Very tough time for Indian Railways indeed.
Biggest expenditure head for railways used to be Salary & pension(30%+20%=50%) and next is fuel 18%. (2014-15 figures)
A lot of cost cutting has been done in the fuel cost in last 1-1.5 years through efficient procurement of Electricity directly from Central Agencies instead of State Electricity boards and getting discounts in procurement of diesels; through saving of electricity through promotion of energy efficient alternatives. Not very much scope is there for further reduction.
With...
more... implementation of seventh pay commission, the Salary & pension head is slated to consume about 68% of total revenues of IRlys, which is not at all sustainable in long run. It is time for Rly employees to be ready to come out of comfort zones and be ready to restructuring so that the Rly operation/ manpower requirement gets simplified and efficient. They have to steam line their work procedures to suit the requirement of current economic scenario. Indian economy very badly need an efficient railway system which should carry much bigger portion of national freight and passenger traffic, in order to reduce its logistics cost which presently is much higher than the other countries. High logistics cost is seriously hampering the competitiveness of our exporters as well as importers and domestic industry. Else the inherently inefficient Road and Airlines shall kill the inherently efficient Rlys due to inefficient operation and management of the later. This will be very bad for Indian Economy.
Along with other steps like hiving off of the non core activities to the more efficient private sector; the cost of operation & manpower cost of IRlys shall can be drastically curtailed .
Railway operation has a very big advantages over road like:
substantially lesser energy requirement and inherent safety as compared to air and road travel.
Very low friction (6-10 times lesser than road & tyre)
Very large axle load (25-30T) permitted as compared to road (about 8T),
Very large volume 5000+T/ freight train as compared to 20T/ truck or
2000 passengers/train as compared to 50passengers/bus
The above Herculean advantage of economies of scale should result in lower manpower requirement perTof Freight carried or per person carried. The manpower cost of Rlys should be much lesser than the manpower cost for road ways and air lines. But surprisingly it is not so, it is rather reverse. This strongly indicates towards inefficiencies inIRrlys structure, operation & management which need to be weeded out.
Profitable segments for IR are:
(a) Freight charges is about 65 % of total revenue are one of the highest in the world,
(b) Upper class a.c. passengers who give 8% of total revenue, are paying higher fares than ac bus fare and only slightly lesser than the air fare (much superior service).
(c) Any further increase in rates of above has resulting the switching over of the traffic to rail/road.
Major loss making segment the second class travel contributes about 18% of total revenue. Even if the price of the second class travel is drastically increased not all the financial problems of IRlys shall be solved. If second class fares are increased by say 2-2.25 times in order to make it no profit no loss, the fare shall be equivalent or more than the bus fares, and there will be switching over of passengers from rail to road.
No permanent solution to woes of IRlys is possible without adopting the latest state of the art technologies, operational practices, and restructuring of organization structure to suit the current scenario.
