Indian rail monopoly

- By Dishant Shah

Indian Railways as Monopoly 1

Overview
About Indian Railways
Why Monopoly?
PPP in Indian Railway
Modern Techniques Indian Railways
using
Freight Traffic
Services Offered and Outsourced
Comparative Study with British Railways

Indian Railways as Monopoly 2

 About Indian Railways

Source : DTE of Eco & Stats Indian Railways as Monopoly 3

 About Indian Railways

Source : DTE of Eco & Stats Indian Railways as Monopoly 4

 About Indian Railways

Source : DTE of Eco & Stats Indian Railways as Monopoly 5

Monopoly
Indian railways widest reach in country
Follows following properties

1. Single seller
2. No close substitutes
3. Price maker
4. Sole manufacturer so blocks the entry

Indian Railways as Monopoly 6

Why Monopoly ?

 To maintain Government control

 Consistent Revenue Generating Business
 To have single Coordinating Authority
 Security reasons
 Contributing towards growth of the country
 Providing service to remote areas

Indian Railways as Monopoly 7

Why Monopoly ?
Competition from low cost airlines
Still not a threat to the monopoly of
railways
Price cross subsidization
Regular service

Indian Railways as Monopoly 8

Disadvantages Of Monopoly
• No alternative to long distance middle class
commuters
• Poor service Quality
• Price maker
• High travelling time
• Poor fund generation for development
• Unable to cope up with high load

Indian Railways as Monopoly 9

Moving Towards Competitive
Market
• Entry of private players
• Introduction of new technology
• Improving services
• Effective management
• Competition from Low Cost Airlines
• Possible use of waterways

Indian Railways as Monopoly 10

PPP in Indian Railway

Indian Railways as Monopoly 11

Need for PPP
Growing with the economy

The bad state of infrastructure

Freeing up precious resources

Competition of aviation and road industry

Indian Railways as Monopoly 12

PPP in Indian Railways
• Container operations
• Dedicated Freight Corridor
• High speed corridors connecting major cities
• World-Class railway stations
• Commercial utilization of lands
• Wagon Investment Scheme
• PPP for manufacturing locomotives/ coaches/
wagons
• Parcel Services
• Catering Services, Budget Hotels and Food
Plazas
Indian Railways as Monopoly 13
Government Policy on PPP
in IR
• No clear roadmap

• Political climate

• Enforcement of contract

• Threat of private monopolies

• PSU mindset
Indian Railways as Monopoly 14
Criteria to evaluate projects
for PPP

Revenue Protection

Contract enforceability

Indian Railways as Monopoly 15

Modern Techniques IR using?

Indian Railways as Monopoly 16

 Anti Collision Device

Collision prevention
system
Input from satellite
system
Auto application of
brakes
Gate ACD’s at railway
crossing

Indian Railways as Monopoly 17

Center for Railway Information
System
Computer information system of Railway
Passenger reservation system
Computerization of unreserved ticketing
system
Online reservation system
National train inquiry system

Indian Railways as Monopoly 18

 LHB Coaches
German technology based Linke
Holfmann Bush (LHB) coaches
Lighter and can travel at 160 to 200
km/hr
Reduced sound level
Heat and cold resistant

Indian Railways as Monopoly 19

Mumbai Rail Vikas Corporation
Rakes
Purchased under Mumbai Urban
Transport Project
More capacity
Forced ventilation
Better lighting
Improved looks

Indian Railways as Monopoly 20

Freight Traffic

Indian Railways as Monopoly 21

 Way of Transport as per
Commodities
 Railways:

◦ Commodities with Bulk Production and Bulk Demand

◦ More than 95 % of IR’s Freight traffic is limited to 8-9
Bulk Commodities such as coal , Raw Materials , Iron
& Steel etc.
 Freight segment accounts for about 70 per cent of the
revenue. Within the freight segment, bulk traffic accounts
for nearly 84 per cent of revenue earning freight traffic (in
physical terms)
 Road:
 Fragile and Perishable Goods
 High Social Costs
Source : NTPC Indian Railways as Monopoly 22
Trends in Freight Traffic

Source : CCI & NTPC Indian Railways as Monopoly 23

 Rail Freight Traffic with
Growth in Manufacturing

Source : India Budget

Indian Railways as Monopoly 24
Why Increasing Freight Traffic in
Roads?
 Advantages of Road over Rail:
◦ Door to Door Service
◦ Greater Operational Flexibility
◦ Economic Movement in Smaller Lots
◦ Reduces the Number of Intermediate Handlings and
Consequent Damages
◦ Growth of consumer goods industries
◦ Better Service for Short Distance Travels
◦ Elasticity of Total Rail and Road Transport with GDP
is 1.48 while for Road Transport is 2.15 in case of
Freight Traffic
Source : NTPC
Indian Railways as Monopoly 25
Inland Waterways as an
Option?
Inland Waterways:
◦ 14,500 kms of Navigable Inland Waterways
◦ Fuel-efficient & Environment Friendly
◦ Good option for movement of Bulk Cargo
Like Coal , Steel , Cement , fertilizers etc.
◦ Cargo movement by IWT showing Increasing
Trend : 55.82 mn tonne in 2007-08 from 32.48
mn tonne in 2003-04.

Source : IWA (Inland

Waterway Authority of
India) Indian Railways as Monopoly 26
Inland Waterways

Indian Railways as Monopoly 27

Disadvantages of Inland
Waterways
 Restricted only to certain areas
 Waterways suffer from navigational hazards like
shallow water and narrow width during dry weather,
siltation and bank erosion and inadequate clearances
 Slow speed - high transit time
 Night navigation not available
 Additional handling involved when compared with rail

Indian Railways as Monopoly 28

Services offered by
Indian Railways

Indian Railways as Monopoly 29

Services outsourced by Indian
Railways (IR)
Procurement of HRM system and other
modules for integrating and automating its
payroll, accounting and pension functions
Intensive mechanized cleaning of coaches
in the coaching depots through
professional agencies
Catering services
Outsourcing more multi-disciplinary and
multispecialty services to the city’s top
medical institutes
Indian Railways as Monopoly 30
British Railways

Indian Railways as Monopoly 31

Structure
Infrastructure Owner Train Owners

Regulation Passenger Train

Operators
Specialist Companies
FreightTrain
Infrastructure
Operators
Maintenance &
Renewal
Franchising

Indian Railways as Monopoly 32

Effects of Privatisation
Customer Service Safety
Fares & Timetable Investment
New Trains Funding
Punctuality & Profitability &
Reliability Efficiency
Level of Traffic Control

Indian Railways as Monopoly 33

Criticisms
Too Complex

Fundamentally Wrong

Has pushed up costs

Indian Scenario

Indian Railways as Monopoly 34

 Indian Railway Scenario
Revenue/Costs

AC

R MC
M

F
AR
E MR

Q Q1 Qty

Indian Railways as Monopoly 35

Bibliography
www.indianrail.gov.in
www.irctc.co.in
Report by National Transport Policy
Committee (NTPC)
Competition Commission of India (CCI)
DTE of Economics & Statistics
ExpressBuzz
Inland Water Authority of India (IWA)
www.indiabudget.nic.in

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THANK YOU!!

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