Indian railways:Turnaround

“….Indian Railways has staged a dramatic turnaround with the same employees and assets. The turnaround strategy has been based on simple principles. Have higher freight volumes. Improve occupancy in passenger trains. Control costs. And most importantly reduce tarrifs.Through this, railways have improved their market share and operating margins…. Our government has been praised for improving customer services and reducing passenger’s fares, particularly for poorer sections of society. Railways reforms have been introduced without losing sight of our social obligation. this is what we call ‘inclusive growth’.”
-Hon’ble Prime Minister in his speech delivered at Ludhiana on 27-09-06
The Indian railways constitute a critical component of India’s transport network, both for passenger as well as freight services. Railways are cost effective and also environment friendly.Yet, capacity and efficiency constraints in freight segment have, over the years, led to significant shift from railways to road transport. A renewed focus of the railways ministry on efficency, customer care and commercial principles is aimed at reversing this trend. The recent turnaround in Railways operations suggests that Indian Railways are poised for rapid growth in capacity expansion.

The carefully crafted strategy of reform has been built around generation of capacity through optimization of the existing infrastructure and assets and differentiated approach to the social and commercial segments of the traffic. On the supply side, increase in axle load from 20.3 to 22.9 tonnes, reduction in turnaround time from 7 days to 5 days has generated the necessary incremental freight-loading capacity. Similarly, augmentation of popular passenger trains by using the spare stocks of coaches and mopping up of the slack available has led to increase carrying capacity per train. These operational innovations have also led to lowering of unit cost of operation in the face of rising cost of inputs. This advantage has been capitalized on the demand side by a dynamic and market-driven tariff policy linked to seasonality and price elasticity of demand. The strategy of across-the-board increase in freight rates has been replaced by selective changes in the tariff in response to market forces. The railways have earned a record surplus of Rs. 13612 crores in year 2005-06 and are headed for a surplus of Rs. 20000 crores in the year 2006-07.

By 2012, the railways are likely to handle double the traffic volumes currently handled. Indian railways have chalked out a well-planned strategy to remove bottlenecks and augment capacity to match the requirement. The key elements of the strategy would entail investment in infrastructure as well as modernization of wagons technology, advanced signaling and telecommunication, induction of high horsepower locomotives, grade separation and use of information technology specifically tailored to improve transit times and lower unit cost operation. It would also include building world –class passenger and freight terminals bench-marked to the best global standards.