INDIAN RAILWAYS

PERFORMANCE ANALYSIS
TEAM LAMBDA (7)
ANKIT KAPOOR
ASWIN RADHAKRISHNAN
BISWAJIT MISHRA
NEERAJ KRISHNMOORTHY
SONAL DENGLE
VARUN KUMAR ANAND
VIVEK SANKHYAN

AGENDA
Introduction
Indian Railways over the years
Vital statistics
Analysis of Revenues/Earnings over the years(Regression)
Operating Ratio over the years for Indian Railways
Analysis of GDP Vs Cost
Analysis of GDP Vs Ticket Cost
Analysis of Growth Rate Vs Change in Price over the
years(Regression)
Conclusion

INTRODUCTION-INDIAN RAILWAYS
Pillar of Indias infrastructure
Worlds largest government railways
Single system which consists of :
63,373 route kms of track spreading across 7000 stations
More than 1,7500 trains operating everyday
Carries 22 million passengers
Hauls nearly 2.2 million tones of freight everyday
Hence a key contributor to the economic growth of the country
Transports about 40 per cent of India's total freight traffic
and 20 per cent of the country's passenger traffic

Vital Statistics Investment percentage

The railways share in the countrys GDP has been more or less
constant at a level of 1.18 per cent from 2003-04 onwards till 200708
Investment in railways as a part of total transport sector
investment was less than 10 percent during the 5 th, 6th and 7th five
year plans.
From 8th five year plan onwards the investment in railways a
percent of total transport sector investment has steadily increased
and today stands at nearly 22 percent Freight and passenger traffic
are the 2 main components of railways
Subsequently, there has been an upsurge in freight
traffic/passenger since 2002.

Vital Statistics- Post recession

Post economic recession (2008) in meeting the demands
generated by the economic upturn, the main challenges
faced by the Railways were the constraints of infrastructure,
particularly line capacity on busy routes, and terminal detentions.
Railways adopted the strategy of intensive utilization of its
existing assets and resources and improvisation of its
operational and maintenance practices.

Vital Statistics- Big picture

The Railways have generated Rs 21,027.96 crore (US$ 3.80 billion) of

revenue earnings from commodity-wise freight traffic during AprilJune 2012 as compared to Rs 16,507.66 crore (US$ 2.98 billion) during
the corresponding period last year, registering an increase of 27.38
per cent
Railways earned 25704.64 crore as passenger earnings in the year
2010-11 as compared to 23414.44 crore in the year 2009-10.
Railways carried 244.81 MT of commodity-wise freight traffic during
April-June 2012 as compared to 233.66 MT carried during the
corresponding period last year, registering an increase of 4.77 per
cent.

Year
Frieghts in million tonnes
Passengers in 10 million

2004
602.12
547.55

2005
666.51
583.23

2006
727.75
633.37

2007
793.89
664.2

2008
833.31
704.6

2009
902.47
748.8

2010
977.38
795.5

2011
1058.53
845.48

2012
1146.35
898.41

Railway Zones
Sr.No

Name
1 Central
2 East Central
3 East Coast
4 Eastern
5 North Central
6 North Eastern
7 North Western
8 Northeast Frontier
9 Northern
10 South Central
11 South East Central
12 South Eastern
13 South Western
14 Southern
15 West Central
16 Western

Abbr.
CR
ECR
ECoR
ER
NCR
NER
NWR
NFR
NR
SCR
SECR
SER
SWR
SR
WCR
WR

Route Kms Head Quarters

3905 Mumbai
3628 Hajipur
2572 Bhubaneswar
2414 Kolkata
3151 Allahabad
3667 Gorakhpur
5459 Jaipur
3907 Guwahati
6968 Delhi
5803 Secunderabad
2447 Bilaspur
2631 Kolkata
3177 Hubli
5098 Chennai
2965 Jabalpur
6182 Mumbai

Divisions
Mumbai, Bhusawal, Pune, Solapur, Nagpur
Danapur, Dhanbad, Mughalsarai, Samastipur, Sonpur
Khurda Road, Sambalpur, Brahmapur, Visakhapatnam
Howrah, Sealdah, Asansol, Malda
Allahabad, Agra, Jhansi
Izzatnagar, Lucknow, Varanasi
Jaipur, Ajmer, Bikaner, Jodhpur
Alipurduar, Katihar, Rangia, Lumding, Tinsukia
Delhi, Ambala, Firozpur, Lucknow, Moradabad
Secunderabad, Hyderabad, Guntakal, Guntur, Nanded,Vijayawada
Bilaspur, Raipur, Nagpur
Adra, Chakradharpur, Kharagpur, Ranchi
Hubli, Bangalore, Mysore
Chennai, Trichy, Madurai, Palakkad, Salem,Thiruvananthapuram
Jabalpur, Bhopal, Kota
Mumbai Central, Ratlam, Ahmedabad, Rajkot, Bhavnagar,Vadodara

Railway Infrastructure
Rail Infrastructure
Infrastructure
Route Kilometres Total
Broad Gauge
Meter Gauge
Narrow Gauge
Running Track kilometers
Broad Gauge
Meter Gauge
Narrow Gauge
Electrified Route kilometers
Electrified Route kilometers
Rolling Stock units
Wagons
Locomotives
Coaches

Quantum
64,215
54,600
7,500
2,115
114,000
72,539
9,000
2,751
21,450
2,29,381
9,213
59,713

Revenues Vs GDP
Year
87-88
88-89
89-90
90-91
91-92
92-93
93-94
94-95
95-96
96-97
97-98
98-99
99-00
00-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
2010-11

Revenues

GDP
9.1
9.8
10.02
12.51
14.47
15.4
18.1
21.2
23.6
25.4
28.1
29.2
32
33
36.01
42.7410
44.9
49.046
56.315
64.785
73.276
81.658
89.229
96.681

301.791
301.233
326.608
274.8
293.262
284.193
333.01
366.59
399.78
423.16
428.71
464.34
474.69
492.37
522.79
617.57
721.58
834.21
949.11
1238.7
1224.11
1361.18
1684.3
1848.9

Source :http://planningcommission.nic.in/data/datatable/index.php?data=datatab

Regression : (GDP Vs. Revenue)

GDP(Y)= 7.7937+17.434(Revenue , X)

Regression Statistics
Multiple R

0.981941

R Square

0.964208

Adjusted R Square

0.962581

Standard Error

90.23361

Observations
Coefficien Standard
ts
Error

t Stat

24

P-value

Lower 95%

Upper
95%

Lower 95.0% Upper 95.0%

Intercept

7.793794 32.97399 0.236362 0.81533865 -60.59008117 76.17767 -60.59008117 76.17766957

X Variable 1

17.43486 0.716167 24.34469

2.1119E-17

15.94961872

18.9201 15.94961872 18.92009598

Revenues/Expenditure (1987-2011)

Reason for decline in IR growth rate in mid

1990s
The decline in the growth rate during the period(1996-2001) was
due to the general recession in the industrial sector.
During this period the movements of coal, food grains, iron ore etc.,
which are important bulk commodities grew at a very slow pace
When we looked at the year to year growth rates of freight
movement, two periods 1994-95 and 1998-99 registered negative
growth rates

GDP Vs Cost (Wagon and Passenger)

Year

Cost/Vehicle km

Cost/Wagaon km

GDP of India

2000-2001

13.83

6.52

492.37

2002-2003

14.72

7.75

617.57

2003-2004

17.18

6.42

721.58

2004-2005

16.08

6.46

834.21

2005-2006

15.26

7.11

949.11

2006-2007

17.13

6.96

1238.7

2007-2008

18.05

7.14

1224.11

2008-2009

24.11

17.38

1361.18

2009-2010

26.67

22.49

1684.3

2010-2011

26.15

23.35

1848.9

Source : Indian Railways Annul Report

Growth %

GDP Vs Cost (Wagon and Passenger)

Year

GDP vs Cost(Only passenger)

Year

Cost/Vehicle km

GDP of India(*0.1)

Passenger kms

2000-2001

13.83

4.9237

457,022

2002-2003

14.72

6.1757

515,044

2003-2004

17.18

7.2158

541,208

2004-2005

16.08

8.3421

575,702

2005-2006

15.26

9.4911

615,614

2006-2007

17.13

12.387

694,764

2007-2008

18.05

12.2411

769,956

2008-2009

24.11

13.6118

838,032

2009-2010

26.67

16.843

903,465

2010-2011

26.15

18.489

978,508

Source : Indian Railways Annul Report

GDP vs Cost(Only passenger)

Year

Cost Elasticity

GDP Vs. Ticket Cost

Year

GDP of India(*0.1)

Cost/Vehicle km

Passenger kms/100000

Avg rate per passenger km(in paise)

2000-2001

4.9237

13.83

22.9400

2002-2003

6.1757

14.72

24.3500

2003-2004

7.2158

17.18

24.5000

2004-2005

8.3421

16.08

24.4000

2005-2006

9.4911

15.26

24.5000

2006-2007

12.387

17.13

24.7000

2007-2008

12.2411

18.05

25.7000

2008-2009

13.6118

24.11

26.0900

2009-2010

16.843

26.67

25.9000

2010-2011

18.489

26.15

10

26.3000

Source : Indian Railways Annul Report

Growth %

GDP Vs Ticket Cost

Year

Price Elasticity Graph..

Regression (Growth Rate Vs. Change in Price)

Growth in Revenue(Y)=
4.376+0.6107(Percentage change in price per km, X)

Regression Statistics
Multiple R
0.754084605
R Square
0.568643591
Adjusted R Square
0.549036482
Standard Error
3.363577582
Observations
24

Coefficients Standard Error t Stat P-value Lower 95% Upper 95% Lower 95.0% Upper 95.0%
Intercept
4.376812995 1.421161502 3.079744 0.005478 1.42950443 7.32412156 1.42950443 7.32412156
% change in price / km 0.61076597 0.113412662 5.385342 2.08E-05 0.375562505 0.845969435 0.375562505 0.845969435

Operating Ratio (1987-2011) Analysis

Change in IR Growth w.r.t Industry inflation

Urban passenger services
Regression Statistics

% change in price Line Fit Plot

Multiple R

0.859746179

R Square

0.739163492

Adjusted R Square

0.724672575

30

25

Standard Error

Observations

Growth

20
15

3.021759271

20

Growth

10

Predicted Growth

5
0
-0.1

-0.05

0.05

0.1

0.15

0.2

0.25

0.3

0.35

% change in price

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

6.867549864

0.830675834

8.267425

1.53E-07 5.122364697

8.612735032

5.122364697

8.61273503

% change in price

63.39119245

8.875781523

7.142041

1.19E-06 44.74386742

82.03851747

44.74386742

82.0385175

Change in IR Growth w.r.t Industry inflation

Sub-urban passenger services
% change in price Line Fit Plot

Regression Statistics
25

Multiple R

0.8154514
44

20

R Square

0.6649610
57

Adjusted R Square

0.6452528
84

Standard Error

2.4460537
53

Observations

19

Growth

15
Growth

10

Predicted Growth
5
0
-0.05

0.05

0.1

0.15

0.2

0.25

% change in price

Coefficients

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

8.935196853

0.781203826

11.43773

2.09E-09

7.2870009

10.5833929

7.28700085

10.5833929

% change in price

47.97735444

8.259644862

5.808646

2.1E-05

30.551027

65.4036818

30.551027

65.4036818

Change in IR Growth w.r.t Industry inflation

Frieght Services
% chage in price / km Line Fit Plot
25

Regression Statistics
0.9478191

R Square

0.8983611

Adjusted R Square

0.8935212

Standard Error

1.6172844

Observations

20

Growth(%)

Multiple R

15
5

Predicted Growth(%)

-10

23

Coefficients

Growth(%)

10

10

20

30

% chage in price / km

Standard Error

t Stat

P-value

Lower 95%

Upper 95%

Lower 95.0%

Upper 95.0%

Intercept

1.6336263

0.753927456

2.166822

0.041896

0.0657484

3.2015043

0.065748365

3.201504305

% chage in price / km

0.8024374

0.058898735

13.62402

6.78E-12

0.6799507

0.924924

0.67995073

0.924923978

-5

-10
2006-2007

2005-2006

2004-2005

2003-2004

2002-2003

2001-2002

00-01

99-00

98-99

97-98

96-97

95-96

94-95

93-94

92-93

1988-1989
89-90
90-91
91-92
92-93
93-94
94-95
95-96
96-97
97-98
98-99
99-00
00-01
2001-2002
2002-2003
2003-2004
2004-2005
2005-2006
2006-2007
2007-2008
2008-2009
2009-2010
2010-2011

-5

91-92

90-91

89-90

1988-1989

Effect of inflation on Indian Railways Growth

25

20
15

10
Growth(%)

0
% chage in price / km

Freight Services
Non- suburban services

40

20
% chage in price / km

-20
0
Growth(%)

20

15

10

Suburban services

5
Growth

0
% change in price

Conclusion

Performance of the Indian railways has been very good over last 6 to 7 years
which is mainly due to higher economic growth leading to increase in freight
traffic and movement of people across states

The good years were between 1993-94 to 1995-96, after which the expenses caught
up with the revenues until 2000-01, when the net revenue shrunk to a little over Rs
1000 crores. The situation started improving steadily to reach an actual net revenue
of over Rs 14,000 crores in 2006-07, for a total earnings of Rs 62,731 crores.

The main determinant of the Indian Railways revenues has been the inflation in the
industry as shown in the regression results :
Growth in Revenue(Y)=
4.376+0.6107(Percentage change in price per km, X)

Further, government policy of simplifying traffic for freight and creating

demand-driven pricing for passengers has helped revenue generation