y ---
--Y 9Y
Y

YNet Dividend paidY ‰ .
Y ‰

.
Y  .Y ‰ .‰
Y  ‰.
Y
Net Surplus available for appropriation (
#
Y  .
Y

.
Y .
Y ‰.
Y ‰‰‰
.Y
±
Y
The trend of growth in receipts and expenditure on Indian Railways is depicted in the following chart:
The net revenue, which was Rs.2141.16 crore in 1998-99 and Rs.2735.67 crore in 1999-2000, declined
sharply to Rs.1071.23 crore in 2000-01. Due to shortfall in net revenue, the Railways had to defer
payment of dividend of Rs.1823.30 crore in 2000-01. Net revenue registered a growth in 2001-02, but
was not adequate to meet the requirements of other funds and the dividend liability for the year.
Railways, therefore, decided to defer dividend of Rs.1000 crore in 2001-02. Though the financial results
of 2002-03, showed a marked improvement over previous years, the net revenue was not sufficient to
entirely set off the deferred dividend of the previous years.
O 
   

The detailed break-up of the traffic receipts of Railways for the years 2002-03 along with the details of
BE, RE and actuals of previous year¶s receipts is shown below:
R
YY 
Y

Actuals udget Estimates Revised Actuals

raffic EarningsY
‰Y Y Estimates Y Y
R
Y R
Y R
Y R
Y R
Y
811Y #
Y -
--Y )-
--Y )
Y
&1Y  
-Y #
--Y ##
--Y #-
Y
(Y$%Y )
Y -
--Y -
--Y  )
Y
"&1Y%&Y"1
1Y 
-Y --
--Y 
--Y ---
- Y
otalY 
 .
Y ‰

.Y 
 .Y ‰
.Y
¦

 


The passenger earnings target was fixed at Rs.13450 crore in the BE. The target was, however, scaled
down by Rs.720 crore in the RE to Rs.12730 crore. The actual passenger earnings were Rs.12575.44
crore. Passenger earnings, thus fell short of both the BE and RE projections. The earnings, however,
registered a growth of about 12.32 per cent as compared to 2001-02.
&



 ÔY Earnings from goods traffic were estimated to yield Rs.26118 crore in the BE and Rs.26658 crore in
the RE. The actual earnings of Rs.26504.82 crore were more than BE by Rs.386.82 crore but fell
short of the RE by Rs.153.18 crore.
ÔY The originating revenue earning goods traffic was projected at 510 million tonnes for 2002-03. This
was increased to 515 million tonnes in RE. Railways actually lifted 518.74 million tonnes of revenue
earning goods thereby exceeding the targets.
ÔY The target for volume of revenue earning goods traffic was projected at 334213 million net tonne
kilometres (NTKMs) which was increased to 357163 million NTKMs in RE. The actuals during 2002-
03 was 353194 million NTKMs, which was more than BE by 18981 million NTKMs but less than the
RE by 3969 million NTKMs.
The increase / decrease in originating tonnage of various commodities in 2002-03 over 2001-02 is
shown in the following chart:

ÔY The offering of µPOL¶ and µFertilizer¶ declined by 1.57 million tonnes and 0.74 million tonnes
respectively, as compared to the actuals of 2001-02.
ÔY The average lead for coal traffic, which was 614 kms in 2001-02, had decreased to 601 kms in 2002-
03. Thus, while the Railways have been able to bring in additional coal traffic, they have actually
suffered loss of long lead traffic at the cost of short lead traffic.
ÔY There was a shortfall in goods earnings from µOther Goods¶ (Rs.409.63 crore), µIron Ore for Export¶
(Rs.155.07 crore), µPOL¶ (Rs.148.81 crore), µCement¶ (Rs.147.77 crore), µFertilizers¶ (Rs.59.91 crore),
µMiscellaneous Goods¶ (Rs.26.63 crore) and µRaw Material for Steel Plants¶ (Rs.3.63 crore).
ÔY There was a shortfall in originating tonnage in respect of µOther Goods¶, µPOL¶, µFertilizers¶, µIron Ore
for Export¶ and µCement¶ by 4.75 million tonnes, 2.55 million tonnes, 2.04 million tonnes, 1.84
million tonnes and 0.25 million tonnes, respectively.
( 




The total amount outstanding against the State Electricity Boards/ Power Houses which stood at
Rs.1616.45 crore at the end of 2001-02, increased by Rs.137.42 crore (8.5 per cent) bringing the balance
to Rs.1753.87 crore at the end of 2002-03.
The outstanding dues against the main defaulting Power Houses/ State Electricity Boards was as under:
R
YY 
Y

Outstanding dues Outstanding ncrease in

Sr. Name of State Electricity as dues dues
No.Y oard/ Power HouseY on ‰ as on ‰ during
March Y March Y the yearY

Y 0&
Y4*Y8Y"Y )
# Y ##
#Y 
-Y

Y 82'Y"Y%%6Y0&Y 
 Y 
-Y 
)Y

Y Y:&6Y0&Y #-
#Y )
Y 
-Y

Y 21Y"Y%%6Y0&Y -
)Y -
Y 
)Y

Y ;Y8&1Y"Y%%6Y0&Y
)Y )
#Y 
-Y
#
Y *&Y:6Y$
Y 
)Y )
Y 
Y
)
Y ,1Y0Y"Y%%6Y0&Y 
 Y
Y 
-Y
&6Y 8&1Y "Y %%6Y

Y 
Y #
Y 
-Y
0&Y
] 


The Operating Ratio represents the percentage of working expenses (including the expenses not yet
paid) to traffic earnings (including the earnings not yet realised). The operating ratio, which was 96.02
per cent in 2001-02, improved to 92.34 per cent (by 3.68 per cent) in 2002-03 for the Railways as a
whole.

The operating ratio of Indian Railways during the last five years is shown in the following chart:

¦ % 


Details of the plan expenditure met from Central Government support and internal resources during
2002-03 were as follows:

 

  

Actual udget Revised Actual

Sr.Y
Sources of FinanceY Expenditure EstimateY Estimate Expenditure
NoY
‰Y Y Y Y
‰.Y Central
Y Y Y Y
 Oovernment
SupportY
YY 0&6Y
Y "

Y Y Y Y Y
Y 0&Y
$
Y 7*Y)#
Y --
--Y -
--Y #
)Y
Y
Y+1Y
'Y 417Y Y
"
%Y 6Y ---
--Y -
--Y -
--Y -
--Y
Y
"76Y&Y
Y $'Y
7*Y $Y &Y
-
 Y -
--Y #
--Y #
- Y
Y &Y Y 6Y
"76Y&Y
otal Central Oovernment

‰ .‰ Y

.Y .Y
.
Y
SupportY
.Y nternal ResourcesY
Y Y Y Y
Y 
%Y
#
# Y -
--Y #
--Y #
)Y
Y 1+Y&Y
Y +
*Y

)Y -
--Y -
--Y  
#Y
Y &Y
Y$
Y&Y 9Y 9Y 9Y 9Y
Y
+Y "
%Y 6Y

 Y #-
--Y #-
--Y #
 Y
Y "76Y&Y#Y
+Y(
Y<Y,1Y

Y 
--Y 
--Y 
Y
Y 9+Y
otal nternal ResourcesY 
.
Y  .Y ‰.Y ‰‰.Y
Orand otal of Plan Funds

.Y .Y 
.Y

‰.Y
(‰ Y
> Expenditure borne out of the SRSF financed by levy of safety surcharge and from Railways allocation
to the fund from its own resources.
*
 


    

The Railways are required to pay dividend at a fixed rate on the Capital advanced by the Government of
India. The Railway Convention Committee (RCC) of Parliament determines the rate of dividend payable
by the Railways to the General Revenues periodically. In accordance with the recommendation of the
RCC:
ÔY A moratorium is given on the payment of interest (dividend) on investments made on new lines out
of borrowed capital during the period of construction and for five years after a line is opened to
traffic. The cumulative liability on this account is payable when the line shows surplus after meeting
the current dividend. The liability is written off, if not paid within 20 years of opening of a line, to
traffic.
 ÔY Any shortfall in the payment of current dividend, when the net revenue is not adequate to meet
current dividend, is treated as deferred dividend liability.


o
 

¦

  " ) Railway-wise analysis of the Pension Fund balances on 31 March 2003 has revealed
that the following Railways had adverse (debit) balances in the fund:
R
YY 
Y

Sr. No.Y Name of RailwayY AmountY

Y 1Y 
) Y

Y "Y )
Y

Y $Y 
Y

Y Y1Y ))
 Y

Y "Y$Y )-
)#Y
#
Y Y
)Y
It implies that these Railways have not appropriated to the fund, the amount needed to meet their
pensionary charges. These Railways have, thus, been able to depict a better/ improved operating ratio
over the years.

On the other hand, Northeast Frontier, South Eastern, Western Railways, Metro Railway Kolkata and all
the Railway Production Units have appropriated more to the fund than the amount required for meeting
the pensionary charges of 2002-03.

Ñ  

  
  " ) For replacement and renewal of assets, the Railways maintain
Depreciation Reserve Fund (DRF) financed by transfers from Revenue.
The balances in DRF for the last five years is shown in the following table:
R
YY 
Y

Withdrawals
Accretion during
½earY Opening alanceY during Closing alanceY
the yearY
the yearY
 9Y 
)Y )#
Y -
Y #)#
)Y
9---Y #)#
)Y )
Y 
Y -
Y
---9- Y -
Y 
Y -
-Y )
-Y
-- 9-Y )
-Y  
Y #
# Y #
 Y
--9-Y #
-Y  
-Y #
)Y )
Y
Notes:
1. Difference between closing balance of 2000-01 & 2001-02 and opening balance of 2001-02 & 2002-
03 amounting to Rs.0.06 crore and Rs.0.02 crore respectively is due to transfers made between DRF
and Capital Fund.
2. Accretion includes interest on the balance in the fund.
Ñ   " ) This fund is financed by appropriation from surplus and/ or loans from General
Revenues to the extent required to meet expenditure on works relating to amenities for users of Railway
transport, labour welfare works, safety works and unremunerative operating improvement works.
Appropriation from surplus to Development Fund (DF) was projected at Rs.550 crore in the BE and RE.
Ministry actually appropriated Rs.550 crore as planned to this fund.

The balances in DF for the last five years is shown in the following table:

 

  

Opening Accretion Withdrawals Closing

½earY
alanceY during the yearY during the yearY alanceY
 9Y -
Y 
Y 
)Y -
 Y
9---Y -
Y )
-Y #
Y -
Y
---9- Y -
Y )
 Y 
Y )
Y
-- 9-Y -
Y 
 Y 
)Y -
#Y
--9-Y -
#Y 
Y  
#Y )-
# Y
Note:

Difference between closing balance of 1998-99 and opening balance of 1999-2000 is due to rounding off
while difference between closing balance of 2000-01 and opening balance of 2001-02 is due to transfer
of Rs.226.84 crore to Railway Safety Fund and transfer of Rs.0.04 crore from Capital to DF. Difference
between closing balance of 2001-02 and opening balance of 2002-03 is due to transfer of Rs.0.06 crore
from Capital and DRF.


" ) This fund was created with effect from 1 April 1993 to finance the Capital works of the
Railways. The balance amount of surplus left after appropriation to Development Fund is credited to
this fund. Since the Railways have not been able to generate adequate surplus for appropriation to
Capital Fund, the operation of Capital Fund has ceased for the time being.
Appropriation from surplus to Capital Fund (CF) was projected at Rs.17.43 crore at the BE stage. In the
RE there was no proposal to appropriate any surplus into the fund. An amount of Rs.0.94 crore was
credited to the fund as interest at 7 per cent per annum on the fund balance during the year 2002-03.
The balances in CF for the last five years is shown in the following table:

 

  

Opening Accretion Withdrawals Closing

½earY
alanceY during the yearY during the yearY alanceY
 9Y --
#Y 
) Y -
#Y #
Y
9---Y #
Y 
-Y #--
Y 
Y
---9- Y 
Y  
Y  
 Y 
-Y
-- 9-Y 
#Y 
#Y )
) Y 
)Y
--9-Y 
)Y -
Y -Y 
 Y
Note:
Difference between closing balance of 1999-2000 & 2000-01 and opening balance of 2000-01 & 2001-
02 amounting to Rs.0.42 crore and Rs.0.16 crore respectively is due to transfer between Capital and
Capital Fund.

 " )This fund was created with effect from 1 April 2001 to finance works relating to
Road Safety works viz. (i) manning of un-manned level crossings and (ii) conversion of level crossings
into road over/ under bridges. The fund is to be funded from three sources viz. (i) contribution from
Central Road Fund, (ii) Railway surplus left after payment of dividend and (iii) contribution which is
made by the Ministry of Railways to the Railway Safety Works Fund (maintained by the Ministry of
Finance) out of the Dividend payable to General Revenues. During the year 2002-03, the Ministry
received an amount of Rs.264 crore from the Central Road Fund and Rs.2.74 crore being contribution
payable to Railway Safety Works Fund. The BE provided Rs.452.73 crore to be appropriated from the
surplus during 2002-03. However no amounts were appropriated from the surplus to the fund.
The balance in Railway Safety Fund (RSF) is shown in the following table:

 

  

Opening Accretion during the Withdrawals during the Closing

½earY
alanceY yearY yearY alanceY
-- 9
#
Y -
)Y -
 Y 
-Y
-Y
--9

-Y ##
)Y #
- Y 
#Y
-Y
Note:
The opening balance of Rs.226.84 crore represents the transfer from DF on 1April 2001.

 

 " )A new fund, namely Special Railway Safety Fund (SRSF) was set up in
2001-02, to wipe out the arrears of replacements/ renewals of vital safety equipment on Railways in
fixed time schedule of 5 to 7 years. This fund was to be financed partly through Railway Revenues by
levy of safety surcharge (Rs.5000 crore) and balance (Rs.12000 crore) through additional financial
assistance (dividend free Capital) from General Revenues. During the year 2002-03 this fund received
Rs.1350 crore by transfer from Capital and appropriation of Rs.1167.91 crore (inclusive of Rs.602.51
crore of safety surcharge receipts) from Revenue. The outgo on account of plan expenditure chargeable
to this fund amounted to Rs.2486.31 crore leaving a balance of Rs.52.42 crore in the fund on 31 March
2003.
The balance in SRSF is shown in the following table:

 

  

Opening Accretion during the Withdrawals during the Closing

½earY
alanceY yearY yearY alanceY
-- 9
=Y 
-Y 
 Y -
Y
-Y
--9
-
Y  )
 Y  #
 Y 
Y
-Y
00(?¦0Ñ

½EARY ‰

‰Y ‰ ‰Y ‰  ‰Y ‰

‰Y ‰  ‰Y ‰  Y ‰ 
Y
Net Revenue ReceiptsY )
#Y )
)Y 
)Y )
Y 
) Y  -
Y  -
Y
‰
 Y ‰  Y ‰ 
Y ‰
 Y ‰ Y ‰Y ‰Y Y
 
-)Y  #
Y  -
Y  
#Y  )
#)Y -)
Y  )
Y  -
Y

 
 

)$ ??

 

There are few political leaders in the country who have been more sharply
criticised than Railways Minister Lalu Prasad Yadav. But now, there is a genuine sense of respect for
what Lalu has been able to achieve for Indian railways, which is looking healthier than it has in years.
In fact, Lalu and his Railways Ministry have been so impressive that they are now a case study for the
Indian Institute of Management (IIM).
When he wrestled the Railways Ministry from Ram Vilas Paswan, many had written the obituary of the
Indian railways, saying Lalu would drive it into the ground. But he¶s proved the skeptics wrong.

$*
 
The Indian railways, an organisation heading towards bankruptcy three years ago when he took over,
now has a surplus revenue of Rs. 11,000 crore, a feat that has won grudging respect for Lalu.
And with success has come recognition. IIM-A is taking the railways success as a case study.
 
 
 

Lalu achieved the feat by taking simple steps like competitive passenger fares

and reducing the wagons¶ turnaround time from seven to five days.
He also raised the carrying capacity of goods trains from 3,200 tonnes to 4,000 tonnes, which led to
higher freight earnings.

³This is just the start. We will soon have a surplus of Rs 20,000 crore. We will do more, you see our
profits will climb even further,´ added a confident Lalu.

Railways officials are in a celebratory mood, as they know their organisation has turned the corner and
the architect of this success is the railways minister.

Turning to the Aam Aadmi slogan, the minister said the railways will soon create economic
opportunities for the farmers. ³We plan to create a public-private partnership model, wherein retail
stores would be set up at around 7,500 stations across the country. It will facilitate procurement,
distribution and marketing. We plan to involve corporates in this project. Global tenders will be invited,´
he said.
He also talked about providing rail connectivity to all the ports in the country. ³We intend to ease the
congestion on the road. This would mainly facilitate the car exports from India,´ he said.
While the minister termed the bullet train project unviable for the country, he
told media persons that the ministry plans to take measures to tighten security in the system.
³We plan to introduce close circuit TVs and metal detectors at all the major stations. We also plan to
restrict entry at the platforms. Only passengers will be allowed to enter the platforms,´ he said.
The minister also stated that he had big plans to enable travellers to get a worldclass experience.
Starting with stations at major cities like Ahmedabad, Delhi, Chennai, Mumbai and Patna the new
station will have underground cross-over system to reach different platforms instead of an overbridge.
Taking a dig at his predecessor Nitish Kumar, Lalu Prasad said, ³I am aware what he has been saying
about our turnaround story and the situation in Bihar. Let us see if he is able to deliver. I don¶t think he
can.´
However, he steered clear of making any controversial statements. When asked about his views on
reservation, he said, ³Today is not the day to discuss it.´