INDIAN RAILWAYS PRESENTATION BY SUDHIR KUMAR, IAS. Officer on Special Duty/Minister for Railways A TURN AROUND STORY

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1 INDIN RILWYS PRESENTTION BY SUDHIR KUMR, IS Officer on Special Duty/Minister for Railways

2 INDIN RILWYS IN FINNCIL CRISIS Indian Railways is today on the verge of a financial crisis. To put it bluntly, the Business s Usual Low Growth will rapidly drive IR to fatal bankruptcy, and in sixteen years Govt. of India will be saddled with an additional financial liability of over Rs.61,000 crores. On a pure operating level, IR is in a terminal debt trap. - Expert Group on IR headed by Dr. Rakesh Mohan July

3 RUSTIC BRILLINCE xk; dk iwjk nw/k ugha nqgus ls xk; chekj gks tkrh gs ( If you do not milk the cow fully, it falls sick. ) osxu jsyos dk dekå?kksm+k gs] ml ij iwjk cks>k ykfn, mls nksm+kb,] csbkdj er lm+kb, ( Wagon is the bread earning horse of the Railways, load it adequately. Make it run and don t stable it. ) Shri Lalu Prasad, Minister for Railways July

4 IR IS PLY ON VOLUMES What is the VRIBLE component of the Rupee Others 9% Lease Charges / Dividend / DRF / SRSF / DF 27% Fuel & Stores 22% Salary & Pension 42% 03

5 IR IS PLY ON VOLUMES Index of T.W.E., Unit cost of PKMs, NTKMs at current prices (81-82 to 03-04) Index of T.W.E. 900 Index Unit Cost Index of PKMs 300 Unit Cost Index of NTKMs ( ) T.W.E. (in Billion Rs.) T.W.E. CGR(%) Total Earnings (in Billion Rs.) Total Earnings CGR(%) BTKMs BTKMs CGR(%)

6 IR IS PLY ON VOLUMES HOW LONG IS LONG-TERM (LTVC may be taken as 78.5% F.Code, para 217) Index of T.W.E. at constant prices and GTKMs Index of GTKM 200 Index Index of T.W.E. 100 ( ) ( ) ( ) to GTKM (Billion) T.W.E. (Billion Rs.) CGR GTKM % ( to ) 3.63% ( to ) 5.00% ( to % Years ( to ) 05

7 IR IS PLY ON VOLUMES Index of NTKM and cost per NTKM at constant prices Index of NTKm Index ( ) Index of Cost per NTKm to NTKM (Billion) Cost per NTKM (Paise) CGR NTKM % ( to ) Freight Earnings at Current Prices (Billion Rs.) Freight Earnings at Constant Yield (Billion Rs.) 2.85% ( to ) 6.87% ( to ) Rate Per NTKM (Paise) % ( ) Years ( to ) 06

8 IR IS PLY ON VOLUMES Index of PKM and Unit Cost at constant prices Index of PKm 175 Index Index of Cost per PKM ( ) ( ) PKM (Billion) Cost per PKM (Paise.) Years ( to ) Passenger Earnings at current prices (Billion Rs.) Passenger Earnings at Constant Yield (Billion Rs.) Earnings PKM (Paise)

9 IR IS PLY ON VOLUMES Index of Unit Freight Cost and Realisation at Current Prices Index of input cost Index Index of Cost/NTKM Index of Earnings/NTKM Years Index of Input Cost Cost/NTKM (Paise) Earnings/NTKM (Paise)

10 IR IS PLY ON VOLUMES 100 Operating Efficiency, Technology and Productivity Gains 90 Index Index of Energy Consumption Index of Wagon Turn-Round Wagon Turn-round Energy Consumption (in thousand Frt. GTKM) Years

11 IR IS PLY ON VOLUMES 100 Operating Efficiency, Technology and Productivity Gains Index Index of Diesel Consumption Index of Electricity Consumption Years 10

12 300 IR IS PLY ON VOLUMES Operating Efficiency, Technology and Productivity Gains Index NTKM per Wagon Day Traffic Output (in 000)/ Employee 150 Traffic Density MGTKm/Running Track Km Years NTKM Per Wagon Day Traffic Density MGTKm per Running Track Km Traffic Output (in thousand) Per Employee/annum

13 IR IS PLY ON VOLUMES KEY STRTEGY Play on freight volumes to reduce unit cost. a) Enhancement of carrying capacity of wagons i) BOX-N increased from 60 tonnes to 70 tonnes ii) BCN increased from 58 tonnes to 63 tonnes b) Reducing turn around time of wagons from 7 to 5 days. Implement three categories of investments on HDN in parallel Upgrade existing infrastructure for higher operating efficiency Invest in additional track capacity/electrification of routes Increase reliability of systems (wagons/coaches, locos, tracks, signalling) Operating strategy for maximisation of throughput 12

14 IR IS PLY ON VOLUMES KEY STRTEGY Reduce passenger losses by a) increasing occupancy of trains through passenger profile management b) Increasing volume of upper class travel c) ugmenting load of well patronized trains to 24 d) Reducing losses on catering and parcel by 50% in

15 IR IS PLY ON VOLUMES REDUCING THE TURN ROUND TIME OF WGONS TO 5 DYS COMMERCIL, OPERTIONL & INVESTMENT ISSUES Full rake placements Round the clock working Electrification of diesel sidings on electrified routes mendment in Preferential Tariff Schedule (PTS) Faster train examination 14

16 IR IS PLY ON VOLUMES TRIFF RTIONLISTION IR has no real competition in door to door bulk and heavy freight delivery beyond 400 kms a) Freight of raw materials/minerals increased. b) Freight of finished products reduced. Scraping of minimum weight condition concept 4000 commodities grouped into 19 commodity heads with single uniform class for different commodities in the same group. 15

17 HITHERTO RECIPE FOR SOLVENCY Passenger Fare Index Increase in Passenger Fares (from to ) Year C First Class C - 2 Tier Sleeper (Mail/Exp) Second Class (Mail/Exp) 15 a

18 HITHERTO RECIPE FOR SOLVENCY Increase in Freight Rates of Major Commodities (from to ) Rate per Tonne Index Year Cement Coal Iron & Steel Fertilizer POL (HSD) 15 b

19 IR IS PLY ON VOLUMES NINTH & TENTH FIVE YER PLN TRGET ND CHIEVEMENT Million Tonnes Target chievement (Proj.) th Plan 10th Plan Freight loading target is likely to be surpassed in and is likely to be exceeded by 18-20% in

20 IR IS PLY ON VOLUMES NINTH & TENTH FIVE YER PLN TRGET ND CHIEVEMENT BTKMs Target chievement (Proj.) th Plan 10th Plan Freight tonne Km target has been surpassed by 4% in and is likely to be exceeded by 16% in

21 GROWTH IN PSSENGER, FREIGHT, OTHER COCHING ND TOTL TRFFIC ERNINGS NO PSSENGER FRE HIKE NO PRCEL RTE HIKE 25 IR IS PLY ON VOLUMES Percent pril-sept Passenger Freight earnings Other Coaching Total traffic earnings earnings earnings 18

22 IR IS PLY ON VOLUMES Operating Ratio Operating Ratio (%) (Projected) Year 19

23 IR IS PLY ON VOLUMES MIDS TOUCH NET REVENUE Net Revenue (Before Dividend) (Rs. in crore) (Projected) Year 20

24 IR IS PLY ON VOLUMES GROWTH IN FUND BLNCES Fund Balances (Rs. in crore) (Projected) Year 21

25 IR IS PLY ON VOLUMES CHLLENGES HED Bringing down unit cost of freight traffic at current prices by 50% over five years:- a) Universalization of 22.9 t axle load on IR. b) Increasing axle load for iron ore movement from 22.9 to 25 tonnes. c) Improving loaded empty ratio to 75% over a period of 3-4 years. d) Transformation of IR from a bulk transporter to a multi-modal transporter. Promoting a consolidation industry for non-bulk traffic ggressively promoting EXIM and domestic containerized movement through PPP Development of integrated multi-modal logistics parks Technology upgradation and modernisation including application of IT. Construction of dedicated Freight Corridors. 22

26 THE END

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