Beruflich Dokumente
Kultur Dokumente
IN
J.K. INDUSTRIES
ON
LITESH PAHIUJA
BBA
ACKNOWLEDGEMENT
All this praise to GOD, the most beneficial the most merciful. My head bows in humble
towards him for blessing me with strength and courage to accomplish this task.
I would like to thank all the people who have given me support and encouragement and
helped me in execution of this project.
I would like to place on record my acknowledgement to the entire staff of the “JK Tyres
Ltd.”, New Delhi for their considerable support, their precious time and suggestion for
the successful completion of the project.
I would like to thank the dealer, the distributor and the people who have given their
precious time to answer the questionnaire, thereby, giving insights to make the project
more successful.
Litesh pahuja
BBA
EXECUTIVE SUMMARY
This project has been made to study past, present and future trends in the modal shift in
transportation from railways to roadways. As the tyre industry depend upon the
railways and roadways for the movement of tyres from one destination to another so the
study of trends being followed in these sectors is necessary in order to understand which
mode of transport is more suitable as well as profitable at present and in the future and
also study the past trends. In order to study this, I used primary as well as secondary data,
through internet, certain books providing information on this and also through personal
interactions with the concerned persons in these sectors.
After completing the research and after analyzing, I have found that the modal share of
railways in India for freight as well as passengers has declined over the years (in terms of
originating tons from 89% in 1950-51 to 48% in 2007 for freight and in terms of
originating passengers from 80% in 1950-51 to 38% in 2007 for passengers) in spite of
the fact that the highway is relatively less developed and suffers from constraints of
capacity as well as quality of infrastructure.
The growing demand for Door to Door transport will continue to boost road transport.
This is partly due to the inherent competitive advantage of road transport, and partly to
the failure of other modes, especially rail, to attract the demand that would otherwise be
more suitable for them. Roads have dominated India’s land transport market 1985, and it
is clear that dominance will continue, if not increase. This is primarily because of the
reasons such as freight tariff (which is one of the highest for Indian railways in the
world), dearth of economic resources, people who run the organization practically hold
no freedom to fix prices etc. Thus, rail freight is overpriced relative to road freight, and
rail passenger movements are under priced while passenger movements by road are
overpriced. However this is another fact that the rail mode transport has been assessed to
be at least four times more energy-efficient than road but unfortunately this energy is not
being channelised in the right manner.
International trends indicates that with growth of highway and aviation technologies the
traffic trends to shift away from the railways, which is not, the same for developed
economies like USA, China and erstwhile Russia. Also if we compare the transport
sectors of India and China we find that China railways managed to carry 1,157 billion km
of freight – or 4.5 times that of Indian railways 257 billion km. Wile India’s road network
officially grew 600,000 km, China’s road grew by 376,000 km. IR is a passenger
dominated railway with 59% of its transportation output but barely 30% of its revenues
from passenger services, while CR is freight-dominated deriving 76% of its
transportation output but only 49% of its revenues from freight.
But some recent reforms in railways have helped to regain its position in the
infrastructure sector and as a result of this, the share of railways have registered an
unprecedented growth of 18% in freight loading during the April-may 2007. In
the full year it expects to see about 14% growth in loading. Officially estimates with the
surplus capacity available now, the railway could earn up to Rs48crore for every
additional million tons of freight loading. This is due to improvement in the rake
availability, which happened because of reduction in turnaround time of wagons.
After analyzing all research work I have also given some recommendations such as
• Separating railways from government and establish an independent regulator.
• Managing railway commercially, with focus on lines of business and market
segments.
• Focusing on core business and spin off non-core activities, target staff reduction
lower tariffs & removal of distortions, focus on customer needs to recapture
commodities that have drifted away.
• Passenger: rebalance tariffs, flexibility; introduce private management of
commercial operations.
• IR must invest only in remunerative projects.
Table of Contents
TOPICS PAGE NO.
1. Introduction 01
2. Company Profile 04
3. Research Methodology 20
Respected Late Lala Juggilal Singhania & Late Lala Kamalpat Singhania
JK Organization owes its name to Respected Late Lala Juggilal Singhania, a dynamic
personality with a broad vision. Inspired by the cause of the Swadeshi movement of
Mahatma Gandhi, and driven by the zeal to set up an Indian enterprise, Lala Kamalpat
Singhania founded J.K. Organization in the 19th century ushering in a new industrial era
in India.
The process of industrialization and diversification was worthily and successfully carried
on by Lala Kamalpat three illustrious sons, Sir Padampat, Lala Kailashpat and Lala
Lakshmipat Singhania, aided in no small measure by the late Lala Gopal Krishna son of
Sir Padampat.
Organization. JK Industries (JKI), is under the able leadership of Shri. Hari Shankar
JK Tyre was founded in 1977. It built its first plant at Jaykaygram near Udaipur in
Rajasthan. This was set up in technical collaboration with General Tire International Co,
USA. Since then, the wheels of JK Tyre have moved only forward. It now has four plants
at Kankroli (near Udaipur), Banmore (near Gwalior) and two at Mysore. To create its
mark on the global highways, the company forged a technical partnership with
Continental AG of Germany, the fourth largest tyre maker in the world. To keep pace
with the market demand as well as technological leadership in Indian market JK Tyre
took over ailing Vikrant Tyres in 1997 and turned it around in ten months. The takeover
brought the company to the forefront of the bus and truck segment, giving it the largest
Organisation. JK Industries (JKI), the flagship company of the Hari Shankar Singhania
Plants
JK Tyres
a) Kankroli, Rajasthan
b) Banmore, Madhya Pradesh
Vikrant Tyres
The company has diversified into hybrid and high-yielding seeds by setting up JK Agri-
genetics to produce cereals, seeds, pulses, etc. The company's sugar operation (JK
Sugars) is located in UP and it has set up a 3120 TCD sugar project at Meerganj, UP.
However the company has hived off its pharma business to JK Drugs & Pharmaceuticals
(JKDPL). Subsequently J K Industries has divested its stake in JKPDL to TEVA Pharma
Fibres like: Nylon, Polyester, Acrylic; Paper & Boards; Cement; Automobile Tyres &
Agrochemicals; Hybrid Seeds; Cosmetics; Audio & Video magnetic tapes; Power
transmission including V-Belts and Conveyor Beltings, Automotive Belts, Oil Seals;
The Group is further diversifying in other fields like Petrochemicals, Steel, Drugs &
Readymade Garments, Engineering Files, Tyres and Tubes, Synthetic Fibres, Paper,
HUMAN RESOURCE
"If you plan for a year, plant corn; if you plan for a decade, plant trees; But if you
WORK CULTURE
JK Tyre provides an enabling work culture with a clear sense of vision; mission and
strategies in which people work to achieve their set goals. Goals are set participatively
aspiration of being a global player known for its excellence provides opportunities for its
employees.
HR DEVELOPMENT
The Company systematically plans for the development of every individual through
opportunities for contribution as well as new learning. The company believes that human
resources are key to the success of business. It has been taking several steps to enhance
employee skills through training & development, empowerment and nurturing talent. In
Business Process Re-engineering is being taken up which have yielded excellent results.
During the current year, the company has laid focus on integrating various Business
adopting best practices and synergising them with initiatives. The company introduced
management and leadership development and has encouraged young leadership forum.
FINANCIAL PROFILE
retained earnings.
The company has had a track record of moderate and steady dividend declaration over the
period of years The Company’s dividend policy has sought to balance the multiple
objectives of rewarding shareholders with cash dividends, of retaining capital to meet the
The directors have recommended a dividend of Rs. 7.39 crores for the year ended 2005.
The Earning per share has increased from Rs 3.25 in 2004 to Rs. 4.47 in 2005 giving rich
fruits to the shareholders of the company as not only the investors are getting the
dividend but also profited by the increase in the earning per share of the company.
Net profit margin ratio of the company clearly indicates that the company is doing very
well in the recent times as the net profit margin ratio has increased from 0.62% in 2004 to
0.80% in 2005.
There has been a substantial increase in the return on net worth as it has increased from
-1.71% in 2004 to 2.08% in the year 2005 which clearly throws light on the fact that the
It is quite evident that the company is more interested in raising funds for expansion
through debt source rather than using equity because if we look at the debt-equity ratio it
has increased from 0.87 in 2004 to 1.06 in 2005 thereby the company has been
Reserve and surplus of the company is on the consistent side during the period of 4 years
JK Tyre has been at the forefront of the radial revolution in India. It is the first tyre
manufacturer in the country to introduce Radial Tyres. This has resulted in development
of many innovative products from the most modern, technologically advanced production
Aquasonic.
JK Tyre is the preferred OEM supplier to India’s leading automobile manufacturers like
Maruti Udyog Ltd., Telco, Mahindra & Mahindra, Hindustan Motors, Ashok Leyland,
Swaraj Mazda, Eicher, Escorts, Bajaj Tempo, L & T, John Deere and New Holland, thus
showcasing the high levels of quality associated with its products and services.
JK Tyre has taken the lead in redefining tyre retailing in India. It has set up more than
100 exclusive ‘One Stop Tyre Sales and Service Center’ - J K Steel Wheels.
It is also credited with the launch of India’s first and unique ‘Dial-a-Tyre’ service
wherein the customers can get tyres delivered and fitted at their doorsteps.
J K’s offering under passenger car segment (radial tyre) consists of ULTIMA, ULTIMA
Car Bias consists of CAPTAIN, JET DRIVE, JET DRIVE XS, and JET DRIVE DX.
JK Tyres are also available for the entire range (various models and variants) of
Premier Padmini, Ford, Hindustan Motors, Mitsubishi, Honda Motors, Opel, Hyundai
Motors, Skoda Auto, Toyota Motors, Mahindra & Mahindra and Tata Motors in India
Apollo
Apollo is the 18th largest manufacturer of tyres in the world. The company, was
incorporated in 1972, manufacturer automotive tyres, tubes and flaps. The unconditional
warranty policy, which covers everything from small cuts to blowouts, is the best among
all tyre manufacturers and makes Apollos a good-value-for-money buy. It has plants in
(Kerala). Apollo Tyres has a history of lockouts, due to labour unrest. Since 1996, the
Bridgestone
offerings include brands like S248 (for 80 aspect ratio) and S322 (for 70 and 65 aspect
ratios). The Bridgestone B350s using DONUT technology are higher performance tyres,
though not high speed ones, and are best for extensive driving over variable road
conditions without compromising on speed. The warranty covers five years against only
manufacturing defects - and Bridgestone is quite strict about enforcing it. It has a plant in
Ceat
Ceat Limited is the flagship company of the R.P Goenka (RPG) group. The company
manufactures automotive tyres, tubes and flaps. The company is the 20th largest
manufacturer of tyres in the world. The company has a technical tie-up with Yokohama
Goodyear
Goodyear India Limited (GIL) is a 74 per cent subsidiary of $ 13.5 billion Goodyear
Rubber and Tire Company, US. The company manufacturers’ automotive tyres, tubes,
flaps, transmission belts and industrial V belts. The GPS2 is known to be one of the better
tyres in its class as it is particularly quiet and offers a soft ride. However, it is sensitive to
mechanical irregularities, which can cause them to wear out fast. These tyres are again
The GT770+ is a 'T' speed-rated tyre and is longer lasting than the GPS2. Goodyear also
boasts of a large range of tubeless tyres and in fact has been at the forefront of promoting
MRF
The Company is one of the leading players in various tyre categories including truck and
bus, light truck, passenger car, jeep, tractor front, ADV and scooter tyres. The company
has a highest share in the replacement segment, due to the perceived brand image and
quality of tyres manufactured by the company. The range essentially consists of the
Zigma CC, ZVT and ZVTS in nylon casing with an 'S' speed rating. The problem though
is the nylon casing which over time tends to lose its shape leading to a wobble that in turn
sometimes result in belt distortion. It has plants in Ponda (Goa), Kottayam (Kerala),
Arkonam (Tamil Nadu), Chennai (Tamil Nadu), Medak (Andhra Pradesh) &
Pondicherry.
Michelin
Michelin has surveyed the Indian markets and road conditions well to come up with tyres
meant for India. The Certis, which is the premier range, covers vehicles from the
Hyundai Santro to Toyota Qualis. The pattern is a unique asymmetric design, which is
basically meant to counter the forced camber angle between the road and the vehicle.
And it comes with a very safe 'H' rating. Michelin plans to launch truck and bus radial
tyres in India.
Pirelli
Pirelli P400s and the P44s stand out as tyres best suited for India and are available in the
size 175/70-R-13, which is an ideal upsize for the Maruti Esteem. The P Zeros are the
ultimate performance tyres that are fitted in Mercedes. The P6000 Energy tyres come
with fuel savings guarantee as they have a very low rolling resistance. However, these
tyres are best on smooth roads and could get fatally damaged on rough surfaces. The low
profile range has a rayon casing and thus has to be inflated to their required pressure or
COMPANY HISTROY
Respected Late Lala Juggilal Singhania & Late Lala Kamalpat Singhania
JK Organization owes its name to Respected Late Lala Juggilal Singhania, a dynamic
personality with a broad vision. Inspired by the cause of the Swadeshi movement of
Mahatma Gandhi, and driven by the zeal to set up an Indian enterprise, Lala Kamalpat
Singhania founded J.K. Organization in the 19th century ushering in a new industrial era
in India.
The process of industrialization and diversification was worthily and successfully carried
on by Lala Kamalpat three illustrious sons, Sir Padampat, Lala Kailashpat and Lala
Lakshmipat Singhania, aided in no small measure by the late Lala Gopal Krishna son of
Sir Padampat.
JK Tyre, a Division of JK Industries is the flagship company under the umbrella of JK
Organization. JK Industries (JKI), is under the able leadership of Shri. Hari Shankar
JK Tyre was founded in 1977. It built its first plant at Jaykaygram near Udaipur in
Rajasthan. This was set up in technical collaboration with General Tire International Co,
USA. Since then, the wheels of JK Tyre have moved only forward. It now has four plants
at Kankroli (near Udaipur), Banmore (near Gwalior) and two at Mysore. To create its
mark on the global highways, the company forged a technical partnership with
Continental AG of Germany, the fourth largest tyre maker in the world. To keep pace
with the market demand as well as technological leadership in Indian market JK Tyre
took over ailing Vikrant Tyres in 1997 and turned it around in ten months. The takeover
brought the company to the forefront of the bus and truck segment, giving it the largest
Organisation. JK Industries (JKI), the flagship company of the Hari Shankar Singhania
Plants
JK Tyres
a) Kankroli, Rajasthan
b) Banmore, Madhya Pradesh
Vikrant Tyres
The company has diversified into hybrid and high-yielding seeds by setting up JK Agri-
genetics to produce cereals, seeds, pulses, etc. The company's sugar operation (JK
Sugars) is located in UP and it has set up a 3120 TCD sugar project at Meerganj, UP.
However the company has hived off its pharma business to JK Drugs & Pharmaceuticals
(JKDPL). Subsequently J K Industries has divested its stake in JKPDL to TEVA Pharma
Fibres like: Nylon, Polyester, Acrylic; Paper & Boards; Cement; Automobile Tyres &
Agrochemicals; Hybrid Seeds; Cosmetics; Audio & Video magnetic tapes; Power
transmission including V-Belts and Conveyor Beltings, Automotive Belts, Oil Seals;
The Group is further diversifying in other fields like Petrochemicals, Steel, Drugs &
Readymade Garments, Engineering Files, Tyres and Tubes, Synthetic Fibres, Paper,
HUMAN RESOURCE
"If you plan for a year, plant corn; if you plan for a decade, plant trees; But if you
WORK CULTURE
JK Tyre provides an enabling work culture with a clear sense of vision; mission and
strategies in which people work to achieve their set goals. Goals are set participatively
aspiration of being a global player known for its excellence provides opportunities for its
employees.
HR DEVELOPMENT
The Company systematically plans for the development of every individual through
opportunities for contribution as well as new learning. The company believes that human
resources are key to the success of business. It has been taking several steps to enhance
employee skills through training & development, empowerment and nurturing talent. In
Business Process Re-engineering is being taken up which have yielded excellent results.
During the current year, the company has laid focus on integrating various Business
adopting best practices and synergising them with initiatives. The company introduced
management and leadership development and has encouraged young leadership forum.
FINANCIAL PROFILE
retained earnings.
The company has had a track record of moderate and steady dividend declaration over the
period of years The Company’s dividend policy has sought to balance the multiple
objectives of rewarding shareholders with cash dividends, of retaining capital to meet the
The directors have recommended a dividend of Rs. 7.39 crores for the year ended 2005.
The Earning per share has increased from Rs 3.25 in 2004 to Rs. 4.47 in 2005 giving rich
fruits to the shareholders of the company as not only the investors are getting the
dividend but also profited by the increase in the earning per share of the company.
Net profit margin ratio of the company clearly indicates that the company is doing very
well in the recent times as the net profit margin ratio has increased from 0.62% in 2004 to
0.80% in 2005.
There has been a substantial increase in the return on net worth as it has increased from
-1.71% in 2004 to 2.08% in the year 2005 which clearly throws light on the fact that the
It is quite evident that the company is more interested in raising funds for expansion
through debt source rather than using equity because if we look at the debt-equity ratio it
has increased from 0.87 in 2004 to 1.06 in 2005 thereby the company has been
Reserve and surplus of the company is on the consistent side during the period of 4 years
JK Tyre has been at the forefront of the radial revolution in India. It is the first tyre
manufacturer in the country to introduce Radial Tyres. This has resulted in development
of many innovative products from the most modern, technologically advanced production
Aquasonic.
JK Tyre is the preferred OEM supplier to India’s leading automobile manufacturers like
Maruti Udyog Ltd., Telco, Mahindra & Mahindra, Hindustan Motors, Ashok Leyland,
Swaraj Mazda, Eicher, Escorts, Bajaj Tempo, L & T, John Deere and New Holland, thus
showcasing the high levels of quality associated with its products and services.
JK Tyre has taken the lead in redefining tyre retailing in India. It has set up more than
100 exclusive ‘One Stop Tyre Sales and Service Center’ - J K Steel Wheels.
It is also credited with the launch of India’s first and unique ‘Dial-a-Tyre’ service
wherein the customers can get tyres delivered and fitted at their doorsteps.
J K’s offering under passenger car segment (radial tyre) consists of ULTIMA, ULTIMA
Car Bias consists of CAPTAIN, JET DRIVE, JET DRIVE XS, and JET DRIVE DX.
JK Tyres are also available for the entire range (various models and variants) of
Premier Padmini, Ford, Hindustan Motors, Mitsubishi, Honda Motors, Opel, Hyundai
Motors, Skoda Auto, Toyota Motors, Mahindra & Mahindra and Tata Motors in India
Apollo
Apollo is the 18th largest manufacturer of tyres in the world. The company, was
incorporated in 1972, manufacturer automotive tyres, tubes and flaps. The unconditional
warranty policy, which covers everything from small cuts to blowouts, is the best among
all tyre manufacturers and makes Apollos a good-value-for-money buy. It has plants in
(Kerala). Apollo Tyres has a history of lockouts, due to labour unrest. Since 1996, the
Bridgestone
offerings include brands like S248 (for 80 aspect ratio) and S322 (for 70 and 65 aspect
ratios). The Bridgestone B350s using DONUT technology are higher performance tyres,
though not high speed ones, and are best for extensive driving over variable road
conditions without compromising on speed. The warranty covers five years against only
manufacturing defects - and Bridgestone is quite strict about enforcing it. It has a plant in
Ceat
Ceat Limited is the flagship company of the R.P Goenka (RPG) group. The company
manufactures automotive tyres, tubes and flaps. The company is the 20th largest
manufacturer of tyres in the world. The company has a technical tie-up with Yokohama
Goodyear
Goodyear India Limited (GIL) is a 74 per cent subsidiary of $ 13.5 billion Goodyear
Rubber and Tire Company, US. The company manufacturers’ automotive tyres, tubes,
flaps, transmission belts and industrial V belts. The GPS2 is known to be one of the better
tyres in its class as it is particularly quiet and offers a soft ride. However, it is sensitive to
mechanical irregularities, which can cause them to wear out fast. These tyres are again
The GT770+ is a 'T' speed-rated tyre and is longer lasting than the GPS2. Goodyear also
boasts of a large range of tubeless tyres and in fact has been at the forefront of promoting
MRF
The Company is one of the leading players in various tyre categories including truck and
bus, light truck, passenger car, jeep, tractor front, ADV and scooter tyres. The company
has a highest share in the replacement segment, due to the perceived brand image and
quality of tyres manufactured by the company. The range essentially consists of the
Zigma CC, ZVT and ZVTS in nylon casing with an 'S' speed rating. The problem though
is the nylon casing which over time tends to lose its shape leading to a wobble that in turn
sometimes result in belt distortion. It has plants in Ponda (Goa), Kottayam (Kerala),
Arkonam (Tamil Nadu), Chennai (Tamil Nadu), Medak (Andhra Pradesh) &
Pondicherry.
Michelin
Michelin has surveyed the Indian markets and road conditions well to come up with tyres
meant for India. The Certis, which is the premier range, covers vehicles from the
Hyundai Santro to Toyota Qualis. The pattern is a unique asymmetric design, which is
basically meant to counter the forced camber angle between the road and the vehicle.
And it comes with a very safe 'H' rating. Michelin plans to launch truck and bus radial
tyres in India.
Pirelli
Pirelli P400s and the P44s stand out as tyres best suited for India and are available in the
size 175/70-R-13, which is an ideal upsize for the Maruti Esteem. The P Zeros are the
ultimate performance tyres that are fitted in Mercedes. The P6000 Energy tyres come
with fuel savings guarantee as they have a very low rolling resistance. However, these
tyres are best on smooth roads and could get fatally damaged on rough surfaces. The low
profile range has a rayon casing and thus has to be inflated to their required pressure or
SIGNIFICANCE OF STUDY
Our topic is concentrated upon Railways, Roadways and other mode of transport.We
hope the data and information collected through our project will be important and
purposeful for J.K. Tyres.
OBJECTIVES
To find the overall perception about Railways, Roadways and other mode of
transport. The main purpose of this study is to get information about the Railway,
Roadways and other mode of transport and share capturing in the market.
UNIVERSE
Universe includes the total fleet owner in Delhi region.
SAMPLE SIZE
Sample size undertaken by us to conduct the survey was 15 in number.
SAMPLING TECHNIQUE
Stratified Random Sampling: As the size of universe was quite large so a relatively
small group of individuals from the universe was selected.
RESEARCH DESIGN
The research conducted is an exploratory field setting qualitative research. The result
were obtained in analytical form, the survey was conducted using questionnaire
method. By using this method we found the qualitative importance of each key areas
and the present condition of the RAILWAYS AND ROADWAYS.
Overview of transport industry
There has been heavy investment in the transport sector since independence and progress has
significance. But the task is so gigantic that it would require many years and large doses of
investment to bring about the desired improvement in the country's transport system.
The bottlenecks, especially in railways, roads and ports, pose a threat to economic growth. The share
of railways in freight traffic needs to be improved and passenger services, especially in backward
areas, need to be expanded. In the road segment, highway network needs expansion to ensure smooth
movement of goods and people. The capacity of major, medium and minor ports also needs to be
augmented and the inland waterways developed. The pollution caused by Vehicles, especially in large
cities, is another problem that needs to be addressed. These are daunting tasks, but by no means
unachievable. The entry of private groups into the transport sector is expected to improve things. But
Significance of Transportation
banking and agriculture are also necessary, but these activities, like many others, depend upon
transportation. Without adequate facilities for moving goods and people from place to place,
economic and social activities can be carried on in a limited way only. Using a mobility index that
combines available data on transport facilities and movement of passengers and freight, Wilfred Owen
finds out that immobility and poverty go together. The countries with low per capita had a mobility
index for freight and passenger transport in single digits, whereas this index was significantly high in
countries with high per capita income. Indeed, a more recent study finds out that every one percentage
growth in the Indian economy presumes a growth of 1.2 to 1.4 per cent in the transport sector.
First: integration of the country: Improved inter and intra state transport systems are needed to link the
country together.
Second: sustainable economic growth: Transport is an integral part of the production of nearly all
goods and services, and transport improvements will contribute to more efficient combinations of
factor inputs.
Third: contribution to poverty reduction: Transport systems can contribute to poverty reduction by
enabling the productive activities that create pro-poor economic growth, and by providing poor people,
especially those living in rural areas, with access to economic opportunities and social services, and
Fourth: Promotion of external trade and foreign direct investments: Improved transport logistics need
to be in place to improve the international competitiveness of exports and to attract more foreign
India.
Transportation is an economic function, that is to say, it serves along whit other productive functions
usefulness. Transportation creates the utility of place, and to a lesser degree, that of time.
efficiency helps in reducing the cost of producing goods and thus reduces their prices. Cheaper
transportation has both has both direct and indirect effects on cost of production. Directly, reduction in
transport rates laid to overall lower production costs by lessening the outlays for assembling
raw materials and shipping finished products by reducing the expense of travel. Indirectly, cheaper
transportation tends towards lower cost of production by making possible more efficient extraction and
great distance, thus avoiding the necessity for local production for all conceivable commodities of
need. Each economic region can thus concentrate upon the goods and services for which it is best
adapted either through natural resources endowment or through historical development. It, thus, leads
. Large-scale marketing. Closely associated with the foregoing is the fact that transportation helps to
expand the size of market. No modern large-scale producer could operate if he will to serve only the
local market. Obviously, a large-scale production is possible when the market extends to the whole
quality and variety of consumable goods, thereby stimulating wants. There is more production because
of the decrease in the cost of production brought about by transportation. A greater variety occurs
because transportation enables a community to enjoy even those goods that could not be
. Transportation raises the standard of living, making possible improved housing, clothing, food and
recreation.
. It helps break the barrier of isolation by promoting social interaction and thus promotes culture and
. It promotes national unity I that it promotes homogeneity among the people. Another reason is that it
creates a need for political unity, by making the different parts of the country economically
interdependent.
. It helps in the strengthening of national defense. It is an important agency that helps in the
mobilization of the entire resources of a country in the event of war and peace.
In modern world, transport along with energy is the basic infrastructural requirement for
industrialization. The developing countries have accorded it an important place in their programmed of
economic development. Transport provides a vital link between production centers, distribution areas
and the ultimate consumers. It also exercises a unifying and integrating influence upon the economy.
Important means of transport are railways, roads, water transport (both inland and overseas) and air
transport.
For many years, railways were the dominant mode of transport in India. However, there has been a
gradual shift from rail to road. In 1960, it was estimated that railways carried 85% of goods traffic (in
ton km) and 51% of passenger traffic ( in passenger km). By 2006, it was reported that this had
declined to 26% of goods traffic and 9% of passenger traffic. Inland water transport (IWT) has
remained a minor player in the nation's transport systems, with a traffic share of less than one percent
(0.15%).
For the future, some key long-term trends are evident in India.
In India, it is estimated that the demand elasticity of transport services with respect to GDP ranges
from1.2 to 1.4. Assuming that for the next five year of India's economy grows at the same price as that
for the last ten years (6-7%), and the demand for transport could be projected to grow at 8-9%.
the ongoing national highway development program (NHDP) will provide a significant boost for the
road transport industry, enabling truckers to cover a longer distances in a single trips . Four-lane
divided highways will allow greater use of multi-axle vehicles with operating costs substantially less
than those of medium-sized rigid trucks. In the long run, the current dominance of road transport
Transport has been as the basic infrastructure that is crucial for the success of a developmental plan.
The second Plan was more forthright in stressing the need for transport development when it stated:
"An efficient and well developed system of transport and communication is vital to success of a plan
of economic development which lays stress on rapid industrialization." The theme has run throughout
development. The share of transport sector has increased over the years, from a mere 1.9 per cent in
1950-51 to about 4.5 per cent in 1994-95. With the economy on track for a planned growth at 7-8
percent per year, the demand for freight and passenger transport is expected to grow at around 10
percent a year. At present, however, India's transport system, especially surface transport, is highly
congested, and the sector performance is poor and efficient by international standards. This raises an
important question: how is India's transport sector to be prepared to meet the rapidly growing transport
demands?
1. Currently, India's transport system handles 870 billion ton-km of freight, and 2,450 billion
passenger-km a year. During a the last 10 years, total transport demand has grown at 10 percent a year.
The rate of growth varies by sub-sector and sub market; road, air, and ocean transport have grown
rapidly, while rail transport has grown more slowly. But across the sector, the traveling public has
been increasingly demanding more speedy, comfortable, reliable, convenient and safe services.
In addition to the transport demand generated by expansion of the economy, India still faces
enormous unmet demand for basic accessibility. About 40 percent of India's rural villages do not have
all-weather access to market and social services. Peripheral states in the north and northeast are poorly
connected with major economics centers, and this prevents them from accessing domestic markets.
About 70 million urban residents - one-fourth of the urban population - lives below the national
poverty line and many of them lack access to basic infrastructure services, including affordable
transport.
SYSTEM....
2. Twenty-five percent of national and state highways are congested. Truck and bus speeds average
only 30-40 km per hour, through the expected average are twice these figures. All high-density rail
corridors face severe capacity constraints. In Mumbai and other Metropolitans cities, overcrowding
3. The geographic coverage of India's highway network, at 0.66 km of highway per square km of
land area, as almost identical to the level of the United States (0.65), and much higher that of China
(0.16). But China's highway network consists of over 15,000 km of four or six-lane access-controlled
expressways linking the major cities, all built during the last 10years. In India, expressways do not link
the major economic centers. Most national Highways are two-lane or less; only 3,000 km are four-
lane.
PERVASICE......
4. Highway capacity shortages are further exacerbated by mixed traffic, encroachment, crowded and
unsafe urban crossings, and frequent stops at state and municipal check pots. Widespread overloading
by the outdated, rigid two-axle trucks has long been a major factor in the damage of road pavement
and structure.
5. Till now, all major ports have handled more traffic than their "rated" capacities. Although the
situation has improved with capacity augmentation, the capacities, as rated, are 50_60 percent lower
than those at comparable ports elsewhere in Asia. The real berth capacities have not been used
efficiently, mainly because of low productivity of equipment and labor. Equipment use on berths is
extremely low-about 30_35 percent. In railways, wagon failures cause the largest share of train
failures, which in turn cause a loss of about 20 percent of line capacity. In rural roads, there is almost a
total lack of important maintenance categories such as grading and drainage, leading to extraordinarily
POOR TRANSPORT SERVICES IMPOSE HIGH COSTS TO THE ECONOMY AND SOCIETY....
Poor transport services impact the Indian Economy-and Indian society in general-in a number of direct
and indirect ways. An enormous amount of time, and therefore money, is wasted because of the
inefficient moving of people and goods. The 1996 Rakesh Mohan Report on Infrastructure estimated
that economic losses from congestion and poor roads added up to 120_300 billion rupees (or US$
2.6_6.5 billion) a year. Nearly two-thirds of the respondents to a 1999 survey by the Confederation of
transport and logistics systems have made India's exports less competitive.
INSTITUTIONAL PROBLEMS........
First, fragmentation and overlapping of responsibilities confuse and limit accountability, and as a
result, affect the pressure on various agencies to perform. The Indian Railways (IR), for example, is an
enterprise expected to provide by way of social service-relatively cheap passenger fares and an
uneconomic schedule: at the same time it is expected to meet its targets for profitability.
Second, resource mobilization is adequate. Public investments in transport have been declining
relative to GDP, and the input from private finance is still very limited . Finance for investment,
operation and maintenance can come from two basic sources: through direct/indirect user charges or
through general taxation. The revenue occurring from the tolling of roads are very limited. Indian
Railway’s progress in financial self-sufficiency in the early 1990s has been reversed _with about 45%
of
expenditure being met by own revenues vin 2006, with market borrowings and budget support making
up the balance.
data collection, analysis and use in decision making; excessive focus on new investment at the expense
of adequate attention to asset maintenance; uneconomical investment made under political influence;
Fourth, there is no working system for user representatives to brig transport agencies to account fore
their performance. The failure to impose effective system of accountability-beyond mere compliance
with budgets and regulations-is the result of limitations on citizens' rights to relevant information; the
failure of public agencies to report all relevant information; the absences of independent bodies to
verify
information and assess performance based on the information given; and the failure to impose
These four underlying problems are interlinked and need to be addressed in comprehensive manner.
While these efforts represent an important shift-from transport as asocial service to an economic
sector-overall progress has fallen short of what is needed for transport to facilitate faster economic
growth as well as poverty alleviation. India's progress on institutional reform in transport varies by sub
sector, with roads and ports moving ahead steadily, while the railways and urban transport have been
Further reform will confront some tough political and institutional constraints. Political pressure
continues to divert resources fro meeting high demand to fulfilling basic needs without ensuring
1. Involving road users in planning, prioritizing, and ensuring the proper use of sector funds through
badly representative advisory commities and, eventually, overseeing boards empowered for decision
making.
2. Moving towards a clear separation of client and provider function, and using output oriented
3. Building consensus for the removal or reduction of any non-physical barriers to the movement of
4. Monitoring closely recent innovations on road financing; evaluating the effectiveness of these new
approaches in leveraging public sector finance and transferring risk to the private sector(rather than
merely creating off-balance sheet liabilities for the central or state budgets);and addressing regulatory
and information bottlenecks that may have slowed down private investment in the sector.
India has high stakes in rail reforms _ which must be based on proved principles derived from
On the basis of recommendations from the recently published Rakesh Mohan report on rail
. Focusing a much larger share of the capital budget on economic priority investments
The major challenge for urban transport agencies in India is improving the current urban transport
Situation-or at least prevent it from deteriorating further-while developing all the much needed
institutional, financial, and technical capabilities, especially at the local level. Again, these should be
based on proved principles derived from international experiences. Indian cities have great potential
for the development of a competitive urban bus transport market, through contracting or franchising
arrangements.
CONCLUSION
Three factors make it a particularly opportunity time for India to expedite transport reform:
. First, the initial reform momentum has already been built up.
. Second, there is growing consensus within India that transport should be managed as an
economic sector.
. Third, there are many successful models for transport reform from around the world. The resistance
to reform, however, should not be underestimated. But such resistance has to be overcome, keeping in
mind the high costs of slow or inadequate action that will be borne by the Indian economy and society.
actions it suggests, to contribute to the momentum being built up to more speedy reforms, and in
Poor transport has become a major drag on economic growth. India's transport system-especially
surface transport-has serious deficiencies. Transport services are highly inefficient by international
standards. Excessive Time, and so money, is spent on moving people and goods. Economic losses
from congestion and poor roads are estimated to be as high as 120_300 billion rupees (equivalent to
US$2.6_6.5 BILLION) A YEAR. inefficient and unreliable transport and logistics systems have made
India's
In recent years, the Indian government and the World Bank have examined transport issues
extensively. IN 1995, the Bank published a report, Indian: Transport Sector-Long Term Issues, which
examined ways in which the sector could respond to national economic reform initiatives and other
development trends, including urbanization, technological changes, and growing social and
environmental concerns. This report addresses the central question of how India can improve its
transport services and supporting infrastructure to meet the rapidly growing demand for transport. The
1995 report proposed policy and institutional reforms that would improve the regulation of private
1. The synthesis of these studies identifies considerable agreement both about the nature of the
problems and the long-term solutions within the structure followed by this report (figure 1.1).
The phenomenon that needs to be examined and understood is the adverse impact of poor transport
performance on the economy, poor performance which arises from a "mismatch" between supply and
demand for transport services and supporting infrastructure. Overall demand is increasing at about
2. What is the path the sector should take to improve adjustment process? There appears to be
considerable census on the longs term direction the sector should take - so that it moves ahead,
for instance, toward further transport liberalization; better asset management ; increased private
3. But moving from census to actual plan of action is proving to be difficult . Short and medium term
action need to be carefully designed to suit India's political and social dynamic, taking into account the
lessons learned recent reform experiences. It is with this need in mind that this report proposes a short
to medium term actions based on its examination of general issues across the sector, and specific
URBAN TRANSPORT
Many government agencies at the central, state, and local levels are involved in providing urban
transport infrastructure and services. Urban roads are provided and maintained mainly by PWDs, and
to a lesser extent, by municipal corporations. Bus services are supplied by the combination of public
and private operators, with variations from city to city. The private sectors also the major provider of
intermediates public transport services. IR runs the suburban commuter rail services.
Despite its extensive coverage, India's transport system is highly deficient: its services are of poor
quality and its costs are high. As a result, the Indian economy and the society at large suffer from a
inefficiently.
2. The second direct impact is the high opportunity cost of public resources being channeled to expand
The deficiencies of the transport system in India lead to various negative impacts:
. High opportunity costs of public resources used to maintain or expand infrastructure capacity, or
. Poor safety outcomes in some sectors that cause human suffering, economic loss, and increase
inequality.
Evidence suggests that a significant portion of a public funds is not being optimally used, and that this
is raising the opportunity cost of such public expenditure. This is especially true for those items of
public expenditure that are justified by social arguments. For example, operating subsidies to state-
owned bus companies, and cross-subsidies of IR from freight to passenger services are not clearly
targeted at the poor; many of the benefits may actually be captured by non-poor groups or by the
a less but still significant extent, in the railways. Not only do traffic accidents cause enormous human
suffering and economic loss, but they also cause an increase in inequality.
India's transport system is one of the largest in the world. It consist mainly of roads, railways, and air
services. In a few states, inland water plays a very small supplementary role. And with its long
14
12
10
freight
8
passenger
6
4
2
0
1 2 3 4
rail road domestic air interntional
air
In the most developing countries, transport demand (usually measured in ton-km and passenger-km)
increase somewhat faster than GDP. India is no exception. During the 1990s, India's economy has
grown by 6 to 7 % a year , and its total transport demand has grown by about 10% a year. The
rate of growth, however, varies by sub sector (figure 2.1), reflecting the structural changes in demand
for different modes, as well as the effect of some supply-side factors that will be analyzed later. The
road
sector , which already enjoys an 80% share land transport demand , has witnessed a 12% annual in
freight demand and 8% in passenger demand . Meanwhile, both air and ocean transport has enjoyed
healthy growth. But the demand for rail transport has grown at a slower pace, at just 1.4 percent a
year for freight and 3.6 percent a year for passenger . This is not surprising: all over the world, rail
transport stagnates as a result of intense competition from road transport. And operational
inefficiencies
and capacity on key routes has also played a rail growth of India's rail traffic.
If GDP is to grow at 8 -9% a year over the next 10 years or so-as intended by the government's
tenth five year-plan (2002- 207), then the demand for transport will, in all likelihood, grow by at
least 10% a year . But growth will materialize only if the level of services and capacity of supporting
infrastructure
are also able to meet this demand. Otherwise, unmet demand will act as a constraints on economic
In passenger transport, the demand for quality services is highly income-elastic, and it grows faster
Between 1994 and 2006, passenger rail demand for premier services grew faster than total passenger
rail demand: 7.3% vs 4.2% a year in the case of intercity rail, and 7.5%vs 3.3% in suburban
commuter rail.
The demand for better quality service is expected to grow rapidly for freight transport as well. The
share of high value consumer goods in total freight will increase with economic structural changes.
The growing demand for door-to-door transport will continue to boost road transport. This is partly
due to inherent competitive advantage of road transport, and partly to failure of other modes,
especially rail,
to attract the demand that would otherwise be more suitable for them . At present, rail carries mostly
bulk-freight as iron and cement. Non-bulk freight accounts for just a dismissal 2 - 3% of its total
freight in term of ton-km. But even bulk freight is shifting to road transport, and it is likely that
competition from road transport will intensify, because substantial investor being made to improve the
parallel, for the most part, to the high-density railway routes. With better vehicles, the road sector will
offer better services to users-and possibly at lower prices. The railways should respond with
substantial improvements of quality, type, and customer orientation of services. All the same, roads
have dominated India's land transport market since 1985, and it is clear that their dominance will
ROAD INFRASTRUCTURE
traffic.
Indian Road network
*National Highways are less than 2%of network but carry 40% of total traffic
Modal Shift
There has been a major shift in transportation mode from railways towards the Road sector.
Current Status:
Road Railways
Freight 70% 3
India has nearly 2 million kilometers of roads: 960,000 kilometers of surfaced roads and more than
1million kilometers of roads constructed of gravel, crushed stone, or earth. Fifty-three highways, just
Fewer than 20,000 kilometers in total length, are rated as national highways, but they carry about 40
These road-building achievements represent an impressive expansion from the 1950 total of
400,000kilometers of roads of all kinds, but more than 25 percent of villages still have no road link,
and
about 60 percent have no all-weather roads serve almost all villages in Kerala, Haryana, and Punjab.
By contrast, only 15percent of villages in Orissa and 21 percent in Rajasthan are connected with all-
weather roads. The quality of roads, including major Highways, is poor by international standards.
None the less, roads carry about 60 percent of all passenger traffic.
The central and state governments share responsibilities for road building and maintaining roads and
for some transportation companies. The Ministry of State for Surface Transport administers the
national
highway system, and state highways and whether state roads are maintained by state public works
departments. Municipalities, districts, and villages maintain minor road. Still other roads, about 22,000
kilometers in total in 1991, are under the jurisdiction of the Border Roads Development Board, a
central government organization established in 1960 to facilitate economic development and defense
With the increase in population, the importance of roads has further increased for mutual interaction of
people. At the time of independence, India got as legacy 1.46 lakh km. Surfaced roads and 2.42
lakh km. of un surfaced roads. In 2001_02 India had about 14_lakh km surfaced and 11lakh long un
surfaced roads.
While India's road density, at 1 km per square km of land, compares favorably with many
developing countries, the standards and conditions of the road network are inadequate to meet the
In early 2006, only 8% of the network consisted of four lanes or more. Over 20% of national highways
have poor surfaces, and many of these are seriously congested. As a result, the average distance
covered by a goods vehicle in a day ranges from 250 to 300 km, far below the international standard.
The Government launched the National Highway Development Program (NHDP) in 1998, which aims
to rehabilitate and widen 13,300 km of roads while 6,000 km of roads have already been substantially
completed.
ADB has provided four loans in support of this program. For many years, India lagged behind many
countries of the world, which built expressways capable of sustained speeds of over 100 kilometer per
hour (kmph). Under the National Highways development project (NHDP)_ the largest highway project
ever undertaken by the country and with the shortest time span for completion _14,279 kilometer of
National Highways are to be converted to 4/6_lanes, at a total estimated cost of Rs. 65,000 crore
1. The Golden Quadrilateral (GQ_5, 846 Kilometer) connecting the four major cities of Delhi,
2. The North-South and East -west Corridors (NS_EW _7,300 KM) Connecting Srinagar in the North
to Kanyakumari In the South and Silchar in the East to Porbandar in the West.
Current estimates suggest that the cost of a four _lane Highways works out to roughly Rs.4.5Crore per
kilometer, and the cost of a protected access, six-lane expressway works out to roughly Rs.8.5 Crore
per km.
The funding of NHDP IS based on a fuel tax and on tolls. Access of Rs. 1.50 per litre is charged on the
sale of petrol and diesel. A part of this (Rs 0.45 per litre against sale of high speed diesel oil and Rs.
0.86 per Litre against Sale of Petrol) goes to fund the NHDP.
It is expected that the GQ would be substantially completed by December 2005, and the NS and EW
corridors would be completed by December 2007. With the completion of more than 75 per cent of the
GQ, a substantial Impact upon the economy is already visible. At this stage there is a need to focus
attention on corridor management and road safety and NHAI has put in place a corridor management
policy (box9.6)
Many parts of NHDP have been commissioned, an the focus needs to now shift from construction to:
corridor management", i.e. the process of managing the high way so as to deliver maximal throughput
in terms of velocity and number of vehicles, while minimizing the cost to the economy of accidents.
Road safety is a particularly important area of focus, particularly given India's lack of experience with
The maintenance of completed sections of the National Highways is being carried out by NHAI
through Short-term improvement and road maintenance contracts and long_term improvement and
In order to make the journey safe, under the corridor management policy, various safety measures are
The annual expenditure of such safety measures is about Rs.1_1.5lakh per kilometer. About 1600
kilometer of highways are being maintained with an annual expenditure of about Rs20crore for safety
measures.
NHDP's prime focus is on developing International standard roads with facilities of uninterrupted flow
of traffic with:
. Divided carriageways
. Wayside amenities
Finance Mechanisms
NHAI proposes to finance its projects by a host of financing mechanisms. Some of them are as
follows:-
Though budgetary allocations from the Government of India.
In a historic decision, the Government of India introduced a Cess On both Petrol and Diesel. This
amount at that time (at 1999 prices) came to a total of approximately Rs.2,000crores per annum.
Further, Parliament decreed that the fund as collicted were to be put aside in a Central Road Fund
(CRF) for exclusive utilization for the development of a modern road network. The developmental
work that it could be tapped to fund, an the agencies to whom it was available were clearly defined as:
4. Construction and Maintenance of National Highways by NHDP and Ministry of Road Transport &
Highways
Today, The cess contributes between Rs 5 to6 Thousands crores per annum toeards NHDP
Major policy initiatives have been taken by the Government to attract foreign as well as domestic
private investments. To promote involvement of the private sector in construction and maintenance
of National highway , Some Projects are offered on Build Operate and Transfer(BOT) basis
private agencies . After the concession period, which can range up to 30 years, this road is to be
NHAI funds are also leveraged by the setting up of Special Purpsor Vehicles(SPVs) . The SPVs will
be borrowing funds and repaying these through toll revenue in the future . This model will alsobe tried
in some other projects. Some more models may emerge in the near future for better
leveraging of funds available with NHAI such as Annuity, which is a variant of BOT model.
Fund Requirement
The financial arrangement for the development of GQ and the corridors has been made as:
Rs in Crore
Cess 20,000
$(12,608)MILLI
Importance of roads
Roads provide transport facilities right up to the consumer's residence or factory . Roads can built in
all types of regions including Hilly areas , desert and marshy lands. Construction of railways is not
possible in such areas . Buses, trucks and cars etc. can pick up passengers and goods from any where .
Quick transport of perishable goods like milk, fruits and vegetables is possible through road transport.
Roads has lower construction and maintenance cost as compared to that of railways . Roads are ideal
for short distance travel and transport. The fast moving cars and luxury buses facilitate tourism.
Roads are very important in strengthening defense system . The border roads have facilitated the
transport of soldiers and their luggage along border areas . These roads have also facilitated social,
economic and political interaction of people of these areas . Roads are complementary to railways,
airways and waterways . For reducing the pressure of increasing transport on roads, the number of
vehicles and length and width of roads are being increased . Measures are being taken for facilitating
fast and safe movement of vehicles on roads . More facilities are being provided for this . Further,
only 20% of surfaced roads are estimated to be in good condition, which compares unfavorably with
other countries ( Indonesia & Brazil 30%, Korea 70%, Japan & USA more than 85% ).
National highways are the main arterial roads connecting ports, state capitals , industrial and
tourist centers, and neighboring countries . National highways constitute less than 2% of total road
network, but carry nearly 40% of the total road traffic . Their growth in quantitative terms has been
rather
gradual, from 22,255 km in 1951 to 34,608 km in 1997 . Out of total 162,920 km. length of National
and State highways only 2% of their length is four-lane, 34% two-lane, and 64% single lane. As far as
NHs are considered, only 5% of their length in four-lane, 80% two-lane and the balance 15%
International trends indicate that with the growth of the highway and aviation technologies the traffic
tends to shift away from railways. However, in the continental economies like USA,
China and erstwhile Russia, the railways have maintained their dominance . India's size, geography
and resource endowments also mandate a dominant role for the railways, not to mention the
environmental consideration, which in recent years are causing a rethinking even in the developed
world.
The Rakesh mohan committee that the economic cost of bad roads ranges from Rs 20,000crore to
from roads are ploughed back into road development while in advanced economies like US,
Switzerland , Japan etc., the entire amount is ploughed back into road development as these counteries
realized that the expenditure on roads is an investment leading to accelerated growth in every sector.
The roads in India have become cash cows. It is estimated that the transport sector pays
Rs 4500crore every year to various state governments as taxes. The present practice of taxation in the
road transport sector was the practice during British India when the government wanted to protect
The different categories of roads and authorities responsible for them are:
c. Rural Roads and Urban Roads - Rural engineering organisation, local authorities like Panchayat and
Municipalities
Department of road transport and highways is directly responsible for development of national
highways which aggregate 65569 km, which, although is only 1.7% of total length , carries about 45%
Their growth had been rather gradual, from 22,255 km in 1951 to 52010 km by March 2000 . The
20 year Road Development Plan (1981 - 2001) recommended total length of 66,000 km by the year
Ministry has assessed the need to build 2000 km of expressways on very selective basis where traffic
density is exceptionally high and upgrade the road system in the country by widening and
NATIONAL HIGHWAYS
These roads are very important for the country . They connect four corners of the country . They
connect state capitals to the main cities of the country . Their construction and maintenance is under
These has been a substantial shift in the mode of transportation from railways towards the road sector .
While the railways handle only 40% of the freight and 20% of the passengers load, 60% of the goods
and 80% of passenger's movement takes place through roads. It is anticipated that function of the road
Though the national highways constitute only 2% of the entire road network, they carry about
40% of the freight . The national highway cover the length of 52000 kms. And pass through every
state of India. They are vital lifelines of the economy making possible trade and commerce . The
National Highway act has been amended to enable levy of a toll on selected sections of national
facilitated .
In the case of BOT projects, the government will compensate enterpreneurs acccording to international
norms in those case where collection of tolls is hampered by either force majuere or policy risks . So
far 11 BOT projects with an estimated cost of more than Rs 530 crore have approved (Box 9.4).
The NHAI and in some cases the state public work departments will assist private enterpreneurs to
acquire land for the establishment of Transport nagar , cargo terminals etc
The national highways besides connecting the major cities, i.e, Delhi, Mumbai,Chennai, and Kolkata
link a numberof other important towns and commercial hubs . The national highway pass through
the following cities and towns: Delhi, Mumbai, Calcutta , Chennai ,Nagpur, Indore, Banglore, Madras,
In this map, some national highways has been shown. The number of each highway has also been
written with it . See the location of Delhi map . A number of highways from different direction
converge
here . National highway no.1 links Delhi with Amirtsar. National highway no.7 is the longest road of
country. After seeing thus map, one can find out the names of cities linked by this road and
the names of cities thus road passes from. Likewise, see the location of the national highways no. 3 ,
. Safe travel
State highway and district rural roads are the responsibility of state governments and maintained
by various agencies in states and union territories. These roads connect major cities and district
headquaters. These roads are also connected to the roads of neighboring states and national highways.
Roads are being developed in rural areas under Minimum Needs Programme (MNP). The objectives of
it
being to link all villages with a population of 1,500 with all-weather roads . The Government also
assists
RURAL ROADS
70% of India's population is rural, and the country has 6,61,000 villages . The rural road network
consist of zilla parishad roads, villagr panchayat roads, and community roads, with a total length of
2.7milion km. There are five types of rural roads surfaced : track , earth , water-bound macadam, and
blacktop.
Neither track nor earth roads are all-weather passable. If properly maintained, gravel and water-bound
macadam roads can be all-weather passable, but in rural India, many of these roads become
impassable during heavy rain mainly because of inadequate ,defective or missing drainage.
DISTRICT ROADS : The construction and maintenance of these roads is with district adminstration .
VILLAGE ROADS : These roads link the village with each other and with the national and state
highways and district roads . They play a major role in the economic development of the villanges and
agriculture.
BORDER ROADS : Border road organisation is responsible for construction ans maintenance of
roads in the border areas of the country . They are very important for the defence of the country . In
addititon to these , express highways are being constructed for fast and safe movements of vehicles.
Two big projects have been initiated for making roads transport fast and secure and for saving time
and fuel . One of these project is called 'golden quadrilateral' and the other is given the name of north-
south and east-west corridors . The roads linking Delhi, Mumbai,Kolkata and Chennai are called
'golden quadrilateral' . The north-south corridors is from srinagar to kanyakumari and east-west
The Golden Quadrilateral and the north-south and east-west corridors connecting kanayakumari with
srinagar and porbander with silchar have initiated the National Highway Development Project ( NHDP
to upgrade the existing highways to connect four metropolitian cities Delhi, Mumbai, Chennai and
Kolkata . This project will involve upgradation to four/six lane of about 13,00km of National
Highways and is to cost Rs 54,000 crore . Target years is completion of golden quadrilateral and the
National Highway Development Project have been set to be 2003 and 2007 respectively.
National Highway Authority of India, an organisation under the Department of Road Transport &
Highways has been assigned this task . This is the most ambitious road-building programme and one
of the monumental construction projects in the history of modern India and it will be a great challenge
for department of road transport and highways and its organisations to achieve this stupendous task in
This year the central government has declared 5694 km of roads as National Highways . This has
brought the total of National highways declared in ninth plan period to 23,439km.
The resources requirement for the removal of deficiencies on national highways is estimated to a
whooping Rs 1650 billions . Moblizing such funds is a big challenge . This is being done by
traditional budgetary allocations, as well as innovative measure like revamping of Central road fund,
funding
The central road fund seeks to distribute the total of 100% of cess on petrol 50% of cess on diesel in
following way:
The department of road transport and highways is responsible for administering the share of national
India has one of the largest road networks in the world. The country's total road length on 31 march
1996 stood at 33,19,644 km. The ninth plan laid emphasis on a coordinated and balnced development
2. Secondary and feeder road system covering state highways and major district roads; and
Substantial outlays were proposed for road development in the rural and tribal areas . During the
eighth
plan, Rs 3,221,41 crore was spent on central sector roads and Rs 12,622 crore spent on state sector
roads. Under the ninth plan , the allocation is Rs 8,862.02 crore for the central sector roads
programme.
Of 58,221 km of national highways, 39% are still single -lane ; 59% are two lanes; and only 2% are
four lane highways , which is desirable for arterial national highways . Thus , the government has
launched a radical program of upgrading three key corridors: (1) the golden quadrilateral, connecting
four metropolitian cities in India; (2) the east-west corridor, connecting eastern and western ends of
the country; and (3) the north-south corridor, connecting northen and southern ends of the country.
The NHDP aims to increase integration of the country by connecting four of its corners.
India has an extensive road network of 3.2 million km. It comprises national highways (57,700km)
state highways (124,300 km), district roads, rural roads, urban roads, and special purpose roads (for
military, port, etc.) Responsibility for the national highway network is divided between the Ministry of
Road Transport and Hihgways (MORTH) and the National Highways Authority of India ( NHAI); But
the maintenance of national highways under Morth is delegated to state PWDs also manage other
roads that are considered highways_ state highways, major district roads, and other district roads.
Both private and public operators provide Road transport services. The private sector provides all
trucking services, and about 70 percent of intercity bus services . The remaining 30 percent of the
intercity bus services are mainly provided by the State Road Transport Corporations (SRTCs).The
geographic coverage of India's highway network, at 0.66 km of highway per square km of land area,
is almost identical to the level of the United States More than 25 percent of natinal Highways are in
poor condition, and more than half the state highways are in poor or very poor conditon (Table 2.1).
An outdated freight vehicle fleet exacerbates the poor condition of roads. Modern multi-axle trucks
Widespread overloading by rigid two-axle trucks has long been a major factor in the serious damage
India's highways network offers very low levels of service, partly because of poor physical conditions,
the use of old vehicles, and unsafe urban crossings, encroachment activities along right of ways, and
frequent enforced stops at state highways are congrested. Truck and bus speeds on national highways
average 30_40 km an hour (compared with expected averages twice that). It often takes four or five
days for a truck to travel from Delhi to Kolkata _a stretch of 1,500 km and about a quater of the travel
The economic development of the country and consequent surge in the demand for transport service's,
and also the strategic needs of country necessitated expansion as well as improvement of the roads
The plan anticipated an increase in road length from 10-lakh km in 1960 to 10.50 lakh km in 1981.
The plan target was to achieve a density of 32.5 km of roads per 100 sq km of area, 44 km for
developed
agricultural area, 19 km for semi-developed and 12 km for underdeveloped area at an estimated cost of
The Mumbai plan set a target of 8.88-lakh km major district roads, orderdistrict roads and
classified village roads. This target was exceeded in 1978 with construction of 9.7 lakh km of
roads. The target of 98,000 km of state highways could only be achieved a decade later . Of the target
of 52,000 km only 34,619 km was achieved till 1 april 1997. Another road development plan (1981-
2001), was known as Lucknow plan of India road congress, has made a case for 66,000 km of
NHAI Establishment
The National highways authority of India was constituted by an act of Parliament, the National
highways authority of India act, 1998. It is responsible for the development, maintenance and
management of National highways entrusted to it and for matters connected or incidental thereto. The
authority was operationalized in feburary 1995 with the appointment of full time Chairman and other
Members.
The maintenance and improvement of roads, though an ongoing programme, has not produced the
desired result due to meager allocations. The country's road network generates large revenues. But
India spends merely 35-40% of this revenue on the improvement and maintenance of roads whereas
eighth plan. External aided projects for improvement of highways started in 1985 with the World
bank assistance and later on with assistance from the Asian Development Bank and Overseas
A study in 1994 estimated the annual vehicle operating codt on Indian roads as Rs 100,000 crore
(Rs 40,000 crore for National and 60,000 crore for State highways). The study further revealed that a
good roads network can reduce this coast by Rs 15,000 crore(Natoinal highway- Rs 6,000 crore and
State roads Rs 9,000 crore). Since the fuel component comprises nearly 15% of this coast, the resultant
FEATURES:
3. Overloading of vehicles
4. Poor infrastructure
6. Very unsafe
1. Operators
2. Transporters
. The industry continues to comprise small operator accounting for as much as 85% of the
total fleet. The industry generates considerable local employment opportunities. Nearly two
. The total transport function is shared among actors i.e operators perform only the haulage
function , while the marketing , aggregating, storing and delivery functions are undertaken
. The two principal manufacturer of truck viz., TELCO & Ashok leyland account for more or
less the entire fleet of heavy vehicles in the country. Owing to their monopoly, the sellers
. The industry productivity could br further improved since only one-third of trucks operate
between 300 to 400 km per day and about 12% trips are empty without load.
Based on growth trends, projections for future requirements if roads have been made by various
agencies like Planning Commission Ministry Of Surface Transport , India Road Congress(IRC). The
working group of roads for eight five year plan predicted that freight to 800 BTK and 3000 BTK
respectively in coming years. With an anticipated growth in GDP at 7% per annum, annual growth of
road
During the period 1951 to 1994, the average yearly growth of traffic has been of order of 8 to 10%
fig.2 indicates that freight traffic has increased from 6 billion tonnes km (BTK) in 1951 to 800 BTK
in 1999. Such a rapid growth has occured cmainly owing to the flexibility and accessibility offered
by road transpotation and passenger traffic has risen from 23 BPK (Billion-passenger km) to 2238
BPK
during the same period. Freight and passenger traffic is expected to increase to 1136 BTK and 3289
BPK
respectively, by the year 2005. The annual growth of traffic is 8 to 10%. Motor vehicle population has
grown from 0.3 million in 1951 to 33.8 million during 1996, marking a 110 fold increase.
Since independence, the number of motor vehicles in the country has been increasing rapidly. The
number of goods vehicles increased from 82,000 in 1950-51 to 17.96 lakh in 2005-06 . During the
same period, the number of buses increased from 34,000 to 4.25 lakh. The total vehicle population
The private sector, mostly unorganized and comprising individual operators, has a dominant
presence in the field of road transportation. It run almost the entire goods_carrier industry and also
owns nearly 73.75 per cent of the buses at present. After the Road Transport Corporation Act 1950
became operational, almost all states and union territories have nationalized passenger transport in
varying degrees by setting up corporations. In other cases, these services are operated by municipal
corporations or registered companies. At present, the number of such bodies stands at 69 with a fleet
strength_ of 1,11,538 buses carrying 6.88 crore passengers every day. The Motor Vehicles Act 1988
replaced the Motor Vehicles Act 1939 and introduced far_reaching changes in the road transport
sector.
The rapid growth in the number of goods vehicles is indictive of the increased volume of freight
handled by road.
The vechile population in India has grown from 0.3 million in 1951 to almost 60 million in 2006_07_
more than a hundred_fold increase. Correspondingly the traffic on Indian roads has also increased
exponentially with the freight traffic increasing from 23 BPK (billion person kilometre) to 1500 BPK.
At the same time growth in the Road Network in India has not been able to maintain a similar pace (as
is very evident from the table below). In the last 45 years the total lenght of roads in the country has
increased by 7 times, while length of National and State Highways (which carry the majority of traffic)
across the country has increased merely 1.7 and 2 times respectively.
2500000
2000000
1500000 HCV
1000000 LCV
500000
0
1996 1995 1997
The no. of goods vehicles has been steadily increasing; however it is still not sufficient to meet the
high demand. The annual growth of trucks during the period 1995_96 has been negative (-6.3%) as
indicated in fig.2 indicting that during this period the growth of other goods vehicles such as LCV's
was far greater, whereas it has sharply increased to 18.5% between 2000_07.
. The Indian Road Feight Index is a tool, which helps to make comprehensive analysis
of freight trends, route wise and date wise and helps to forecast the freight trends and freight
rates.
. The immediate impact of seasonal, regulatory changes can be predicted viewing the previous
trends.
.The Financial Institutions may use Indian Road Freight index to monitor their NPAs.
Rail Transport
Indian Railway consist of extensive network spread over 62,915 km covering 7068 stations
consisdered as the second largest in the world . Almost 85% of rail network was inherited from the
British. Operating on the three gauge - broad gauge (1676 mm) meter gauge (1000 mm) and narrow
gauge
(762 and 610 mm), train in India carry about 12 million passengers and 1.2 million of tonnes of
freight every day . Broad gauge although forming 64.5% of the route, generated 95.9% of
freight
output and 90.6% of the passenger output during 1995-96. Almost all the double/multiply track
sections
and electricfield routes lie on broad guage . Approx 12,306 route km , constituting over 19.5% of
the total network and 30% of broad guage network on Indian railway is electrified . This carries
approx.
41% of the pessanger traffic and 52% of freight traffic on Indian railways . Indian railway
system has developed a capacity to carry 410 million tonnes of originating revenue-earning traffic,
which in turn of transport output is 283 BTKMS. During 1995-96 the revenue earning freight traffic
moved by railways was 390 million tonnes growing at the rate of 7%. The total passenger traffic in the
year 1995-96 was 4018 million . In march 1999 , IR's network consisted of about 63,000 route-km.
It carried 4,441 million passengers and lifted 442 million tons of freight . About 14,000 route-km
was electrified. The network had 2,785 electric and 4,589 diesel locomotives, about 40,000
passenger coaches and 250,000 freight wagons in service. BG contributes about 95% of the freight
output and 90% of the passenger output. In 1998-99, 44% of passenger train km and 60% of BG
freight
gross ton-km were operated on electric traction. The total staff employed was 1.578 million . The
capital at charge was 36,829 crores and total investment was of order of Rs 54,00 crores . It is
the growth in freight traffic , 29% of rail links will experience traffic approaching or exceeding charted
As per World bank estimate in India , a unit increase in GNP generates an increase of 1.5 times in
fright transport demand and 1.9 timer in passenger transport demand. Expecting Indian economy
to grow more than 7-8% per year in a near future would imply dobling of freight transport output in
about 14 years and passenger transport output in 8 years. The increasing rate of urbanization would
Railways are the main mean of passenger and freight transport in the country. They provide
opportunities; trade , tourism and education to the people Indian railways has playingg an
important role for past 150 years in national integration . They developed in development of
agriculture and industeries in the country. Railway in India made a beginning on 16th april 1853
when
the first train covered a distance between Mumbai to Thane . After the first war of Independence
in 1857, the British ruler's developed railways rapidly . Development of railways help the British
rule in three ways - strengthened their hold on the admininstration of India, helped in the defence
against foreign aggression and provided a lot of the advantages to their own country. At the time
of Independence , our country had 53596 km long track. With the regard to the length of tracks,
India stood fourth in the world; there are 7000 stations on these tacks. In 1999- 2000 Indian railways
carried about 458 crore passengers and about 48 crore tonnes of goods. The network of railways of our
country in asia.
In all, IR supports a work force of about 1.6 million constituting 6% of the 27 million people
employed
control and management is vested in 9 zonal railways , each of which is an integrated , geographic
monoply interchanging traffic with all other zones. Thw railway system is further subdivided into 60
division each headed by Divisional Railway Manager. The freight tariff continues to be one of the
highest in the world . As a result, IR has continued to lose market share to the road subsector in spite
The Indian railway network can be broadly divided into the following segments:
1. High density corrridors (HDC), consisting of the quadrilateral joining 4 metropolitan cities
and the diagonals. aoan most of these corridors the current utilization exceeds the normal capacity.
2. Connecting lines that feed the HDC, handling mostly mineral traffic. The traffic growth dependent
3. Alternative routes, including some recently converted from meter gauge to broad gauge that could
provide relif to HDC, by rerourting traffic over relatively lower density , though longer, routes.
4. Low-density lines, both on BG and MG, have uneconomic traffic density with little prospects of
the
traffic growth
RAILROAD NETWORK
The railroads of India are the fourth heavily used system in the world , which suggests the large
investment made in rail transportation. In the mid-1990s , the railroad syastem employed 1.7 million
people and carried around 66% of India's goods traffic and 40% of passenger traffic.
Indian Railways is administrated and managed by the Railway boards, which is subordinate to the
Ministry of railways. The minister of the state railways assists the minister of railways . IRs is the
Asia's largest railroad system and the second largest state-owned system under a single management
in the world. The 62,915 km of route-length track run in three gauges: broad gauge (1676 mm)
meter gauge (1000 mm) and narrow gauge (762 and 610 mm ) . Around 17%, or about 11,000 kms, of
all guages
The railway is divided into 9 zones : centeral , easteren , northern , northeastern , northeast frontier ,
The eigth five-year plan provided for an Rs 45 trillion investments in railroad development. Priorty
was
to be given to track and roadbed renovation , additional electrifictation , the replacement of all steam
locomotives and improved signaling and telecommunications. By 1992 however, the fund actually
approved by the government were only 80% of eigth plan 's amount, and only 42% woulb be covered
by centeral government budget. IR was expected to come up with the balance. Thus, in FY 1994, the
billion from internal railroad were expected from world bank. The only way to cover these outlays
with syuch low budgertry support was with drastic increase in fares and raes in passenger service, In
FY 1993,
Indian railways made capital expenditure ammountig to Rs US$ 2 billion for items sucha s rolling
siock,
An example of scale of new rail line construction in the new broad-guage high-speed Konkan
railway, a 760-km coastal connection between Mumbai and Manglore featuring fifty-five station,
seventy-three tunnels, 143 major bridges and some 1,670 minior bridges. The line croses several
mountain ranges and runs some 380km through an earthquake-prone zone. Besides opening up
an all-weather transportation infrastructure between two important cities, it cuts the distance
India has a major railroad-equipment production industry . Although some stse-of-the-art electrical
components and equipment are imported , India is developing sufficient industrial capacity to meet
most
of its standard locomotive and passenger-car and ancillary equipment needs has made plan to
export locomotives . The reseach, design and standard orgnisation of IRs engage in research
and simulations aimed at further improving the quality of domestic achievements , which have
included high speed passenger trains and freight train and solid-state signaling equipment. Because
train crries some two-third of the nation's freight , there is a serious freight car shortage.
RAILWAY NETWORK
Indian railways is the largest rail network in asia and world second largest under one management,
Indian Railways comprise over one hundred thousand track kilometers and run about 11000 trains
every day carrying about 13 million passengers and 1.25 million tones of freight every day. Despite
being reliable, safe, eco_friendly and economical mode of transport, its share in both freight and
passenger traffic has comedown signigicantly over the years. The scope for public private partnership
is
enormous in railways, ranging from commercial exploitation of rail space to private investments in
railway infrastructure and rolling stocks. In order to have an integrated development of Trandsport
system, National Rail Development Programme has also been launched in December 2002 envisaged
an investment of about US$ 3.5 Billion in next 5 years. The programme envisages tremoval of
capacity
bottlenecks in the critical sections of railway network. The Golden quadrilateral is proposed to be
strengthened to enable running of more long distance passenger trains and freight trains and freight
speed. Programme also envisages strengthening of rail connectivity to ports and development of
multi_
model corridors to hinterland. Construction of 4 mega bridges costing about US$ 750 million is also
terrain at a cost of us$ 1.5 billion an expansion of rail network in Mumbai area at a cost of US$
NETWORK OF RAILWAYS
The policy formation and managemant of Indian railway board comprises of chairman and six
functional memebers. Wide powers are vested in the Board to effectively supervise the running of 15
zonal railways, metro railways (calcutta), production units, construction organization and other rail
establishments.
These are generally headed by General Managers. Four subsidiary organizations under the Ministry of
Railways viz. IRCON, FITES, CONCOR and CRIS, undertake specialized jobs in India and abroad,
The rail network is divided into nine operationg zones (based on geographical regions )and various
In addition to the above four manufacturing / production units, Indian Railways also has a
. Research, Designs and Standards Organization (RDSO) _IRs research and development
division and also the approval body for new technology _products.
. Central Organization for new Rail Electrification (CORE) _ Overseas major rail electrification
projects
Indian Railways has a large number of projects in the pipeline but progress is sloe due to resource
constraints. The Govt. has drawn up a development plan to improve and enhance capacity across the
The Plan was Launched in August 2002 an involves an estimated investment of Rs 15000 r over the
There are also ongoing projects to improve suburban metro system in Kolkata, Chennai and Mumbai.
There are being taken forward by separate nass transit organizations. In Delhi construction work is
Distribution of Railways: Distrivution of railways in the country is not uniform. While some area
Have dense network of railways, in other areas, railways are not available for long distances. Now, let
Areas with dense railways: Adense network of railways is found in the northern planins
between Amritsar and Kolkata. This region accounts for about half of the tatal length of railways in
the country.
Areas with sparse railway network: There are very few rail routes in the Himalayan mountainous
areas, north eastern India and Western Rajasthan. Find out the two main reasons of sparse railway
network in these areas. Railway network is comparatively lies on peninsular region than that of
northern plains.
States without railway track: Sikkim, Meghalaya and Arunachal Pradesh do not have any railway
track so far. A now railway track is now under construction in kashmir valley too.
Importance of Railways
Railways have contributed greatly in the economic development of India _ common man today cannot
think of living a comfortable life without railways. Railways affect our affect our life in many ways.
Let us
see what role railways have played in the economic development of our country.
Contribution to the agricultural development: Railways carry seeds, fertilizers and many types of
Contribution to the industries: Railways carry raw materials of different sources to factories unit.
Specifically the raw materials of iron and steel, cement etc. that is heavy and bulky, is carried by
railway only.
First, India's increasing reliance on market forces and its WTO-driven external trade focus will
necessarily precipitate dramatic changes in the Indian economy, its transport sector, and especially in
IR.
Second, Political perceptions rooted in the pllaned economy imposed uneconomic functions on IR, and
Third, as in every other country facing rail reform, allowing IR to languish in a situation of inadequate
financing and confilicting policy leadership will eventually create a large scale financial and transport
disaster.
IR is facing a financial crisis that needs to be addressed sooner rather than later. Freight market share
is down and falling, mainly due to low quality and overpriced services. There is alarge backlog of
investment that cannot be funded by thestate under the current setup, as the state doesnot have
adequate resources. The majority of investment are politically motivated and loss making. IR must
invest
At present , IR faces two possibilities : significant changes through reform , or a financial and
operational collapse. Thus India has high stakes in geeting rail reform right.
Out of three gauges , the broad pre dominants with 25,292 km . It costituted 47.13 % of total route
kms in
1951. Over the years, it has been increasing and in 2001 it was 40,620 km,forming 64.5% of the total
route km of 62,915.
Gauge conversion
the conversion of metre and narrow gauges into broad gauge has been an ongoing programme.
However, in 1970-71 , it was deciced not to construct any more metre and narrow gauge railway lines.
Railway station
In 1950-51 , the number of railway station s in the country was 5,976, which was gradually rose to
7,068 in
2001-2002.
locomotives
Steam locomotives
In 1950-51 there were 8,120 steam locomotives, whi9ch gradually incraesed to 10,810 in 1963-64.
Since it was decided to phase out of steam locos, their member started declining from1964 onwards.
In 2001-02 , the Indian Railways had only 209 steam locos in operation.
Diesel locomotives
The number of diesel locos in1950-51/1951-52 was 17, which went up to 28, and finally 45 at the
end of first plan. Since then the numbers has been continuosly rising and increased to 1,069 during
the first year of the fourth plan . With rapid phasing out of steam locos, the number of diesel locos
rose
to 4,919 in 2006-07.
Electric locomotives
In 1950-51, the number of electric locos was 72 and those were mostly employed on suburban traffic
routes. This number reached the four figure mark in 1980-81 and finally shot to 3,310 in 2006-07.
Investments in railways have been traditionally been funded by the central government (budgetry
report: a
loan in perpetuity on which railway pay a dividend @ about 7%) and through internal accurals .
However, in recent year there has been scaling down of budgetary support from a peak of 75% in fifth
plan ( 1975-80) to 25% in the ninth plan (1997-2002). The railways resorted to market borrowing to
partly finance its capital needs. In 2001-02, capital investment were funded in proportion of 20, 54 ,
26% budgetry support, internal resources and market borrowing respectively. IR deffered its dividend
payment to the central government and under allocated funds for maintenance and asset renewal , thus
travel directly from Jammu to Kanyakumari by 'Himsagar Express' . Passengers are provided a
number
of facilities. Facilities are travel in air conditioned , first class , second class sleeper and general class
are
available to cater to the need of people of different income group. These days onlydiesel and electric
locomotives are used . Trucks loaded with the goods are these days loaded on to special rail wagons.
Thus , goods loaded once are delivered directly to the consumer's warehouse or factory.
Metro rail has been run first in Kolkata and now in Delhi for reducing inconviences of the transport
in
Railways, in India have three type of tracks - broad gauge(1.69 metre), metre gauge(1metre) and
narrow gauge(0.77 metre). In this way, the multiplicity of gauges is the major problem of our railways.
Transfer of goods from one train to other involves loss of goods, time and money. The solution for
this problem is to change metre gauge tracks to broad gauge. Track sleepers and many bridges of India
railways have become old. Running high-speed on these track is not possible. Hence, these are being
replaced slowly.
Shortage of economic resources : Another major problem of IRs is the shortage of economic
A train failure not only delays the affected train, but also the trains threat follow. A 1998 analysis
found
that wagon failure cause the largest share of train failures, and the current rate of train failures causes
a loss of about 20% of line capacity. Thus a50% reduction in asset failure would result in a 9% gain
in
line capacity. The study concluded that any investment in reducing failure yielding high returns, and
that payback period was less a year on saturated routes dominated by freight traffic. Further analysis,
projecting to fiscal year 2008, found that the capacity released by a system 50% reduction in asset
failure would enable IR to carry 12% more freight traffic-that would in turn generate an additional
1. IR is among the larger railway system of the worlsd in term of route-km and passenger and freight
output.
4. Since IR is apassenger-dominted railway, low passenger fares have forced it to raise freight rates
5. IR has lowest employee productivity among the major railway's system, and there is a significant
IR
to offer competitive freight rates as well as raise internal resources for expansion of capacity, increase
FORCES
In every broad terms, IR server distinct market functions - freight , intercity , passengers , suburban
passengers, and a wide range of non-core functions. IR is the world's largest passenger railway and
the fourth largest freight carrier. Each of these four functions poses a different challenges if a better
Freight: The role of IR in the freight sector has been shinking partly because of a natural shift toward
trucking, as highways are built to serve a requirement for higher value transport; and partly because
IR has not been able to meet shipper capacity requirements at an acceptable price. Studies are
unanimous
in concluding that Indian definitely needs a larger rail freight role in the coming decades . But the
studies
also agree that IR cannot meet these needs unless it can create, and react to, market incentives; and
unless IR's social roles can be funded directly, rather than through the unsustainable policy of taxing
As market needs change and competition become more intense, IR has to reinvent itself to continue
playing an important role in the Indian transport market.
Customer perception of IR
IR should provide safe , fast, comfortable and socially responsible services at reasonable prices.
Inadequate capacity IR should add capacity on growth corridors and meet the transportation needs of
Market-driven services covering areas of comparative advantage should be provided . The focus
should
be high-quality services. IR should provide a services profile that meets changing customer
requirements
Freight movement funereally involves the use of more than one mode. The transport of commodities
by rail is increasingly becoming part of a multi_modal logistics chain, which os often integrated in the
Production or sales process. Door_to _door quality control of the transport chain will become even
more
important ofr th freight customer. An important quality factor will, therefore, have to be a consignment
tracking system along the transport chain. Rail freight rates are higher than road freight rates in a large
number of commodities and distance segments. The approach to the customer is not involved in
deciding freight policy and pricing. Claims and their settlement, Packing standards etc. also leave
ease of payment.
. Transform services profile in line with customer needs and provide high quality of service.
. Competitive pricing.
IR will need to break from tradition, chage mindsets and become a customer_focused aggresssive
. Customer Focus
Customer Focus
IR needs to concentrate on the following aspects that have a direct bearing on the implementation of
Capacity increase through higher efficiency, cost effective technology upgradation, more intensive
transport, reliable transits time, tracking system, customer friendly interface friendly interface and new
Pricing action to reduce and target subsidy, rationalize costing system and take measure to increase
Maintain and increase market share through market reserach, aggressive marketing, market related
Developing an appropriate regulatory frame work to ensure safety, fair competition and protection of
customers' interests.
International experience : Most major railways system have experienced the effects of competition
from other modes of transport - especially highways, that have seen the introduction of modern trucks
that are faster, carry higher payload , and have lower unit operating costs. They have adjusted to the
consequences of liberalization of economies on the transport market that led to more intense
competition, shorter leads and the demand by the customers for a much higher quality of services. To
protect their market share and viability, the railways have, in different degrees, responded with a
recognized management structure-that focuses on businesses and customers, improved asset and staff,
redefined services profile to non-core activities. The fundamental changes has been that services is
tailored to meet the specific needs of the customer, and pricing varies accordingly. Thus freight rates
are flexible.
The railways had set target of 600 million tones of revenue earning freight traffic for 2006_07, in
anticipation of strong economic growth. But the economic slow_down, which had started in the
second
half of 2005_06, continued through 2006_07. Due to reduced demand, the freight loading target was
revised to 489 million tones. The Railways had , however, achieved originating revenue earning
freight
loading of 492.50 million tones during 2006_07 , increase of 19 million tones over 2005_06 and 3.5
million tonnes over the revised target. For 2006_07, a target of 610 million tones of revenue
earning freight traffic (origination)has been set. The freight loading performance of Railways up to
December 2006, at 380.5million tones, is 23.2 million tones higher than that achieved during April_
December 2005 and 7.7 million tones higher than the proportionate target. The overall increase in
revenues earning freight traffic in terms of NTKM during April December, 2006 works out to 10.6 per
cent over the performance of April December 2006. A key element driving this outcome was the sharp
The losses incurred on passenger services are cross subsidized by profit earned through freight
services as also earnings from higher classes of passenger travel. In addition, cross subsidization exits
within the freight services since certain commodities, such as, salt, fruits; vegetables, etc. are being
carried at much below cost of operations. Since, Indian Railways do not receive any subsidy from th
Government to fulfill such Social Service Obligations, the level of cross_subsisization can only be
reduced through proper tariff rationalization, action for which has already been initiated in the Railway
Budget 2006_07, effective April 1, 2006. This is being attempted in consultation with the State
Governments with the condition that in case the State Governments do not agree ofr closure for their
own reasons, they should share the losses with the Railways on a 50:50 basis. Instructions have been
Railways have taken a number of initiatives to face competition from other modes and increase its
share
in the transport sector. Some of the steps, which have been taken in this regard, include rationalization
of freight structure by reducing the number of classes for charging freight from 59 to32, and reducing
the ratio between the highest and lowest freight under Station_to_Station Rates scheme.
Growth of Traffic
Freight traffic
In 1950-51, the freight traffic on railway was 93 million tones originating, of which the revenue
eraning
traffic was 73.3 millions tones originating. Since then, both the total traffic and revenue earning traffic
have been showing an upward trend though not consistently and have increased to 405.5 and 390.7
million
tonnes originating respectively in1995-96 with an annual average growth rate of 5.38 and 6.39 %
respectively.
Passenger traffic(suburban)
At the beginning of the first Five-Year Plan, suburban passenger traffic witnessed a decline from 872
to 753 million passengers originating with an average decline of 3.69 per cent annually. The traffic
resumed upward movement during the first two years of the Sixth plan with an annual growth rate of
0.68 and 1.67 percent. Incidentally, the 1,640 million passengers origination in 1981_83 was the
highest ever.
further by 2.8 percent in 1984 _ 85. Traffic increased by 6.9 percent in 1985_86 , and reached 1,485
manifest in the present sorry state of affairs. To present things in perspective, a status paper of the
ministry presented last year stated that while index of inputs cost (with FY71 base year) has risen
by 16 times, the freight rates have gone up only by 10 times and passengers fares only by 7 times.
Freight traffic
In term of he share in freight movement, the share of railways has fallen from high of 89% in FY51
to
40% at present. The status paper has identified the fact any improvement in the share of freight traffic
is
facing a serious challenge on account of increase in freight rates in respect of certain important
commodities . This has les to diversion of traffic from rail to road . This increase in freight rates has
been at the cost of subsidizing passenger traffic. Just to provide an example, the cost of making a 6-
minute STD call from Delhi to Lucknow is equal to the Mail/express fare between two places. Cost of
travelling from Mumbai to Hyderabad is around Rs 216 by bus while it is just around Rs 69 by train.
The passenger trains fares are on an average 2.5 time lower than bus fares in the country-making
them one of the lowest in the world. But ironically, despite all the cross-subsidization , the railways
have been losing passenger traffic over the years, primarily due to delays and poor services.
A concise of the load carrying profile of the Indian Railways is shown below-
commodity
Food grains
Iron ore for export
Sources of bulk commodities has increased from 80% to around 98% in last 30 years in terms of
tonnage. Coal has continued to remain the most important bulk comodity trasnported by railways
and its share has increased from 30% in FY71 to arrond 60% at present.
The reason for this development can traced to the following two reasons-
. Relocation of industries closure to the market. For eg, the coming steel plant in the western
parts of the country has lowered freight movements from east . Also with the coming up of
refinery capacities in the eastern regions of the country, the need for transporting it from the
. Secondly, with laying of around 2,000 kms of pipelines an the last three to five years, the
Strategy
In order to recover lost ground, the recent status paper had presented a comphrehensive bulk and
non-bulk strategy for Indian railways. The bulk freight strategy would consist of the following main
elements:
. A detailed mapping of the flows of bulk commodities across various modes of transport for key
A strategy for maximizing non-bulk freight would include the following main components:
origindestination
Freight proposal
For the next fiscal, the railway ministry has put faith on the buoyant economy by targeting freight
traffic
of 475 mn tons, up by 5.5% from the present year actuals and freight income of Rs 230.38 bn.
Towards
this end, the minister has put forward the following proposals on freight rates:
. No increase in the freight rates for essential commodities like food grains, sugar , edible salt, oils,
. Keeping in view need to encourage higher industrial, increase in rates kept less than 5% for core
sector commodities of coal, iron and steel and certain petroleum products.
previous year. An annual growth rate 5% has been assumed for the Ninth fivr year plan period.
With the reference to the fig.1 we can say that the Indian Railways freight traffic volumes have
increased over the year but the railways share of the total freight movements has reduced drastically.
150
100 rail
42 40
89 72 road
50
58 60
11 28
0
1950-51 1960-61 1993-94 2005-06
The railways and the roadways are the two main modes of transport carrying the bulk of freight and
passenger traffi. Freight transport by road has risen from 6 billion tonnes kms in 1951 to 400 BTK in
1995 and passenger traffic has risen from 23 billion passenger kms to 1,500 BPK during the same
period.
Freight and passenger traffic were to increase to 800 BTK and 3,000 BPK respectively by the year
2002.
Commercial vehicles in India are able to run only 250 kms on average per days as compared to 600
Successive policy statements and the plan documents have recommended that the railways should be
given the lead role in the transport sector because of their greater energy efficiency, eco-friendliness
and relative safety. However, the railways have continued to yield their dominant position to the road
transport. There is a major shift of movements of freight and passengers from rail to road since 1951
as
120
100 13
20 30
80 rail
72 58
60
40 80 87 road
70
20 28 42
0
1950- 1960- 1993- 2000- 2005-
51 61 94 01 06
The main reasons for continual slide in railways' share has been the inability of the sysytem to
cope with the traffic growth of the growing ecnomy and under supply both quantitatively and
qualitatively.
Faced with capacity constraints, the railway system chose to concentrare on the movement of the
bulk materials for the core sector like power, steel, cement etc, thus losing it clientele in the high
value
non-bulk sector, which often recorded higher growth rates. The skewed tariff policy of subsidizing
passenger traffic and an increase in freight rates are driving away even some of the long distance bulk
Railways freight traffic has come down from 89% in 1951 to 40% in 1995 with respect to the total
freight
The main reason for this can be attributed to the fact that road sector has experienced booming
growth,
fast mode of transportation of short distance, can go for Door to Door services and has been gradually
eating out of the rail freight traffic. But from last few years the Indian start booming because of their
20 2
20 3
20 4
20 5
20 6
7
0
-0
-0
-0
-0
-0
-0
0-
03
06
01
02
04
05
0
20
06
91
93
95
19
19
20
20
19
2500
2000
2000
1500 1136
800 Roadways
1000
350 375 400
500
6
0
51
95
99
06
19
19
19
20
COMPARISON BETWEEN RAILWAYS & ROADWAYS IN TERMS OF FREIGHT
TRAFFIC
. No increase in the freight rates for essential commodities like foodgrain, sugar, edible salt, fruits
and vegetables.
Freight Rates
. for all commodities, freight will be charged now based upon the carrying capacity of wagons.
First and foremost the offers are empty not because of their inefficiency but because of a policy that
keeps Railways poor in the name of "populism". The people who run the organization enjoy
practically no
freedom-in fixing prices, generation of resources, and deployment of resources or even planning day-
to-day activities.
The input costs go up but they are asked to keep prices constant because the Minister wants it.
Electrification would improve efficiency but no funds are allotted. Some sections are unviable but
Railways can design better waves, manufacturing large number of standardized waves but some
bureaucrats want sixteen classes often in the same wall. Their problems are unnecessary paperwork.
No money is allotted to track improvement but more Railways zones are created to increase paper
work and thereby create unproductive employment of clerks who will be busy during the unnecessary
paperwork.
The competition between railways and roads will intensify in the coming years with substantial
investments to improve the highway network in India . For the most part, the highway is being
improved
run parallel to the high-density railway routes. In addition, larger capacity and modern technology
trucks
that offer advantages of higher speed, reliability and lower cost, are also being progressively
introduced.
Thus the railways need to improve quality of service, customer focus and services profile to meet the
the bulk transport market and has not focused on non-bulk high margin traffic. The tariff for freight
As mean of transport Railway in India have been loosing market share steadily to Roadways in the
past 50 years. From 20:80 ratio of traffic between roadways and railways around independence in
1947, today the ratio is just reversed! Roadways are important too; they directly benefit one in every
six Indians, represent the most unorganized sector in India represent the largest private enterprise in
contemporary
India. Sadly Indian Railways should also be doubled the most lrthal weapon system killing more
Indian diseases put together causing maximum pollution in the air, crippling the largest number of
The first and foreman is the separation of cause an services. People who make the roads and maintain
them do not run buses/trucks. Those who manage airports do not run airlines. Even Indian telephone
department has separated cause from service providers. ATIT improved considerably once they
seperated equipment from services. Railway those who run trains for the usage.
The current system of long distance tains/freight train is simlar to circuit switching in telephoney. In
current system of telephony when two parties are coming over the traditional telecom network, a
virtual
pain of wires is dedicated to the parties, end to end, throughout the length of the conversation.
Typically the conversation in one-way, full of poises, repetition etc and the remittent use of the
channel capacity is rather low. Packet suitably which led to Internet, TCP/IP , work over IP and many
other developments, break data up to packets and send them over any of the existing paths and
The railways were losing out to roadways, which offered a cheaper, door to door service. Lowering
freight rates alone would not do, as the main problem now is non-availability of wagons for export
purposes.
The problem with Railways itself is a deeply entrenched one. Improvement in roads saw the railways
steadily losing its share in national freight movement. Due to political constraint, passenger fares wre
held down at moderate levels while the deficit was partially overcome by increasing freight rates. This
also led freight traffic towards the roadways. The railways found itself in a bind, where increases in
freight saw its share slipping while increaase in passenger fares was at the mercy of political was
compounded for the largest employer in the country by the implementation of the new pay scales
Marinating the general freight rates at current levels, while bringing down the freight rates on
While lauding the proposal to fully computerized railways accounting, the chamber has criticised the
proposed recruitment plan when the focus should have been on redeployment.
Welcoming the decision to hold passengers the fares steady, the Bombay Chamber of Commerce and
industry had said the proposal to classify petrol for trainload movement, lower freight rates and reduce
the parcel and luggage rates would boost goods transport by rail.
While cheering the steady freights rates, the Federation of Indian Export Organization(FIEO) has
expressed concern at the lack of any specific proposal for exporters. The FIEO President, Mr. M.
Rafeeque Ahmed, said there was need to introduce more train from upcountry exporting centers of
different ports.
We expect the economy to continue its turnaround. This year the railways carried 23 million tones
extra freight than forecast. Therfore,the projection of 25 million tones of revenue earning fright for
next fiscal cannot considered unrealistic. The Tenth plan documents projects an increase of 5% in the
originating traffic.
It is imperative for IR to develop an innovative approach to minimize losses on a large number of low
density branch lines, which account for significant losses. The first step woukd bo to obtain reliable
estimates of losses incurred on each such line. The next step would be to consisder various options for
eliminating or reducing losses. One option would be to put on "concession" the essential railway
infrastructure of such lines for an extended period, where the concessionaire would be required to
provide specified servicesat the minimum and pay a fee to IR. Some of these lines would
act as feeder for freight traffic to the core rail network of IR. In some cases, where there is little
freight traffic , IR may end up with negative concession _ it may pay the concessionaire for operating
the line.
The international experience is that a private sector concessionaire is able to operate the loss-making
branch lines at profit it manages the line as a small business with high productivity and an acute
business focus.
Environment for reform
There are certain essential requirements to bring about the desired institutional changes in the
3. Reform process to be driven from outside the raiway by an empowered body mandated to achieve
objectives.
Despite a loss in term of market share to road industry, a growyh rate of 8% is being assumed for tenth
plan period for railway and even higher growth rate will have achieved in the eleventh plan in order to
The railway will improve its financial health by plugging revenues and bringing down its operating
ratio to 94% in next couple of years through aggressive markrting to maintains its share in freight
movements.
NORTHERN railway achieved 46.99 million tonnes in 2005-06, its highest ever figure and earned Rs
240 crore extra revenue through a combination of savings and surplus funds.
NORTHERN railway saved 108 crore in operating express and collected anotherRs 122 crore surplus
the EU. Fortunately, experience else where has also established that though painful, reform is possible,
and that the process must be based on several principles that have increasingly been accepted in India
in other sector.
1. First, railway enterprise function should be separated from government's policy development,
2. second, enterprise function should become linen of business, including social services that
3. Third, the organization of the railway enterprise will emerge as a mixture of factors and objectives
including geography, market location and dispersion and the desired role of public versus private
4. Finally, non-core activities should be managed separately, or even fully separated from the railway
enterprises so that the management attention can achieve an appropriate focus on core activities.
Indian railway are getting more market savvy and for thr 1st time, the monolith is talking undercutting
competition to cornor more markrt share freight. In July 2005 a lean sesson freight policy was
later in that year, a peak sesson tariff policy was uneveild under which about 10% premium was
charged for carrying awhole range of commodities. The railway now plan to offer packages for return
round trips where return trips would be at discount of two single journeys in opposite direction.
Railway ministry officials point out that the improvement in rake availability due to reduction in
trunaround time wagons has given the department a headroom to launch initiatives that could easily
Thr two railways in 1992 carried almost exactly the same volume of passenger km (314 vs 315 billion
pkm), but china railways manged to carrry that of Indian railways 257 billion km. Wile India’s road
network officially grew 600,000 km, China’s road grew by 376,000 km. IR is a passenger dominated
railway with 59% of its transportation output but barely 30% of its revenues from passenger services,
while CR is freight-dominated deriving 76% of its transportation output but only 49% of its revenues
from freight.
Although India's road network was more extensive than that of China in 1992, the quality of the road
network in both counteries was severly deficient relative to the standards of modern highways in
virtually
Over the ensuring decades decades , China leap-frogged India in both railways and highway
development .
.China took advantge of the macro-economic slowdown following the asian currency crisis that began
in 1997 to more than double its spending on highways, from $13 billion in 1997 to $ 27 million per
annum or more during the ensuring years, thus turning adversity to advantage, as highway building
is estimated to have increased China's GDP by a full 2% per annum over the subsequent yeras. India
. Rail network extension and capacity expansion also dwarfed that in India, as the doubl-tacked
network
was extended by 69%, electrified track km doubled, and the overall network route km extended by
24%.
The later included 12,367 km built by new local rail corporation, many with private participation,
owned and operated seperately from the national railway , unlike India, where IR retained a
In contrast, china,s road network officially grew by only 376,000 km, but the emphasis was on the
areterial network. By 2002 some 25,130 km of expresssways with minimum 4-lanes and controlled-
access feature plus another 27,468k of 4-lane dual carriagrway highway without controlled access
With the adoption of economic reforms, India's growth accelerated to an average annual rate of 6.1%
over the decade, substantailly above rather earlier growth rates, but well below those of China. Rail
passenger traffic grew at 4.6% freight traffic grew at a rate only 2.7% aspassenger trains continued to
preempt constrained rail line capacity , there was little investment in deteriorating performance and
Despite limited expenditures on development of modern highways and increasingly congested traffic
conditions, trucking absorbed the major freight and passenger traffic, in a part by continuing to
overload trucks by wide margins, thereby accelerating road deterioration and worsening an already
RAILWAYS
Comparative Railway Assets and Physical Performance of China railways and Indian railways are as
explainedWhile in 1992 IR had a somewhat larger network infrastructure and rolling stock the
utilization and productivity of the assets was quite different. While the two carried almost the same
volume passenger, CR carried 1,157 billion tkm of freight or 4.5 times through far efficient
revenues from passenger services, while CR is freight-dominated deriving 76% of its transportation
output but only 49% of its revenues from freight,the 314 billion pkm carried by IR constituted only
20% of India's estimatred passenger pkm, While 315 billion pkm via CR constituted 45% of china 's
CR carried 1,157 billion tkm of freight or 4.5 times through far efficient exploitation of track,
locomotives and wagons lower priorty to passenger services while IR's 257 billion tkm represented
Financial Performance
The operating ratio for IR is shown to deteriorated from .90 in 1991/92 to .98in 2006. The operating
ration for CR is much healthier at .74 in 2006. Very many factor contribute to the performance of any
railway system, particularly for such large, complex system as China railways and Indian railways. At
1. Physical features
2. Institutional determinants
As indicted above, in most dimension the performance of China Railways has come to surpass that of
3. Labour productivity
4. Maintenance of assets
5. Financial profitability.
CR's superior performance can be attributed largely to six closely interrelated groups of factors:
2. Commitment to reform
4. Introduction of Quasi-competition
5. Introduction of privatiztion
The experience of China shows that much will demand, in the first instance, on whether the new
government of India musters a political consensuses to come to grip with overwhelming failure of
Cooperative evaluation of investment experience in China and India suggests in following areas:
. Invest in areas that would help increase productivity of existing assets and reduce capacity constraint,
. Invest in improving maintenance of infrstructure and rolling stock so that these are used to full
potential, and loss of capacity due to failures and restriction id situated drastically.
. Invest in reas that would help reduce unit cost or increase margins.
. Invest for capacity enhancement on corridors where additional traffic is expected.
ANNEXURE
The following important annexure relevant to this study are enclosed.
Questionnaire
Address:
Telephone No.: