Indian Railways at the Crossroads

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Indian Railways at the Crossroads

Introduction
Indian Railways is more than 150 year old. The roots of IR are traced back to the 1800s, when India was under the British rule. First commercial passenger train ran in India in 1853 from Bombay to Thane. Indian Railways, the largest railway network under a single management and the largest employer in the world. It is a lifeline of country. The development of IR since the mid-1800s till the early-2000s.
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Railway networks were initially developed by private companies. Always targeted by public during any rally, agitation etc. Indian Railways covers 64000 of route km along length & width of the country. It runs 12000 trains every day. Presenting a railway budget separate from the annual general budget After Indian Independence in 1947, railways continued as a central government department.
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Difficulties face in the later part of 1990s Freight traffic fall from 89% in 1950s to 40% in early 2000s Passenger traffic fall from 80% in 1950s to 20% in early 2000s After independence many rail network also got divided IR is a very large organization in India that played a :
Social role Political role Economic role

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Indian Railways at the Crossroads

Concepts used

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Indian Railways at the Crossroads

Time Periods
Peak Period: April- June, October- December Reasons: Holidays, Festivals, Climate Off Peak Period: July- September, JanuaryMarch Reasons: Exam Time

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Indian Railways at the Crossroads

Stretch Related Concept

Facility Stretch: Additional Trains to avoid the rush. Ex- 1) Special Trains to Bihar during Chatt Puja. 2) Special trans to West Bengal During Durga Puja.

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Indian Railways at the Crossroads

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Equipment Stretch: Extra Bogies are added during peak period. Ex- Gaya-Chennai (12389-12390) 2-3 bogies are added during February for Pongal Festival.

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Indian Railways at the Crossroads

Changing demand to meet supply

Modify time: Ex- Kerala express( In between Bhopal station, time of arrival- 1:00 am) Bhopal Express (Starts at 5:45am reaches 3:45pm)

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Indian Railways at the Crossroads

Consumer Purchase Decision for IR

Pre-Purchase Stage (Recognition of need, Information search and Evaluation of alternatives).

Service Encounter Stage (Customer gets the experience of service).

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Post Encounter Stage (Evaluation of service performance and comparing it with the expectation).

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Pre Purchase Stage

Need for travel in recognized by the consumer. Destination of travel & Mode of travelling is considered under this stage. Searches different modes: Roadways Railways Airways Waterways (Cruising) Time of Journey Fair (Prices) Purpose of Travelling Availability of Seats

Modes Evaluated on the basis of :-

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Service Encounter Stage

Customer needs to make reservations.
Online booking Offline (through Booking Counters)

Travelling Experience

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Starts when person enters Railway Station Cleanliness Staff Conditions of Compartment Catering Services Delay in Travel Schedule Coolie Availability etc.
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Post Encounter Stage

Customer compares the experience with expectation. No Gap in Expected Services & Perceived Services,
Satisfied (Continue with same Service)

his

Gap in Expected Services & Perceived Services,

Dissatisfied (Will scout for better options as per affordability). his

Future decision will be based on his experience in both pre purchase stage as well as service encounter stage Word of Mouth counts a lot when a person share travelling experience with family & friends.
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7 Ps of Marketing
Product People

Price

Promotion

Physical Evidence

Place

Process

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Indian Railways at the Crossroads

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Product
There are various categories of trains run by the Indian railways. There are Non Stop trains, luxury trains ,Super fast trains, Trains for the lower section of the society.

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Indian Railways at the Crossroads

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Place
Trains run by the Indian Railways are divided on the basis of zones like the Central Zone, East Central Zone, East Coast Zone, Eastern Zone.

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Indian Railways at the Crossroads

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Price
Indian Railways follow different pricing strategies based on the following categories
Consumer Groups Age based pricing Quantity based pricing

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Indian Railways at the Crossroads

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People
Railway Employees having a personal contact with the people like Enquiry and Reservation clerks. TTE, Railway porters, Railway staff serving customers .

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Promotion
Indian Railways promotes its new services through the website and banners & hoardings at the stations. It also uses advertisements through television. It promotes the launch of various schemes targeting tourists, students and daily travelers Luxury trains such as Palace on wheels , Deccan odyssey have packaged tours over many cities.
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Process
Come to the Railway Station Collect the ticket Confirm reservation Travel in the Train Reach the Destination

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Physical Evidence
Good Infrastructure Parking facilities Waiting Halls Catering Facilities Railway announcements TV on Platforms Securities

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Porters Five Forces

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Intensity of Existing Rivalry

Declining growth rate of industry. Government limits competition Large industry size

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Indian Railways at the Crossroads

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Threat of Substitute
Substantial product differentiation High cost of switching to substitute Limited number of sustitutes

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Indian Railways at the Crossroads

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Threat of New Competitors

High Capital Requirements High sunk costs limit competition Industry requires economies of scale Entry barriers are high

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Indian Railways at the Crossroads

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Bargaining Power of Customers & Suppliers

Customers Product is important to customer Large number of customers Suppliers Self-sufficiency in production of rolling stock

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Indian Railways at the Crossroads

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SWOT Analysis

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Strength
Availability of abundant low cost land near country stations provides possibility for development Less damage of goods compared to other modes of transport Better connectivity across the length and breadth of India More carrying capacity of goods Largest commercial employer with almost 1.5 million staff It transports over six billion passengers and almost 750 million tons of freight annually Approx. 120,000 km of tracks and nearly 8000 stations

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Weakness
Passenger sector is loss making Accidents and delays cause a dent to the image Facilities not comparable to international standards still Last mile problem is there

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Opportunity
It can capture large chunk of container traffic by introducing block container trains operating at passenger speeds Its 70% of revenue and most of its profits comes from freight sector and there is a tremendous growth in emerging companies, hence has a great future for freight sector Operating ratio has been decreasing drastically in last 10 years
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Threat
Low cost of airlines Increase in allowable gross weight of road vehicles Possible introduction of double road trailers High accident rates

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Ques. In India, the social role of the railways was far more prominent than their economic role. Discuss the social role of IR. Also discuss the difficulties faced by IR in balancing its social and economic objectives. How do political considerations affect the operations of IR?

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Social Role Of Indian Railways

The Indian Railways has emerged today as the main vehicle for socio-economic development of the country, as Indian Railways is one of the largest systems in the world. When there was famines in several part of country between 1870-1880, railway plays a important role by providing relief to the affected areas. After independence Indian railways introduced several Janta Express with second class Ac to make travel more affordable and convenient. In 1991 Indian railway introduced Jeven Rekha or lifeline express in association with Impact India Foundation this was world 1st hospital train.
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As it was government department Indian railways had the responsibility to fulfill social obligation by providing less fare to certain class of passengers. It provide verity of service from 1st class to sleeper class. It also have division like AC coaches and chair class to suit all pockets and preferences. Although it is world largest employer, it provide various benefit to employee and their families like free education to their children in railway school and colleges, along with free medical and travel concession to them. It also provide medical aid and other facilities to people in affected area and also help to transport them to health and relief camps.
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The difficulties faced by Indian Railways

Social Role The most critical issue of Indian Railways is safety. Indian railways faces number of accidents which faces several hundred lives. Competition with air transport and road transport. Economic Role Budget- difficulties in preparation of railway budget. There was usually deficit in internal resources, most of the financing come from budgetary support of making borrowing.
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Political Consideration
In 1890 the British government passed a railway constitution, given consideration and operation of railways in India. IN 1920 East India Company was setup to suggest the recover from ravages of war and recommend the suitable change in working of Indian railways. To please their consideration several politicians used their influence to get lay line to remote areas thus bringing to railway network. Indian railway was obliged to purchased most of equipment from the government run factories and their was no guarantee of the quality.
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Ques. Although IR was an important part of the infrastructure of India, it had to contend with a number of problems. Discuss some of the problems faced by IR. Comment on some of the suggestions given to restructure IR. Do you think privatization is a viable option? What efforts was IR making to improve its operations and services?

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Problems
Too large to show flexibility in adapting to the changing requirements. Dilemma between Social responsibility and Profitability. Operate in unprofitable areas. Political influence. Shortage of resources leading to engineering and maintenance faults. Human error. Increase in number of accidents. Increase in the competition from roadways and airlines. Huge debt burden.
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Should be privatized or not?

Indian Railways is the biggest railway network in the world that is being managed by the state. Complete privatization of IR would not be a good idea either broadly because of the following reasons. Railways were built in India for national integration, economic development and exploitation of resources, and above all for military purposes. Railways have continued to be a highly visible national symbol, and the role played by them in times of crises like the Gujarat quake, Orissa cyclone and military operations like Kargil is something that cannot be replicated by any corporation. Nor can a corporate structure contribute to economic development and national integration as the Railways have done.
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Defense services have built up alternative arrangements in all elds including postal service and communications network, but are completely dependent on Railways for transport. All the strategic rail lines are owned and operated by the Railways. There is no comparison between other infrastructure facilities and railway facilities as far as transport by rail is concerned. This fact needs to be kept in view while coming to any conclusion on the suggestion about corporatization of IR. Railway operations require constant co-ordination with state governments and other wings of the Centre. If only for these reasons, it is necessary that the government exercises direct control over their operations, which is possible only when they are run as a departmental undertaking. Thus, the role of the railways is too critical for the Indian economy to handle it completely into the private hands. Also, due to the national importance it'll be never be actually be possible to pass on IR to complete private hands as government intervention will be required for most of the decisions. 21-08-2013 Indian Railways at the Crossroads 40

Conclusion
Trade-off b/w Social Responsibility & Profitability Time bound 17 Indian Railway Zones (Metro Railway, Kolkata) Safety

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Recommendation
Break Political Bureaucratic nexus GAGAN Develop organization like CRIS Trespassers to be prosecuted- Railway tracks Independent Rail Tariff Authority Wi-fi facility Special AC coaches: Rajdhani & Shatabdi, excellent ambience
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