INTER-ZONAL VARIATIONS IN THE GROWTH STORY OF INDIAN … · Indian Railway (IR), one of the largest transport undertakings in the world, is an important pillar on which the growth

Vol-1, Issue-I Amity Journal of Strategic Management 2017

38

INTER-ZONAL VARIATIONS IN THE GROWTH STORY OF INDIAN RAILWAYS

Manpreet Kaur, Assistant Professor in G.G.S. Khalsa College, Sarhali (Tarn Taran), Punjab, India

Anjali Mehra, Assistant Professor in Social Science Department, Guru Nanak Dev University, Amritsar, India

Abstract

This paper tries to analyze the growth performance of 16 zones of Indian Railways (IR) in terms of physical and financial performance as well as

asset utilization in railways for the period 1991-92 to 2010-11. In order to study the overall performance of the railways over the aforementioned study period as well as in order to reflect the impact of economic reforms and reorganization on Indian Railways, the entire period (1991-82 to

2010-11) denoted as P1 is divided into two sub-periods - Pre-reorganization period (from 1991-92 to 2002-03) denoted as P2 and Post-

reorganization period (from 2003-04 to 2010-11) denoted as P3. The average annual growth rates have been calculated separately for all the periods. The growth performance of most of the zones in IR, however, has been found to be unsatisfactory with no significant rail network

expansion, slow process of electrification, insufficient development of rolling stock and higher costs.

Keywords: Indian Railways, Reorganization, Zone, Exponential Growth, Asset Utilization.

JEL Codes: D20, E60, G 18, G28, G34, G38.

Introduction

Indian Railway (IR), one of the largest transport undertakings in the world, is an important pillar on which the

growth and development of the country rests. IR is a central government monopoly with a mandate not only to

provide rail transport services, but also to fulfill certain obligations. Its revenues account for about one percent of

India’s GDP. It is a cheap and affordable means of transportation for millions of passengers and also carries bulk of

freight each day.

Railways were first introduced to India in 1853 with the first passenger train services inaugurated between Bori

Bunder (Bombay) and Thane on 16 April covering a distance of 34 km (21 miles). From a modest beginning in

1853, Indian Railways (IR) have grown into a vast network with 7,146 stations spread over a route length of about

65,000 km with a fleet of 2,39,381 freight wagons, 62,924 passenger coaches and 9,013 locomotives in 2014. IR

operates more than 19,000 trains every day carrying over 30 million passengers on a daily basis and around 975.2

million tons of freight annually. IR employs more than 1.4 million employees directly and several times larger the

number indirectly through forward and backward linkages (Ministry of Railways, 2015). The growth of IR in the

162 years of its existence is thus phenomenal with not many parallels in the world in terms of its size, volume of

traffic carried and manpower employed.

Indian Railway (IR) has increasingly attracted the world attention in the last few years as traffic (both freight and

passenger) has increased manifold. But it cannot be negated that IR lags behind in infrastructural development in

terms of modernization as well as in capacity augmentation. The opening up of the economy in early nineties

resulted in IR losing its share in passenger and freight traffic to other modes of transportation. This brings into

account, the key issues relating to railway performance in sharp focus.

Reorganization of Zones of Indian Railways in 2003

In 1951 the systems were nationalized as one unit, it was decided to replace the existing rail network with zones and

a total of six zones came into being namely Central zone, Eastern zone, Northern zone, North Eastern zone,

Southern zone, and Western zone (Chand, 2014). The process of further restructuring of zones was carried out as a

part of turnaround strategy adopted by railway authorities since the administrative requirements became more

critical with the passage of time. “In 2002, with the four fold objectives of bringing greater efficiency in

administration, speedy implementation of the on-going projects, better customer care, and reduction of workload on

the administrators of each zone seven new zones were created” (Alivelu, 2010) making the total number of zones 16

(Table 1.1). “The new zones were East Coast, East Central, North Central, North Western, South East Central, South

Western and West Central. These were formed by reorganizing some of the divisions from the previously existing

nine zones. East Coast was constituted of divisions from South Eastern, East Central


39

Table 1.1: Zones of Indian Railways

Sr.

No. Name

Year of

Establishment

Route

Kilometers Headquarters Divisions

1. Central 1951 3905 Mumbai Mumbai, Bhusawal, Pune, Solapur, Nagpur

2. East Central 2002 3628 Hajipur Danapur, Dhanbad, Mughalsarai,

Samastipur, Sonpur

3. East Coast 2003 2572 Bhubaneswar Khurda Road, Sambalpur, Visakhapatnam

4. Eastern 1952 2414 Kolkata Howrah, Sealdah, Asansol, Malda

5. North Central 2003 3151 Allahabad Allahabad, Agra, Jhansi

6. North Eastern 1952 3667 Gorakhpur Izzatnagar, Lucknow, Varanasi

7. North Western 2002 5459 Jaipur Jaipir, Ajmer, Bikaner, Jodhpur

8. Northeast

Frontier 1958 3907 Guwahati Alipurduar, Katihar, Rangia, Lumding

9. Northern 1952 6968 Delhi Delhi, Ambala, Firozpur, Lucknow,

Moradabad

10. South Central 1966 5803 Secunderabad Secunderabad, Hyderabad, Guntakal,

Guntur, Nanded, Vijayawada

11. South East

Central 2003 2447 Bilaspur Bilaspur, Raipur, Nagpur

12. South Eastern 1955 2631 Kolkata Adra, Chakradharpur, Kharapur, Ranchi

13. South Western 2003 3177 Hubli Hubli, Banglore, Mysore

14. Southern 1951 5098 Chennai Chennai, Trichy, Masurai, Palakkad,

Salem, Trivandrum

15. West Central 2003 2965 Jabalpur Jabalpur, Bhopal, Kota

16. Western 1951 6182 Mumbai Mumbai Central, Ratlam, Ahmedabad,

Rajkot, Bhavnagar, Vadodara

Source: Ministry of Railways, Government of India (2014)

from North Eastern and Eastern, North Central from Northern and Central, North Western from Northern and

Western, South East Central from South Eastern, South Western from Southern and South Central and West Central

from Western and Central zones” (Ministry of Railways, 2002). “In 2010, Kolkata Metro was given the status of

seventeenth zone of IR thus making the total number of zones 17 while Konkan Railway has been deemed a zone

for administrative purpose” (Banerjee, 2002).

This increase in the number of zones allowed for a better comparability of their operational performance in terms of

incurred costs and corresponding output as well as providing a constructive stimulus to improve operations. “It is a

matter of great significance that this policy measure was carried out more on the basis of political considerations and

was opposed by experts (Railway Convention Committee (1996), Fifth Pay Commission (1997), Comptroller and

Auditor General of India (2001), Expert Committee on Railways (2001)) as not only unnecessary and financially

crippling, but also as an infructous move which will hamper operational ability” (Naveen, 2002).

Though empirical analysis on measurement of growth performance of railways world over has been quite exhaustive

but there are few studies aimed on examining the inter-zonal variations in the growth story of Indian Railways.

Paranjape (1980) analyzed the traffic structure on IR for the period 1976-77, Mukherjee and Sachdeva (2004)

studied the impact of restructuring and liberalization on Indian Railways, George and Rangaraj (2008) tried to carry

out a performance benchmarking of zones of IR, and Alivelu (2008a, 2008b and 2010) tried to measure and analyze

the productivity performance of IR and also investigated the trends in technological advancements and output

employment in IR. Kaur and Mehra (2014, 2015) tried to measure technical efficiency in Indian Railways by

decomposing it into pure technical efficiency and scale efficiency (see Table 1.2). The present study tries to fill the

void in literature by examining the impact of restructuring on growth of zones of IR. The specific objectives of the

study are:

To examine the inter-zonal variations in the physical growth of Indian Railways.

To examine the inter-zonal variations in the financial growth of Indian Railways.

To study the impact of reorganization on physical and financial growth of Indian Railways.

To analyze the growth of asset utilization of zones of Indian Railways.


40

The remainder of the study is organized as follows. Section II reviews different studies related to the measurement

of growth and efficiency of railways in India. Section III deals with the methodology, variables and data sources.

Section IV gives empirical results and conclusions are given in last section.

Section II

Review of Literature

This section brings a brief survey of review of literature on growth and efficiency of Indian Railways as given in

Table 2.1.

Table 2.1: Review of Literature on Growth and Efficiency Indian Railways

Sr.

No

Author (s)/

Year

Data source/period Variables Used Techniques

Applied

Major Findings

1. Paranjape,

(1980)

A sample of 32,000

passengers from two

major passenger

profile surveys, one

on the season ticket

holders on suburban

and non-suburban

sections and the

other on non-

suburban passengers

on the railway

system, Planning Commission studies.

(1976-77)

Passenger

fares

Freight rates.

Cost Data

Analysis. The tariff was uniform for the same type of

traffic i.e. the same type of passenger

accommodation, or for the same type of

goods, all over the Indian railways.

The transport for short distance (except for

bulk commodities and mass transportation)

was best carried by roads, while transport

facilities for medium and long distances were best provided by the railways.

Regarding the passenger fares, it was pointed

out that the fares were artificially kept down

as compared to the costs, the result being

that the passenger services as a whole were subsidized by goods services.

2. Mukherjee

and

Sachdeva,

(2004)

Indian Railways

Annual Reports,

Economic Surveys,

World Bank Reports

(1950-51,

1960-61,

1970-71,

1980-81,

1990-91,

1996-97 to

2003-04)

Train kms

Passenger traffic

Freight traffic

GDP at factor cost

Ordinary

working

expenses

Tabular

Analysis. The impact of restructuring/ liberalization

had largely been positive and performance of

railways had improved in the post-restructuring era.

In spite of significant autonomous

liberalization, there was limited scope for

multilateral liberalization in rail transport

services since many WTO member countries

had not even bound the existing regime in

their initial offers.

The pro-longed presence of monopoly in

Indian Railways had resulted in various

monopoly induced inefficiency and low

productivity leading to decline in market

share of railways in freight transportation and lack of global competitiveness.

India had export potential in maintenance

and repair of rail transport equipment and supporting services.

3. Alivelu

(2008a)

Annual Statistical

Statement of Indian

Railways, Indian

Railways Year

Books, Annexure

‘G’ of Appropriation

on Account of Indian Railways.

(1981-82 to

Inputs-

Labor

Fuel

Capital

Outputs-

Passenger-

kms

Freightton-

Partial

Factor

Productivity,

Total factor

Productivity (TFP).

Capital intensity and fuel intensity showed

an upward significant trend during the entire

study period, implying that the input

intensities contributed to the increase in the

partial productivities and the total factor productivity.

Huge capital investments had yielded

increasing capital productivity on Indian

Railways hence high TFP on Indian


41

2002-03). kms. Railways.

The technical change was an important

contributor to TFP growth. The

decomposition of TFP growth also indicated

that Indian Railways experienced increasing returns to scale.

The period as a whole contributed to an

increase in the partial productivities, which

in turn resulted in an increase in the total

factor productivity of the Indian Railways,

leading to higher efficiency levels.

4. Alivelu

(2008b)

Annual Statistical

Statements, Indian

Railway Year Books,

and Annexure ‘G’ of

Appropriation on

Accounts of Indian

Railways, Various

publications of the

Monthly Index

numbers of

Wholesale prices,

Chandok (1990),

Currency and

Finance Report of

Reserve Bank of India.

Inputs-

Labor

Fuel

Capital

Outputs-

Passenger-kms

Freight-ton-kms.

Translog

Cost Function.

There was cost saving effects of technical

change on IR. The nature of technical

change was such that it reduced the use of

fuel and labor and increased the use of capital.

The own price elasticities of demand for

labor, fuel and capital had negative signs

indicating that when prices of the respective

inputs increased, the demand for them decreased.

The elasticity of substitution between labor

and fuel indicated complementarity and the

elasticity between the labor and capital showed substitutability.

The initiation of economic reforms in the

Indian economy in the 1990’s resulted in

better capacity utilization of assets by IR resulting in capital deepening.

5. George and

Rangaraj (2008)

Indian Railways

Annual Statistical

Statements (1997-98,

1998-99, 2004-05).

Inputs-

Operating

expenses

Tractive effort

'Equated track

kms

Number of

passenger

carriages

Number of

wagons

Outputs-

Passenger kms

Freight-ton

kms.

Data

Envelopment

Analysis

(DEA).

The Northern, Western and Central Railways

had more or less maintained the same

performance levels even after the

restructuring.

The minimum efficiency drop was observed

in the case of the South Eastern zone, which

was formerly a relatively efficient zone.

Central and Western zone had been

consistently performing well both before and

after restructuring and among the new zones

East Coast, North Central and South East

Central appeared to be good performers.

Among newly formed zones of East Central,

South Western and West Central, it appeared

that there was a vast scope for efficiency

improvements.

6. Alivelu

(2010)

Annual Statistical

Statements of Indian

Railways, Year

Books of IR.

Inputs-

Labor

Outputs-

Passenger-

kms

Net ton- kms

DivisiaTornq

usit Index,

Average

Annual

Growth

Rates.

The average annual growth rate of passenger

kilometers (PKMs) registered an increase

over the entire study period on IR.

The percentage share of the management

personnel (group A&B ) remained more or

less the same over the entire study period,

while the percentage share of the skilled

labour (group C) increased. However, the

percentage share of the unskilled labour

registered a decline.

The turnaround was achieved because of

more focused attention on implementation of

the various strategies by IR like optimum use

of assets, enhancing the capacities of the

wagons, differential pricing system,


42

increased speed of trains, increased number

of coaches, reduction of fares in the upper

classes, e-ticketing etc.

7. Kaur and

Mehra

(2014)

Annual Statistical


Railways, Year

Books of IR.

(1991-92 to 2010-11)

Total Route

Km

Electrified

Track Km

Number of

Stations

Total

Locomotives

Passenger

Carriages

Number of

Wagons

Passenger Km

Passenger

Average Lead

Net Ton Km

Freight

Average Lead

Total Staff

Expenditure on

Staff

Gross Receipts

Total

Investment

Capital-at-

charge

Average

Annual

Growth

Rates

IR was lagging behind in the development of

physical infrastructure with its growth not

being commensurate with rising investment

allocations and growing demand resulting in

railways fallen short of the targets set so far.

The growth estimates of passenger and

freight traffic of IR had shown better

performance during post-reorganization

period highlighting positive impact of

reorganization on output growth of IR.

The over-staffing in IR had been a major

problem causing an extra burden on

railways.

The total investments grew rapidly during

the study period but most of them proved to

be unproductive.

After 2003 revenue gross receipts started

rising more rapidly than total working

expenses and hence railways started

generating surpluses.

The operating ratio was maximum 98.34 in

2001-02. Also in this period the working

expenses of railways started mounting higher

than its earnings.


43

8. Kaur and

Mehra

(2015)

Annual Statistical


Railways, Year

Books of IR.

(1991-92 to 2010-11)

Inputs-

Operating

Expenses Per

Route

Kilometer

(OEPRKM)

Number of

Passenger

Carriages (PC)

and Number of

Wagons (WG)

Outputs-

Passenger

Kilometers

(PKM)

Net Ton

Kilometers

Data

Envelopment

Analysis

The technical efficiency of Indian Railways

was observed to be 0.826 in the period from

1991-92 to 2010-11. This suggested that the

railways, if utilizing its inputs in the efficient

manner would increase its outputs by 17.4

per cent of the outputs currently being

produced. The connotation of this finding is

that the magnitude of OTIE in Indian

Railways is to the tune of 17.4 per cent.

Determining the sources of inefficiency, it

had been observed that 10.2 percentage

points of 17.4 per cent of average OTIE was

due to inappropriate management practices

that were being adopted by the railway

managers in organizing output resources in

the production process. However, the

remaining part of the OTIE in IR was due to

its operating at non-optimal scale size. Thus

the results indicated that pure technical

inefficiency (PTIE) was a dominant source

and scale inefficiency (SIE) was relatively a

meager source of OTIE in IR.

Reorganization had resulted into a decline in

OTE in IR.

CRS was observed to be predominant

phenomenon during pre-reorganization

period while post-reorganization IRS was

dominating the railways indicating that

railways were operating below their optimal

scale size and thus could enhance their OTE

by increasing the size.

Section III

Methodology, Variables and Data Sources

The growth and performance of Indian Railways has been analyzed in terms of physical infrastructure growth,

financial growth, output growth and growth in staff employed. The physical performance of IR has been studied

with the help of various performance indicators relating to the inputs used in the provision of railway services such

as route kilometer (RKM), running track kilometer (RTKM), electrified network (ELC), number of stations (ST),

locomotives (LOC), passenger carriages (PC), wagons (WG) and staff employed (STF). The output of Indian

Railways is divided into two dimensions - passenger and freight. The variables taken to reflect the output growth of

Indian Railways are passenger kilometer (PKM), passenger average lead (PAL), net ton kilometer (NTKM) and

freight average lead (FAL). The financial performance of Indian Railways has been reflected in terms of passenger

earnings (PE), freight earnings (FE), total working expenses (WE), gross receipts (GR), total investment (TI), capital

at charge (CC), cost of staff (CST) and operating ratio (OR).

In order to study the overall performance of the railways over the aforementioned study period as well as in order to

reflect the impact of economic reforms and reorganization of Indian Railways, the entire period i.e. 1991-92 to

2010-11(P1) is divided into two distinct sub-periods – 1991-92 to 2002-03 (P2) and 2003-04 to 2010-11 (P3). It is

observed that at the time of imposition of reforms in 1991-92 the number of zones was nine while seven new zones

were added to IR in 2003-04 making the number of zones to be 16. Due to the formation of new zones, though the

comparability of zones over time was somewhat reduced but it was felt that if through adjustment of data new zones

were treated as parts of old zones, the picture would not become clear. Therefore it is deemed fit to include the new

zones as such.


44

Due to big differences in geographical areas, passengers and freight carried in the selected zones, the absolute values

of variables taken are not comparable. Therefore, most of the indicators are standardized on the basis of either area

(per route kilometer) or output (per passenger/freight kilometer). The financial indicators are deflated in order to get

clearer picture. The deflator used was GDP for Indian Railways which is available in National Income Statistics,

CMIE Reports. The exponential growth rates of different variables related to the growth of the Indian Railways were

worked out by fitting function of the type:

Y= abt

(3.1)

which in the natural log form becomes

log Y = log a + t log b

= α + βt (3.2)

where Y is the dependent variable, t is the rate of growth and a, b are constants.

In order to analyze the operational efficiency of IR, following variables have been selected based on the review of

literature.

Passenger kilometer per route kilometer (PKM/RKM) – defined as the average number of passenger

kilometers carried over a kilometer of route length.

Net ton kilometer per route kilometer (NTKM/RKM) – defined as the average number of net ton kilometers

carried over a kilometer of route length.

Wagon Turn Round (WTR) – the interval of time between two successive loadings of a wagon.

Earnings per Carriage (EPC) – the revenue earned per passenger carriage.

Earnings per Wagon (EPWG)- the revenue earned per freight wagon.

Traffic Units per employee (TPE) – defined as the total traffic units (NTKMs plus PKMs) per employee and is

an indicator of staff productivity.

Section IV

Empirical Results

4.1 Physical Growth of Zones of IR

The performance of physical infrastructure among the 16 zones of IR has been mixed and uneven during the study

period as can be seen in Table 4.1 and Table 4.2. It is observed that there had been stagnation in rail network

expansion in terms of route kilometer (RKM) and running track kilometer (RTKM). There was seen a marginal

increase in RKM of Central, Eastern, Northern, North Eastern, South Central and South Eastern zones during post-

reorganization period while Southern and Western zones experienced a decline in the same period. This was due to

the reason that two new zones namely South East Central and South Western were carved out of Southern while

three zones, North Western, South Western and West Central were carved out of Western zone causing fall in the

route network of the parent zones. The new zones made after restructuring of previous zones showed a significant

growth during post-reorganization period with the highest growth attained by East Coast zone (0.791 percent)

followed by East Central zone (0.760 percent). Similarly the growth in RTKM was also observed to be very low

with a little improvement after reorganization. However, Southern, South Eastern and Western zones showed a fall

in the growth of RTKM after reorganization than what was observed during pre-reorganization period. Among

newly made zones West Central showed an insignificant decline in the growth of RTKM while other zones

experienced marginal improvements. The significant growth was shown by North Western and North Central zones

to the tune of 1.272 percent and 0.824 percent per annum respectively. The electrification process slowed down after

reorganization as evident from falling growth rates of electrified track kilometer (ETKM) for all the previous zones

barring Southern and Western zones for which the growth of ETKM increased at a rate of 5.609 percent and 1.929

percent from the levels of 4.868 percent and 0.240 percent (during pre-reorganization period) respectively. Even

some zones were identified as having negligible electrification of the network like North Eastern, Northeast Frontier

and North Western zones. Furthermore, it was noticed that less than 50 percent of the network had been electrified

in all railway zones which is a matter of serious concern. All new zones, however, were observed to experience a

positive significant growth in ETKM except East Central (in which there was an insignificant decline of -2.732

percent).

The growth in rolling stock of railway zones was disappointing over the study period. Analyzing the performance of

rolling stock after restructuring of railways, it is observed that Central, Eastern, Northern and South Eastern zones


45

showed comparatively significant growth in number of stations (ST) during post-reorganization period than what

was observed during pre-reorganization period, with maximum growth.

Table 4.1: Growth Rates of Physical Growth of Nine Old Zones of Indian Railways

Zon

es

Peri

od RKM RTKM ELC ST LOC PC WG STF PKM PAL NTKM FAL

C

E

N

T

R

A

L

P1

-4.235*

(-6.536)

-4.132*

(-6.289)

-3.169*

(-5.030)

-2.849*

(-4.125)

-

3.618*

(-

3.922)

0.649*

(2.523)

-9.350*

(-8.562)

-4.380*

(-8.269)

2.621*

(4.711)

0.019

(0.041)

-0.625

(-1.028)

-

4.055*

(-

4.503)

P2

0.128

(1.804)

0.290*

(4.601)

1.354*

(4.757)

0.987*

(5.089)

3.082*

(9.021

)

2.260*

(6.086)

-2.354*

(-6.216)

-0.622*

(-3.985)

5.996*

(16.752

)

2.758*

(6.530)

3.343*

(4.600)

1.113

(0.646)

P3

0.415*

(7.107)

0.608*

(8.905)

0.194*

(2.653)

4.202*

(5.981)

1.368*

(6.010

)

-1.148*

(-2.643)

-

15.352*

(-3.991)

-1.431*

(-

12.043)

7.663*

(15.664

)

3.068*

(2.939)

2.671*

(5.058)

-

6.358*

(-

3.574)

E

A

S

T

E

R

N

P1

-4.061*

(-6.897)

-3.666*

(-5.981)

-0.347

(-0.390)

-3.110*

(-6.727)

-

2.932*

(-

4.479)

-1.010*

(-2.762)

-9.449*

(-9.100)

-3.987*

(-9.736)

2.562*

(9.517)

-0.884*

(-

4.677)

-4.407*

(-3.903)

-

3.978*

(-

6.895)

P2

-0.129*

(-2.153)

0.418*

(14.197)

6.795*

(14.105)

-0.144

(-1.534)

1.834*

(6.092

)

1.326*

(4.168)

-2.706*

(-5.479)

-1.202*

(-9.173)

4.014*

(10.509

)

0.540*

(2.771)

2.569*

(14.784

)

0.158*

(2.316)

P3

0.250*

(4.594)

0.905*

(8.081)

0.831*

(7.713)

0.618*

(4.885)

0.045

(0.067

)

1.524*

(4.692)

-

17.309*

(-6.468)

-1.321*

(-6.603)

4.537*

(10.421

)

-1.150*

(-

7.541)

5.915*

(9.090)

-

0.853*

(-

2.270)

N

O

R

T

H

E

R

N

P1

-3.297*

(-6.632)

-2.872*

(-6.050)

1.485*

(2.025)

-2.718*

(-7.961)

-0.093

(-

0.323)

-0.756*

(-3.035)

-7.082*

(-6.917)

-3.170*

(-7.945)

4.818*

(12.093

)

-1.527*

(-

2.665)

0.238

(0.479)

-

6.571*

(-

11.175

)

P2

0.044*

(4.653)

0.125*

(6.970)

6.828*

(7.344)

-0.733*

(-5.041)

1.526*

(4.849

)

0.431*

(2.151)

-1.077*

(-1.453)

-0.457*

(-3.222)

6.818*

(8.173)

2.805*

(5.723)

2.818*

(5.833)

-

3.153*

(-

10.592

)

P3

0.291*

(4.337)

1.153*

(18.216)

2.739*

(4.813)

0.478*

(3.230)

2.225*

(5.005

)

0.126

(0.104)

-

11.397*

(-2.680)

-0.533*

(-3.319)

3.021*

(3.701)

-4.136*

(-

5.020)

5.159*

(9.910)

-1.659

(-

1.710)

N

O

R

T

H

E

A

S

T

P1

-2.592*

(-6.392)

-2.369*

(-5.811) _

-3.196*

(-6.882)

4.144*

(3.685

)

0.436

(1.451)

-7.440*

(-8.474)

-3.636*

(-9.178)

3.772*

(6.350)

-2.034*

(-

6.009)

2.330*

(4.413)

-

4.053*

(-

18.652

)

P2

-0.279*

(-6.430)

-0.074

(-0.232) _

-0.024

(-0.307)

7.024*

(2.292

)

1.032

(1.355)

-3.265*

(-3.493)

-0.874*

(-5.017)

6.268*

(20.024

)

0.501*

(2.766)

2.102

(1.609)

-

4.558*

(-

10.466

)

P3

1.412*

(5.191)

1.274*

(2.491) _

-0.044

(-0.936)

-0.326

(-

0.988)

1.731*

(2.792)

-

13.084*

(-3.544)

-1.349*

(-8.891)

11.504*

(16.931

)

-1.074*

(-

2.845)

3.149

(1.702)

-

1.801*

(-

4.685)

N

E

F

R

O

N

T

L

I

N

P1

0.528

(1.677)

0.940*

(2.513) _

-0.727*

(-5.533)

2.134*

(10.44

2)

2.432*

(6.331)

-4.933*

(-3.868)

-1.308*

(-

23.819)

2.584*

(4.416)

-3.398*

(-

5.097)

5.672*

(11.239

)

-

1.012*

(-

2.069)

P2

0.268

(1.682)

0.471*

(3.152) _

-0.791*

(-8.466)

2.688*

(8.260

)

0.048

(0.083)

-0.397

(-0.401)

-1.157*

(-8.587)

0.917

(0.851)

0.471*

(0.821)

3.899*

(3.090)

-1.817

(-

1.926)

P3

1.174

(0.555)

1.910

(0.761) _

-1.949*

(-2.821)

2.301*

(2.143

)

5.297*

(14.013)

-

17.206*

(-3.368)

-1.252*

(-8.443)

6.856*

(2.964)

-

10.537

*

(-

4.872*

(7.456)

-

4.461*

(-

2.518)


46

Zon

es

Peri

od RKM RTKM ELC ST LOC PC WG STF PKM PAL NTKM FAL

E 11.384)

S

O

U

T

H

P1

-2.202*

(-6.353)

-1.395*

(-4.767)

4.071*

(20.420)

-2.477*

(-9.295)

1.357*

(3.461

)

2.546*

(13.588)

-6.467*

(-6.054)

-2.508*

(-

14.637)

5.769*

(15.431

)

-1.076*

(-

2.535)

0.808*

(3.251)

-

3.213*

(-

11.490

)

P2

0.313*

(7.694)

0.695*

(11.377)

4.868*

(16.041)

-0.945*

(-

12.492)

4.452*

(14.41

2)

3.825*

(14.364)

-1.472

(-1.871)

-1.387*

(-

17.359)

6.790*

(12.456

)

-2.077*

(-

2.865)

2.110*

(6.085)

-

3.307*

(-

9.811)

P3

-0.390*

(-10.428)

0.275*

(5.680)

5.609*

(8.791)

-0.620

(-0.744)

1.150*

(4.316

)

2.730*

(9.651)

-

13.384*

(-2.730)

-1.394*

(-5.354)

10.292*

(14.802

)

-2.013

(-

0.949)

2.631*

(5.590)

-

6.267*

(-

5.744)

Sou

th

Cen

tral

P1

-1.590*

(-7.137)

-0.967*

(-5.731)

3.450*

(9.936)

-1.557*

(-4.924)

2.253*

(8.308

)

1.464*

(4.346)

-5.440*

(-5.343)

-2.369*

(-9.912)

6.691*

(12.838

)

0.424

(1.649)

6.465*

(5.674)

-

3.297*

(-

10.169

)

P2

-0.141*

(-3.167)

0.081*

(2.268)

5.055*

(6.342)

-0.591*

(-5.742)

3.999*

(10.14

9)

3.582*

(5.906)

-1.190*

(-2.479)

-0.657*

(-4.627)

5.208*

(5.095)

-1.032*

(-

2.162)

7.965*

(2.439)

-

2.875*

(-

5.919)

P3

0.143*

(2.329)

0.489*

(7.182)

3.808*

(7.032)

2.145

(1.910)

3.343*

(11.81

2)

1.438*

(3.587)

-

11.333*

(-2.133)

-1.259*

(-

11.664)

12.530*

(15.165

)

1.175*

(2.311)

6.716*

(10.276

)

-

6.991*

(-

7.023)

Sou

th

Eas

tern

P1

-7.076*

(-6.435)

-4.947*

(-5.205)

-1.129

(-1.376)

-6.159*

(-5.795)

-

3.209*

(-

4.097)

-2.304*

(-2.513)

-

10.767*

(-7.889)

-5.706*

(-7.783)

2.018*

(2.424)

-1.523*

(-

2.817)

-2.622*

(-2.249)

-

4.736*

(-

8.753)

P2

0.286*

(3.502)

1.588*

(9.478)

5.446*

(17.525)

0.625*

(2.740)

1.069

(0.938

)

4.145*

(12.855)

-0.823

(-1.551)

-0.384*

(-6.615)

6.283*

(11.364

)

-0.052

(-

0.070)

3.890*

(12.321

)

-

1.163*

(-

7.124)

P3

0.984*

(3.048)

1.439*

(2.119)

0.272

(1.660)

2.632*

(5.338)

2.725*

(11.06

8)

3.314*

(3.262)

-

15.419*

(-4.235)

-1.978*

(-

20.168)

11.468*

(15.798

)

-1.128

(-

0.373)

9.914*

(13.222

)

-1.861

(-

1.413)

We

ster

n

P1

-3.044*

(-6.628)

-2.926*

(-6.594)

-1.450*

(-4.068)

-3.067*

(-8.534)

-

1.378*

(-

3.090)

1.138*

(4.865)

-8.572*

(-

10.325)

-4.168*

(-9.376)

3.688*

(11.589

)

1.482*

(6.215)

1.424*

(2.409)

-

4.504*

(-

9.242)

P2

0.229*

(3.084)

0.156*

(4.124)

0.240*

(2.420)

-1.051*

(-4.661)

1.061*

(2.103

)

2.971*

(33.296)

-4.251*

(-9.868)

-1.473*

(-

17.329)

3.205*

(8.509)

0.201

(0.431)

1.912*

(5.799)

-0.962

(-

2.598)

*

P3

-0.461

(-1.821)

-0.091

(-0.467)

1.929

(1.669)

0.358*

(2.366)

-0.320

(-

0.177)

1.005*

(2.434)

-

13.977*

(-3.882)

-0.265

(-0.843)

8.458*

(16.643

)

1.650*

(3.209)

11.070*

(22.916

)

-

2.913*

(-

7.308)

Source: Author’s Calculations

Table 4.2: Growth Rates of Physical Growth of Seven New Zones of Indian Railways in Post-Reorganization Period

Zones RKM RTKM ELC ST LOC PC WG STF PKM PAL NTKM FAL

East Central 0.760*

(3.203)

0.528

(1.219)

-2.732

(-

1.924)

0.804*

(2.091)

3.535*

(6.893)

3.493*

(9.955)

-

19.994*

(-4.888)

-2.081*

(-4.979)

7.520*

(11.975)

19.273

(1.501)

4.312*

(3.046)

2.157

(0.884)

East Coast 0.791*

(2.904)

0.228

(0.524)

4.220*

(9.615)

0.669*

(2.541)

4.361*

(7.927)

7.279*

(19.688)

-4.832

(-0.306)

-0.541

(-0.939)

5.133*

(4.048)

-6.630*

(-

2.903)

7.254*

(15.757)

-1.733*

(-

4.614)


47

North Central 0.408*

(3.781)

0.824*

(5.315)

0.443*

(6.005)

0.268

(0.789)

4.715*

(11.919)

9.011*

(5.778)

1.177

(0.059)

-1.438*

(-2.491)

16.249*

(12.165)

4.302

(0.411)

10.846*

(12.020)

0.971

(1.409)

North Western 0.051

(0.208)

1.272*

(2.098) _

0.134

(0.403)

-0.504

(-0.462)

1.635

(1.037)

-4.718

(-0.477)

-0.514*

(-2.329)

29.882*

(2.332)

-3.223*

(-

5.529)

10.550*

(7.589)

-4.582

(-

1.639)

South East

Central

0.343*

(5.725)

0.567

(0.878)

0.531*

(5.270)

0.440

(0.411)

2.256*

(7.016)

16.991*

(7.698)

-4.019

(-0.289)

0.185

(0.457)

14.297*

(25.577)

-2.189

(-

1.895)

27.164

(1.472)

-4.262*

(-

4.985)

South Western 0.477*

(4.957)

0.565

(1.197)

1.177*

(2.540)

-0.979

(-

0.638)

11.429*

(11.685)

23.709*

(2.303)

-3.924

(-0.312)

0.216

(1.235)

12.218*

(11.176)

-7.968*

(-

2.773)

11.902*

(5.429)

2.637

(1.229)

West Central 0.110

(1.710)

-0.482

(-1.730)

2.107*

(2.404)

-0.646

(-

0.465)

2.162*

(14.499)

5.946*

(11.612)

-2.434

(-0.169)

-0.868*

(-6.697)

21.779*

(27.959)

3.246*

(3.817)

6.629*

(8.428)

-3.413

(-

0.715)


Note: i) * indicates that the value is significant at 5 percent level of significance.

ii) The values in brackets ( ) are t-values.

iii) RKM- Route Kilometer, RTKM- Running Track Kilometer, ELC- Electrified Network, ST- Number of Stations, LOC- Number of Locomotives, PC-

Number of Passenger Carriages, WG- Number of Wagons, STF- Staff Employed, PKM- Passenger Kilometers,

PAL- Passenger Average Lead, NTKM- Net Ton Kilometers, FAL- Freight Average Lead.

seen in Central zone (4.202 percent). Among the new zones, East Central and East Coast also showed significant but

marginal improvement in number of stations (i.e. 0.804 percent and 0.669 percent respectively). In case of number

of locomotives (LOC), the maximum growth was observed in South Western zone (11.429 percent) followed by

North Central zone (4.175 percent). Most of the previous zones, however, followed a relative decline in number of

locomotives during period after restructuring of zones. There had been a dramatic fall in the growth of number of

wagons (WG) for almost all the zones (except North Central) which was multiple times the decrease in number of

passenger carriages (PC). This increase in number of passenger carriages was contributed more by introduction of

new trains in many zones along with increase in the length of trains. At the same time, it also indicated that lesser

attention was paid by the railways towards efforts to increase the freight traffic. Also the decline in the number of

passenger carriages as well as of wagons was more aggravated during post-reorganization period. South Western

zone showed the highest significant growth in number of passenger carriages (23.709 percent) followed by South

East Central zone (16.991 percent). These zones attracted large volume of passenger traffic from their parent zones

and also got the advantage of better passenger facilities provided by railway authorities. South East Central zone is

headquartered at Bilasur which is considered as a regional hub for the railway system. Barring South East Central

and South Western, all other zones reflected a negative growth in staff employed (STF) during post-reorganization

era. This was induced by the strategy of staff reduction in railways for reducing their costs. For the previous zones,

the decline was relatively at a rapid rate after reorganization than during pre-reorganization period. The most

significant decline in staff employed was shown by East Central zone (-2.081 percent) followed by North Central

zone (-1.438 percent). Regardless of the strategy of reduction in workforce through various schemes adopted by

railway zones (as reflected by the negative growth rates during the entire study period), the number was still very

high. The greatest significant decline in staff employed is observed in Central zone (-4.380 percent) during entire

study period.

While analyzing the output growth of railway zones, it is observed that South Central zone had experienced robust

growth in passenger- kilometers (PKM) (6.691 percent) well as in net ton kilometers (NTKM) which was 6.465

percent per annum during the study period signifying increase in freight loading along with passengers carried. It

may be due to the factors like highest priority to the safety and security of passengers, introduction of new trains,

carrying capacity augmentation, up gradation of passenger amenities, computerized PRS facility, incremental

loading capacity etc. Comparing the output growth in two sub-periods, a higher growth in PKM was seen for almost

all the zones except Northern zone which experienced a decline from 6.818 percent during pre-reorganization to

3.021 percent in the latter sub-period. It is remarkable to note that Northern zone was the second highest in terms of

growth in PKM during the entire study period (4.818 percent). This zone has been the largest route kilometers of

track under its jurisdiction even after reorganization also operating the busiest railway routes covering Punjab,


48

Haryana, Himachal Pradesh, Jammu Kashmir, Uttaranchal, Uttar Pradesh, Delhi and the union Territory of

Chandigarh. However the decline in PKM for this zone was supported by comparatively higher growth observed in

newly carved zones out of this zone, which were North Western and North Central experiencing maximum growth

in PKM to the tune of 29.882 percent and 16.249 percent respectively. On the other hand, a positive significant

growth in passenger average lead (PAL) was shown only by Central zone (3.068 percent) and West Central zone

(3.246 percent). This again confirmed a relative higher growth in newly carved zones than the parent zones. All

other zones either showed a negative or an insignificant increase in PAL during post-reorganization. On freight

front, the maximum growth in net ton-kilometers (NTKM) was observed in South Western zone (11.902 percent)

followed by Western zone (11.070 percent) and North Central zone (10.846 percent). Again the growth in NTKM

was observed to be higher during post-reorganization period than what was observed during pre-reorganization

period. The greatest comparative increase was seen for Western zone for which rate of growth in NTKM increased

from 1.912 percent during pre-reorganization to 11.070 percent during post-reorganization (about 10 times increase

in NTKM). This zone has become the most densely loaded and intensively utilized system due to provision of

efficient and reliable services. In addition a large number of ports are handled bythis zone resulting into high

revenue generation. It may be due to the highest incremental loading of this zone surpassing the loading figure of

South East Central zone at 60.98 million tones and South Eastern Railway at 55.47 million tons of freight till August

2013 (Kanwar, 2013). A fall in the growth rate of NTKM was seen for South Eastern, Eastern and Northern zones

post reorganization while some modest increase was observed in North Eastern, Northeast Frontier and Southern

zones. However Central and South Central zones had shown a marginal decline in post-reorganization period which

might be due to the diversion of freight traffic to newly made zones after reorganization. An insignificant growth

was observed in freight average lead (FAL) in entire study period with a further decline in post-reorganization

period. The greatest fall in FAL was shown by Central zone (-6.358 percent) followed by South East Central zone (-

4.262 percent).

Thus, despite an increase in output(s) of railway zones in terms of PKM and NTKM, they are still lagging behind in

infrastructure development. The route network of railway zones has expanded very slowly during the period under

study. The process of electrification has been unacceptably slow and the growth and development in rolling stock

has not kept pace with increase in traffic of railways. It may be due to lower investment in technological tools and

managerial systems that ensure reliability of assets. The poor attention of railway authorities towards up gradation of

track structure, better maintenance practice and improvement in locomotives, segregation of passenger and freight

services had also contributed for the poor performance of zones. Though the newly made zones are performing well

but no significant improvement has been seen in the performance of old zones.

4.2 Financial Growth of Zones of IR

Table 4.3 reports the compound growth rates of financial growth of previous nine zones of IR while Table 4.4

provides the corresponding growth rates for the seven new zones made after restructuring of railways. It is observed

from Table 4.3 that out of nine old zones, all reflected a steep decline in passenger earnings (PE) during post-

reorganization as compared to the period of pre-reorganization. Even for Eastern zone, passenger earnings declined

heavily from 4.592 percent to a negative growth of -0.228 percent over the two sub-periods. On the contrary, the

newly constructed zones had experienced a positive significant growth in passenger earnings with maximum growth

seen in West Central zone (13.533 percent) followed by North Central zone (10.690 percent). This implied that new

zones had been able to capture a large part of revenue-generating passenger traffic from their parent zones. For

example, North Central zone got the advantage of having much passenger revenue generating areas of Northern and

Central zones. While looking at the growth of freight earnings (FE), it is observed that out of nine old zones, five

showed a comparative decline during post-reorganization with the highest fall seen in North Eastern zone (from

7.992 percent to 0.813 percent over the two sub-periods). For this zone, Sonpur and Samastipur divisions had been

shifted to East Central railway and some part of Andhra Pradesh to East Coast railway which are now the leading

zones in freight traffic. East

Table 4.3: Growth Rates of Financial Growth of Nine Old Zones of Indian Railways Zones Period PE FE GR TI CC WE CSTF OR

Central

P1 2.926*

(5.220)

-0.051

(-0.741)

1.119

(1.841)

2.552*

(5.110)

1.234

(1.751)

2.249*

(3.140)

4.766*

(6.782)

1.096*

(3.214)

P2 6.906*

(9.165)

4.738*

(5.283)

5.327*

(6.290)

5.598*

(7.353)

1.435

(1.244)

6.900*

(9.649)

8.574*

(9.011)

1.511*

(3.295)

P3 3.770*

(5.441)

1.177

(0.997)

2.205*

(2.799)

5.024*

(7.718)

10.792*

(10.985)

6.788*

(6.014)

8.241*

(3.477)

4.485*

(3.059)


49

Eastern

P1 1.096*

(2.189)

-3.261*

(-2.840)

-1.419

(-1.730)

3.522*

(9.134)

-1.817

(-1.445)

2.300*

(3.248)

4.930*

(8.029)

3.781*

(11.537)

P2 4.592*

(6.657)

4.333*

(13.599)

4.168*

(12.280)

5.860*

(9.337)

4.502*

(3.949)

6.622*

(7.585)

7.824*

(7.225)

2.384*

(4.426)

P3 -0.228

(-0.254)

5.728*

(5.194)

4.191*

(4.495)

2.077*

(2.065)

11.987*

(10.094)

6.990*

(6.368)

7.504*

(3.751)

2.630*

(2.066)

Northern

P1 3.876*

(8.717)

0.423

(0.589)

2.957*

(5.979)

8.026*

(16.291)

2.706

(0.750)

3.783*

(6.918)

5.760*

(7.901)

1.295*

(4.438)

P2 7.047*

(11.827)

5.590*

(8.001)

6.640*

(12.434)

5.550*

(5.921)

3.994*

(2.483)

6.621*

(8.367)

9.089*

(7.898)

0.414

(1.198)

P3 2.003*

(2.979)

3.348*

(6.061)

3.075*

(3.840)

10.343*

(7.646)

-13.168

(-0.609)

7.856*

(6.703)

8.329*

(2.808)

4.151*

(3.220)

North

Eastern

P1 2.916*

(4.432)

4.423*

(5.219)

3.521*

(5.035)

6.401*

(22.078)

2.195*

(2.619)

3. 646*

(5.854)

3.571*

(4.480)

0.096

(0.186)

P2 7.600*

(8.362)

7.992*

(4.353)

7.816*

(6.151)

6.425*

(11.084)

0.931

(0.659)

6.299*

(5.442)

8.173*

(9.175)

-1.403*

(-3.682)

P3 3.232*

(3.403)

0.813

(0.343)

2.415

(1.691)

9.297*

(11.056)

13.164*

(7.533)

7.903*

(5.421)

4.071

(1.214)

5.362*

(2.114)

Northeast

Frontier

P1 7.338*

(15.230)

7.504*

(9.051)

8.863*

(12.456)

11.099*

(21.215)

10.807*

(21.629)

6.483*

(13.044)

6.050*

(9.437)

-2.106*

(-3.761)

P2 6.186*

(5.462)

6.391*

(3.354)

6.249*

(4.059)

7.791*

(8.178)

8.028*

(7.566)

6.287*

(5.422)

5.971*

(7.113)

0.068

(0.102)

P3 4.211*

(5.084)

2.029

(0.925)

7.979*

(3.520)

12.409*

(21.807)

11.965*

(36.442)

9.391*

(5.622)

12.909*

(4.418)

1.148

(0.449)

Southern

P1 6.121*

(16.527)

2.826*

(6.515)

4.364*

(12.485)

6.061*

(2.780)

3.681*

(6.356)

5.003*

(10.846)

6.628*

(11.695)

0.612*

(2.272)

P2 8.113*

(12.228)

5.183*

(9.287)

6.267*

(11.683)

11.554

(1.879)

4.700*

(2.919)

6.887*

(7.516)

6.794*

(10.198)

0.609

(1.489)

P3 5.229*

(4.454)

3.685*

(2.120)

4.848*

(3.868)

7.780*

(11.382)

2.765*

(3.663)

7.197*

(5.338)

12.590*

(4.659)

2.248

(1.562)

South

Central

P1 6.228*

(15.092)

5.775*

(16.252)

5.854*

(17.567)

6.936*

(13.047)

2.741*

(4.246)

5.390*

(14.982)

6.222*

(10.374)

-0.430

(-1.703)

P2 7.020*

(6.512)

5.537*

(11.355)

5.773*

(9.145)

9.447*

(7.763)

0.139

(0.089)

6.206*

(7.304)

9.213*

(7.839)

0.428

(1.634)

P3 6.189*

(5.865)

7.594*

(3.723)

7.460*

(4.605)

5.807*

(5.795)

2.781*

(4.405)

7.020*

(6.804)

5.918*

(3.169)

-0.405

(-0.280)

South

Eastern

P1 1.113

(1.404)

-0.806

(-0.686)

-0.440

(-0.403)

-1.108

(-1.005)

-4.745*

(-4.270)

-0.706

(-0.611)

2.391*

(2.568)

-0.316

(-0.725)

P2 6.844*

(9.480)

5.508*

(10.667)

5.554*

(10.432)

5.688*

(8.242)

1.412

(1.245)

6.843*

(7.986)

8.158*

(12.015)

1.250*

(2.337)

P3 4.293*

(4.367)

11.930*

(6.807)

10.917*

(6.141)

8.859*

(19.024)

5.357*

(5.843)

7.758*

(4.857)

9.650*

(4.964)

-3.069

(-1.440)

Western

P1 2.504*

(5.728)

0.908

(1.872)

1.619*

(4.004)

4.186*

(11.796)

2.419*

(3.906)

3.462*

(6.706)

3.846*

(5.563)

1.789*

(5.630)

P2 5.530*

(9.540)

2.562*

(8.219)

3.541*

(9.001)

5.669*

(7.212)

1.575

(0.906)

5.909*

(6.648)

7.803*

(9.954)

2.331*

(3.600)

P3 2.066*

(2.146)

6.765*

(4.727)

5.497*

(5.447)

2.923*

(3.115)

1.726*

(3.323)

6.622*

(5.012)

6.331*

(2.420)

1.128

(0.767)




Table 4.4: Average Annual Growth Rates of Financial Growth of Seven New Zones of Indian Railways in

Post- Reorganization Period. Zones

PE FE GR TI CC WE CSTF OR

East Central 3.315* (2.351)

2.753* (3.067)

3.828* (3.331)

21.014* (8.816)

6.790* (15.447)

6.348* (6.675)

11.605* (6.344)

2.530 (1.734)

East Coast 6.586*

(6.928)

10.588*

(10.337)

10.327*

(9.898)

4.709*

(4.888)

1.750*

(3.742)

4.380*

(4.427)

8.611*

(3.650)

-5.440*

(-7.920)

North Central 10.690*

(6.292)

6.154*

(4.292)

7.737*

(5.337)

14.940*

(3.060)

10.388*

(3.175)

5.364*

(5.642)

12.555*

(2.625)

-2.169

(-1.479)

North Western 3.311*

(4.043)

8.947*

(8.049)

7.270*

(7.259)

28.304*

(3.007)

21.441*

(4.028)

8.862*

(6.127)

12.425*

(5.714)

0.122

(0.074)

South East Central 7.851* 4.565* 5.053* 7.740* 2.028* 4.992* 15.587* -0.030


50

(6.389) (3.052) (3.474) (6.832) (3.318) (5.175) (7.356) (-0.016)

South Western 3.148*

(3.274)

10.472*

(2.640)

9.277*

(3.219)

11.663*

(4.023)

7.920*

(3.314)

9.874*

(7.445)

9.755*

(3.835)

0.547

(0.280)

West Central 13.533*

(6.485)

5.233*

(3.844)

7.844*

(6.717)

10.975*

(4.189)

0.295

(0.379)

5.799*

(6.000)

13.262*

(7.786)

-1.809

(-1.451)

Source: Author’s Calculations.



iii) PE- Passenger Earnings, FE- Freight Earnings, GR-Gross Receipts, TI- Total Investment, CC-Capital at-

charge, WE-Working Expenses, CSTF- Cost of Staff Employed, OR-Operating Ratio.

Central zone was also performing well on passenger and freight segments as both sectors assumed great importance

in view of the huge coal loading in the coal bearing of Dhanbad division of Jharkhand state and densely populated

area of Bihar. Due to this, the zone has been able to maintain a consistent and balanced growth in passenger and

freight earnings. For other zones, there was seen a relative rise in freight earnings. The increase was most prominent

for South Eastern in which FE almost doubled after reorganization. Among the new zones, East Coast showed the

maximum growth in freight earnings which was 10.588 percent (highly significant) followed by South Western

(10.472 percent). Following the decline in passenger and freight earnings, the gross receipts (GR) of railway zones

also declined for four zones i.e. Central, Northern, North Eastern and Southern. The only exception was Northeast

Frontier for which GR increased from 6.249 percent during pre-reorganization to 7.979 percent during post-

reorganization which can be attributed to increase in other miscellaneous earnings of railways. Also it was noticed

that South Central and South Eastern zones had experienced an increase in gross receipts which was more driven by

increase in freight earnings than that of passenger earnings. Thus freight earnings showed an edge over passenger

earnings in Indian Railways. Also East Coast zone showed a high growth in gross receipts to the tune of 10.327

percent.

The total investments (TI) made by railway zones increased for Northern, North Eastern, Northeast Frontier and

South Eastern zones during post-reorganization relative to those incurred during pre-reorganization period. Also

maximum growth in this variable was seen in the case of North Western zone (28.304 percent) after reorganization.

Huge investments in terms of modernization, renewal of assets, introduction of new trains, signaling and equipment

etc. were made in these zones after reorganization. Thus it is clear that in spite of an increase intotal investments

during post-reorganization period, most of them proved to be not very productive as these had not turned into

surpluses. The capital-at-charge (CC) also showed a positive growth after reorganization which was relatively higher

than what was observed during pre-reorganization for all zones except Northern and Southern zones. Higher growth

in capital at charge indicated greater dependence of these zones on government support rather than generating

surpluses on their own. This clearly implied a fall in the profitability of railways. However, the new zones have also

shown significant growth in this indicator barring West Central zone. The high cost of railways had a direct bearing

on the performance of zones and has been a major area of concern for the authorities. Higher the cost lesser will be

the money left for further development of the zone. The cost of staff constitutes major share of working expenses

thereby reducing the profits to railways. It was observed that there has been a rapid increase in the cost of staff

(CSTF) in all the zones during the entire study period highest being in Southern zone (6.628 percent) followed by

South Central (6.222 percent) zone. Almost all zones followed a declining trend in this indicator after reorganization

as driven by the policy of curtailing costs of railways. However, Northeast Frontier, Southern and South Eastern

zones showed an increase in CSTF. In case of Northeast Frontier zone, the staff cost was observed to be more than

doubled during post-reorganization period leading to a high operating ratio and hence poor performance of this zone.

The corresponding increase in working expenses has also been significant, causing fall in the performance of these

zones. The working expenses of all the zones increased significantly during entire study period. In case of Northeast

Frontier zone, these were the highest, grown at a significant rate of 6.483 percent. These expenses have increased

significantly for all the zones in post-reorganization period except Central zone which experienced a marginal

decline indicating that the target of reorganization to reduce expenses of zones has not been achieved at all. The

operating ratio also showed a significant growth in post-reorganization period in all zones except South Central,

South Eastern and Western zones for which it deteriorated.

4.3 Asset Utilization Growth in Zones of IR

Table 4.5 displays the growth of some major indicators for asset utilization considered in this study.


51

Track Utilization

It is observed that during the selected study period, there had been only a modest growth in the network of IR in

terms of route kilometers or running track kilometer (as also seen in Table 5.6 and Table 5.7). The effective use of

track is reflected in the density of traffic which is measured by the average number of passenger kilometers (PKMs)

and net ton-kilometers (NTKMs) carried over a kilometer of route length. The growth in density of traffic of zones

of IR has been outlined in Table 5.10 and Table 5.11. A highly significant growth in both passenger kilometer per

route kilometer (PKM/RKM) and net ton-kilometer per route kilometer (NTKM/RKM) was observed in Central

zone followed by South Central and South Eastern zones during the entire study period. Again all zones showed an

increase in PKM/RKM after reorganization except Northern which experienced a heavy fall (from 6.889 percent

during pre-reorganization to 1.553 percent during post-reorganization) reflecting decline in the passenger traffic

density of this zone. West Central zone showed maximum growth in PKM/RKM which was 21.032 percent

followed by South Western zone (12.403 percent). The NTKM/RKM declined only for Central and North Eastern

zones over the two sub-periods, while for other zones it showed an improvement, maximum being in Western (from

an insignificant negative growth of -0.632 percent to a highly significant growth of 7.576 percent). Similarly, South

Western showed the maximum growth in this indicator which was 45.386 percent while South East Central was the

only zone, among new zones, which showed a negative growth of -21.014 percent. Moreover, Northern, North

Eastern and Western zones have recorded a significant growth in PKM/RKM but a comparatively lower growth in

NTKM/RKM may be due to passenger dominant nature of these zones as explained in earlier sections.

Table 4.5:Growth Rates of Asset Utilization of Nine Old Zones of Indian Railways Zones Period PKM/RKM NTKM/RKM WTR EPC EPWG TPE

Central

P1 6.655*

(27.677)

3.517*

(11.087)

-18.266*

(-6.377)

2.263*

(4.607)

10.257*

(11.945)

6.270*

(37.648)

P2 5.102*

(13.973) 2.809* (3.963)

-14.357 (-1.790)

4.543* (4.581)

7.263* (9.535)

5.713* (18.238)

P3 6.039*

(16.671)

1.070

(1.954)

-9.545*

(-3.130)

4.976*

(7.050)

19.528*

(4.857)

7.871*

(17.759)

Eastern

P1 6.984*

(16.211)

-0.163

(-0.299)

-7.463*

(-10.262)

2.127*

(4.689)

6.834*

(5.483)

4.314*

(24.969)

P2 4.050*

(12.373)

2.723*

(14.570)

-3.171*

(-4.332)

3.223*

(3.322)

7.235*

(14.537)

4.642*

(18.672)

P3 4.367*

(10.695)

5.736*

(8.813)

-13.733*

(-8.402)

-1.725

(-1.534)

27.859*

(8.448)

6.268*

(11.713)

Northern

P1 4.992*

(10.137)

1.549*

(5.416)

-18.361*

(-10.936)

4.668*

(10.819)

8.077*

(9.106)

6.377*

(19.913)

P2 6.889*

(6.275)

0.860

(1.348)

-15.533*

(-4.233)

6.587*

(9.811)

6.739*

(13.116)

5.568*

(7.661)

P3 1.553

(1.732)

4.056*

(7.558)

-8.383

(-1.732)

1.875

(1.113)

16.642*

(3.252)

4.265*

(6.378)

North

Eastern

P1 4.094*

(12.782)

2.689*

(3.229)

-11.751*

(-4.690)

2.469*

(4.293)

12.817*

(15.948)

7.400*

(24.081)

P2 3.820*

(9.548)

0.348

(0.269)

1.069

(0.480)

6.501*

(7.646)

11.637*

(6.983)

6.344*

(17.862)

P3 7.489* (5.142)

-4.070 (-1.407)

-36.181* (-8.567)

1.476 (1.728)

15.990* (4.444)

11.477* (13.654)

Northeast

Frontier

P1 -1.204

(-1.767) 1.552* (3.205)

-14.585* (-5.937)

4.789* (10.740)

13.083* (9.657)

5.557* (13.450)

P2 -3.631*

(-2.653)

-0.201

(-0.169)

-1.747

(-1.011)

6.135*

(9.235)

6.815*

(4.130)

3.624*

(4.217)

P3 3.444

(1.682)

1.576

(1.872)

-36.314*

(-5.934)

-1.030*

(-2.026)

23.232*

(3.809)

7.156*

(6.965)

Southern

P1 5.513*

(11.694)

-0.082

(-0.188)

-11.591*

(-4.071)

3.487*

(11.681)

9.935*

(9.399)

7.128*

(29.924)

P2 3.912*

(3.291)

-2.713*

(-4.570)

7.257*

(4.713)

4.130*

(6.437)

6.754*

(10.476)

6.839*

(16.217)

P3 5.0028

(7.273)

-2.093*

(-3.621)

-32.326*

(-4.692)

2.432

(2.005)

19.707*

(3.339)

10.129*

(21.166)

South

Central

P1 4.956*

(8.673)

3.127*

(6.029)

-12.536*

(-4.331)

4.695*

(13.645)

11.860*

(9.995)

8.905*

(17.995)

P2 2.066

(1.934)

0.235

(0.222)

8.212*

(2.515)

3.319*

(5.212)

6.808*

(10.071)

6.574*

(5.836)

P3 9.401*

(10.589)

4.301*

(9.414)

-28.135*

(-5.483)

4.683*

(3.362)

21.346*

(3.353)

11.201*

(29.174)

South

Eastern

P1 7.484*

(17.122)

3.442*

(10.403)

-14.819*

(-6.572)

3.498*

(7.618)

11.164*

(8.098)

4.709*

(9.651)

P2 4.647* 2.830* -9.590* 2.591* 6.383* 4.873*


52

(7.956) (7.595) (-8.989) (2.763) (20.977) (16.005)

P3 9.320*

(7.969)

8.223*

(10.507)

-30.947*

(-2.743)

0.947

(0.555)

32.335*

(6.438)

12.715*

(21.107)

Western

P1 4.176*

(8.426)

1.680*

(3.556)

-17.717*

(-4.968)

1.351*

(5.054)

10.368*

(9.934)

7.374*

(18.365)

P2 0.631

(1.050)

-0.632

(-1.631)

-5.167

(-1.488)

2.485*

(4.630)

7.115*

(13.848)

4.261*

(14.404)

P3 5.820*

(8.648)

7.576*

(6.646)

-49.503*

(-5.614)

1.050

(1.127)

24.112*

(5.183)

9.533*

(24.395)




Table 4.6: Growth Rates of Asset Utilization of Seven New Zones of Indian Railways in Post-

Reorganization Period.

Zones PKM/RKM NTKM/RKM WTR EPC EPWG TPE

East Central 10.479

(1.913)

11.187*

(3.163)

-13.401*

(-2.734)

-0.173

(-0.117)

28.432*

(4.872)

8.440*

(14.115)

East Coast 3.744*

(2.890)

5.961*

(11.774)

-11.860*

(-9.326)

-0.646

(-0.927)

16.203

(0.903)

7.401*

(8.630)

North

Central

10.482

(0.706)

20.455*

(3.568)

-6.204

(-0.418)

1.540

(0.695)

4.920

(0.234)

15.152*

(10.523)

North

Western

1.900*

(2.318)

3.401*

(3.593)

-20.164*

(-6.707)

1.649

(1.066)

14.342

(1.251)

16.012*

(4.257)

South East

Central

5.134*

(2.939)

-21.014*

(-3.530)

-7.880*

(-3.371)

-7.813*

(-3.610)

8.943

(0.588)

18.903*

(2.149)

South

Western

12.403*

(4.702)

45.386*

(4.772)

-18.277*

(-2.774)

-16.620

(-1.925)

14.984

(1.023)

11.800*

(13.073)

West Central 21.032*

(17.922)

4.096*

(4.017)

-11.062

(-1.387)

7.161*

(4.110)

7.857

(0.521)

14.692*

(24.683)

Source: Author’s Calculations.



iii) PKM/RKM- Passenger Kilometer per Route Kilometer, NTKM/RKM- Net Ton Kilometer per Route

Kilometer, WTR- Wagon Turn Round, EPC- Earnings Per Carriage, EPWG- Earnings Per Wagon, TPE-

Traffic Units Per Employee.

Utilization of Rolling Stock

The highest significant growth in earnings per carriage (EPC) was observed in Northeast Frontier zone (4.789

percent) followed by Northern zone (4.668percent) during the entire study period. However the growth in EPC

showed a sharp downward trend after reorganization as compared to what was observed in pre-reorganization

barring Central and South Central zones. This indicates that though passenger traffic of railways had increased, it

did not generate much revenue for railways may be due to their low fare policy. Among the new zones, significant

growth was seen only for West Central zone (7.161 percent). The earnings per wagon (EPW), on the other hand,

yielded relatively more revenues to railways as reflected by their increasing growth rates after reorganization which

was multiple times the growth in earnings per carriage. The most pronounced growth was observed in South Eastern

zone (32.335 percent) followed by East Central (28.432 percent) and Eastern (27.859 percent) zones. In case of

Western zone, the growth in earnings per wagonwas about 10 times the growth in earnings per carriage while for

Central zone the difference stood at about 5 times.


53

Wagon Utilization

An efficient railway system required the wheels of wagons moving as full as possible better still if the wagons carry

higher rated commodities. All the zones had showed a declining tendency in WTR during the study period

indicating higher speed of wagons in order to enhance freight loading. This decline was even more pronounced in

post-reorganization period. The maximum decline was observed for Western (-49.503 percent) followed by

Northeast Frontier (-36.314 percent).

Staff Productivity

The most significant growth in total traffic units (PKMs plus NTKMs) per employee (TPE) was seen in South

Eastern zone (12.715 percent) followed by North Eastern zone (11.477 percent). However, South East Central had

grown at a faster rate of 18.903 percent. It may be observed that TPE had registered significant growth for all the

zones during entire study period. The most significant growth in TPE is observed in South Central zone (with 8.905

percent growth rate) followed by North Eastern and Western zones. While TPE had shown significant growth during

the study period, it should be realized that railway zones had also made substantial investments to upgrade the track,

signaling and rolling stock in the same period. Thus the growth in TPE cannot be directly related with the growth in

staff efficiency.

Conclusion

Thus from the above analysis, it may be concluded that IR has witnessed a rising trend of performance especially in

post-reform period. However, inadequate and obsolete infrastructure, continuous loss of freight traffic to roadways,

overstaffing and poor financial condition are still the major obstacles in the way of development of IR. Even more,

the process of reorganization has not added much to the railway’s performance in these areas rather has decelerated

it on many fronts. Along with, the growth performance of most of the zones in IR has been found to be

unsatisfactory with no significant rail network expansion, slow process of electrification, insufficient development

of rolling stock and higher costs. Central and Western zones have maintained a consistent performance both before

and after reorganization and among the new zones East Coast, North Central, and South East Central have appeared

to be good performers. Among the previously existing zones, Southern, South Central, Eastern, Northeast Frontier

and Northern zones have shown no significant improvement in post-reorganization period rather reorganization

process has caused a further drop in their performance. On the other hand, East Central, South Western and West

Central zones are found to perform well but have much scope for improvement.

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INTER-ZONAL VARIATIONS IN THE GROWTH STORY OF INDIAN … · Indian Railway (IR), one of the largest transport undertakings in the world, is an important pillar on which the growth