Union Minister Suresh Prabhu presented the Rail Budget 2015 in Parliament today and promised the PM Narendra Modi government...
Union Minister Suresh Prabhu presented the Rail Budget 2015 in Parliament today and promised the PM Narendra Modi government would get the travel giant back on its feet within 5 years.
Here we take a look at the State of the Indian Railways as per Suresh Prabhu’s ‘White Paper’ and focus on top 5 factors driving the PSU. (Also read: The state of Indian Railways in Suresh Prabhu’s White Paper)
1) Indian Railways’ finance structure is divided into revenue and capital expenditures. The revenue expenditure takes care of the day to day and operational working expenses, including debt servicing and dividend payment. The chart below indicates the flows into and out of revenue expenditure:
2) The low recovery of costs on the passenger segment and high freight rates have led to an imbalance in the revenues from these two business segments. This can be clearly seen in the graph below.
3) Punctuality is the one of significant factors determining overall satisfaction of passengers with the service provider. Indian Railways run 2558 Mail/Express train services, including daily and non-daily services (as on 31 December 2014). At present, the punctuality of Mail/Express trains over the Indian Railways is about 80 percent. The average punctuality of Mail/Express trains achieved over the IR system on terminating basis in the last five years is depicted in the graph below.
4) The expenditure on Railways as a percentage of total transport expenditure has declined considerably. Railway expenditure as percentage of transport sector expenditure used to be about 56% in 7th Plan (1985-90). It has reduced to 30% in 11th Plan (2007-12). IR in last two decades has remained under-invested whereas the road sector has witnessed a surge in investments. The share of IR in overall GDP has been static at 1% and has, in fact, gone down to 0.9% in 2012-13
5) Accidents have marred the reputation of Indian Railways over the years. Here in graphical format you can check out what the real picture is: