MARKET

MARKET AND
AND INDIAN
INDIAN
RAILWAYS
RAILWAYS
Presented By:Nidhi Sood (3057)
Preetmahinder Kaur (3072)
Parveen Kaur (3063)
Sachin (3084)
Shubhanjali(3092)
Sunny Dev (3094)

Presented To:Miss Aditi Kalra

INTRODUCTION
What

is a Market ??

Market refers to a place or locality where

commodities can be bought or sold.

But in economics:
Market
Market

Mechanism
Mechanism
Or Process
Or Process

Buyers and
Buyers
sellersand
sellers

Direct
Direct
Competition
Competition

Market does not refer to a place but it is a

mechanism by which buyers and sellers of a
commodity are able to contact each other in
Direct competition for economic exchange.

TYPES OF MARKET
Market
Perfect
Competition

Monopolistic

Imperfect
Competition

Oligopoly

Monopoly
Duopoly

MONOPOLY

Derived from two Greek words:

Monos

Single
meaning

Poles

Seller

Monopoly means existence of single

producer or seller who produces or sells
a product which has no close
substitutes.

FEATURES OF
MONOPOLY

Single sellers and many Buyers- A monopoly firm may be owned by a

person, a few numbers of partners or a joint stock company.

No close substitutes- Monopoly can not exist when there is

competition.

Closed entry-In a monopoly market there is strong barrier on the entry

of new firms.

Price Marker- The seller controls the prices of that particular product or
service and is the price maker.

Price Discrimination- Price discrimination refers to the practice of a

seller of selling the same good at different prices to different buyers. Price
discrimination is possible and profitable only when markets are imperfect.

MONOPOLY: EQUILIBRIUM

Revenue/Cost

P
Pm

MC

AC

Qm

E= Equilibrium Point,
where, MC=MR
Pm= Price
Qm: Pm> AC, :. Excess
profits

MR

Demand

Firm = Market
Short run losses are also possible
Qm shows abnormal, supernormal profits

PROFIT MAXIMIZATION
UNDER MONOPOLY
A

firm in the short run earns maximum

profit when it meets the following
conditions:* MR = MC and MC curve cuts MR from
below.
* Average Revenue is greater than
Average Total Cost.

PROFIT MAXIMIZATION
UNDER MONOPOLY
Revenue/Cost

MC

ATC

AVC

Profit
e

AR

Output

MR

MONOPOLY- THE
INDIAN RAILWAYS
State owned railway company of India and has monopoly

on country's rail transport.

One of the largest and busiest rail network in the world,

transporting over 6 billion passengers and almost 750 million
tones of freight annually.

Worlds largest commercial or utility employer, with more

than 1.6 million employees.

Railways was first introduced in 1853, the first passenger

train between Bombay & Thana.

Railways grows in India with the encouragement of British

Government.

WHY IR IS
CONSIDERED AS A
Single seller (Government)
MONOPOLY
??and many

buyers.
No substitutes NOT EVEN CLOSE
Closed entry
Price maker
Price Discrimination
- Senior citizens
- Students
- Army officials, etc.

IMPACT OF GOVT.
MONOPOLY ON IR
Benefits

Hindrances

Stability of prices.
Public benefited.
Source of revenue for
government.
Price discrimination
can be applied to earn
profits or provide
services to people.
Economic differences
can be reduced.

Poor level of
services.
No consumer
sovereignty.
Lack of competition &
proper care leads to
lower quality.
No consumer choice.
Hinders the economic
growth.

BACKGROUND
Production:
INFORMATION
Production:

-Manufactures
-Manufactures most
most of
of its
its Rolling
Rolling
Stock
Stock and
and heavy
heavy engineering
engineering
components.
components.
-Production
-Production units
units are
are managed
managed
directly
directlyby
byministers.
ministers.
-Each
-Eachunit
unitwas
washeaded
headedby
byGM.
GM.

-Operates
-Operatesover
over9000
9000trains
trains&&over
over
55billion
billionannually
annuallyacross
acrossIndia.
India.
-Preferred
-Preferredmode
modeof
oftransportation
transportationin
in
most
mostof
ofthe
thecountries.
countries.
-Overcrowding
-Overcrowding..
-Ticket-less
-Ticket-lesspassengers.
passengers.

Passengers:
Passengers:

Services
Services
-Many
-Manycities
citieshave
havededicated
dedicated
Suburban
Suburban Rails:
Rails:

-Carries
-Carriesvariety
varietyof
ofgoods.
goods.
-Contributes
-Contributesto
to70%
70%of
ofrevenues.
revenues.
-Majority
-Majorityof
ofearnings
earningscomes
comesfrom
from
carrying
carryingbulk
bulkgoods
goodslike
likecoal.
coal.

Freight
Freight ::

suburban
suburbannetworks
networkslike
likeMumbai,
Mumbai,
Chennai,Delhi,Hyderabad,Pune
Chennai,Delhi,Hyderabad,Pune
,etc.
,etc.
-Only
-OnlyMumbai,Pune
Mumbai,Pune&&Hyderabad
Hyderabad
shares
sharestrack
trackwith
withlong
longdistance
distance
trains.
trains.
-Trains
-Trainswere
weremostly
mostlyelectric
electricmultiple
multiple
units.
units.

IR AT PRESENT
Worlds

3rd largest railway network.

Contribute up to 2% to the gross
domestic product (GDP).
Approximately 65,000 km of rail tracks
and over 7,151 railway stations.
Operates 1,60,251 trains including 9,550
passengers trains, carrying about 1.6
million tones of freight and about 18
million passengers daily.
Worlds largest commercial or utility
employer, with more than 1.5 million
employees on its payrolls.

PROBLEMS FACED BY
IR

Some

regions are beyond the reach of

railways due to unfavourable geographical
conditions.
Railways are facing stiff competition from
road transport and thus its share in
passenger and goods traffic is declining.
Railways have huge outstanding payments
to diesel and electric power supply
companies.
The railways have to develop uneconomic
projects due to political pressures and
interferences.

CORRECTIVE MEASURES
Modernization.
Safety

and security of passengers.

Replacement and renewal of assets.
Computerization of railway systems.
Introduction of new technologies for
signaling and telecom.
Prevention of leakages of Revenue.
Increase in productivity and reduction
in Operating ratio.

NEXT 5 YEARS
GOALS OF IR
1.

2.
3.

To deliver a sustained and measurable

improvement in customer experience.
To make Rail a safer means of travel.
To expand Bhartiya Rails capacity
substantially and modernize infrastructure
i.e. to increase daily passengers carrying capacity,
increase track length and to grow the annual
freight carrying capacity.

4.

To make Bhartiya Rail financially selfsustainable.

STRATEGIES TO
ACHIEVE GOALS
Quality of life in journeys- Cleanliness, 24x7
helpline, catering, e-ticketing, more coaches,
etc.
Station Redevelopment.
Improving train speed and introducing Bullet
trains.
Safety- Train Protection Warning System etc.
Transparency and Governance initiatives.
Social initiatives like promotion of products
made by Self Help Groups.
Tourism- Incredible Rail for Incredible India to
be launched.

CONCLUSION
Better, cheaper
and faster than
other means of
transports.

A monopoly is a
firm that is the
sole seller in its
market.

Various schemes
like PPP for
attracting more
investment.
Indian Railways has
launched a mobile
application for
booking unreserved
tickets.

It faces a downward
sloping demand curve
for its product.
Monopolists can raise
their profits by
charging different
prices to different
buyers based on
willingness to pay.
Railways was first
introduced in 1853 and
grows in India with the
encouragement of British
Government.

THANK
YOU