ANALYSIS&nb= sp; OF THREE YEARS

PERFORMANCE OF INDIAN RAILWAYS

&n= bsp;

A Venkateshwar, IRAS, Director/C-TARA/SCR

= Ø Indian Railways have exhibit= ed signs of a turnaround in the last three years and the improvement in the performance has been significant , especially in FY05-06. An attempt has therefore been made to analyze

<= span style=3D'mso-list:Ignore'>(a)&= nbsp; the improvement in FY05-06 over FY04-05 and

<= span style=3D'mso-list:Ignore'>(b)&= nbsp; the projections made for FY06-07= over FY05-06.

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= Ø The analysis is based on :

= a)&n= bsp; 04-05 - actual performance as per accoun= ts.

= b)&n= bsp; 05-06 - likely performance as per revised estimates .

= c)&n= bsp; 06-07 - projected performance as per budget estimates .

<= span style=3D'font-family:Wingdings;mso-fareast-font-family:Wingdings;mso-bidi-f= ont-family: Wingdings'>Ø The analysis is contained in= the three annexures enclosed.

Annexure – A : Financials of revenue operations and capital investments.<= /o:p>

Annexure - B : Pattern of Goods traffi= c.

Annexure - C : Pattern of Passenger traffic. =

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( = Source : Railway Budget 2006-07 Documents – Explanatory Memorandum)

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ANALYSIS OF Financials

= Annexure a

I REVENUE OPERATIONS<= /b>

Total receipts=

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      In 05-06, share of passenger= earnings to total receipts dropped from 29% to 27%, while share of freight earnings = went up by 2% to 65%.

o      = Recorded a growth o= f 15% ( 7375 Crs.) in 05-06 over 04-05 , due to a 7% increase in passenger earnings= and 11% increase in freight earni= ngs.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Are expected to increase by = 10% (5412 crs.) in 06-07., due to a 11 % increase in passenger earnings and 10% increase in freight earnings.

In 06-07, it is expected that ,     <= /b>

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Misc. receipts will grow by = 8% against 3% in 05-06, due to increase in subsidy.        =

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Passenger earnings will grow by 11% against = 7% in 05-06.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Goods earnings will grow onl= y by 10% against 19% in 05-06 during which period there was approximately an 8% increase in the permissible loading per wagon. .

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Sundry earnings will fall by= 27% against a growth of 56% in 05-06, due to the continued transfer of catering activities to IRCTC..

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Traffic Suspense will increa= se by 50%, against a drop of 70% in 05-06.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Goods earnings will continue= to constitute 65% of total receipts.

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Total expenditure

<= o:p>

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Recorded an increase of 11% = ( 5069 Crs) in 05-06 over 04-05.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Is expected to increase by 1= 0% ( 5120 Crs) in 06-07.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Ord. Wrkg. Exp. are expected= to increase by 9% ( 3116 Crs) in 06-07 (against 5% - 1795 Crs in 05-06) due to= a 18% increase in fuel expenditure and 12% increase in repairs & maintena= nce.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Increase in Appr. to Pension fund by 12% ( 850 Crs) over 0= 5-06 against a 4% ( 270 Crs) increase in 05-06 over 04-05

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Increase in Appr. to DRF by 20% ( 703 Crs) over 05-06 again= st a 33% (904 Crs) increase in 05-06 over 04-05.

Surplus/Excess

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Likely to increase by 111% in 05-06 over 04-05, due to increase in total receipts.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Expected to increase by 7% in 06-07

o      = Reduction in Appr. = to Development Fund by 48% ( 893= Crs) in 06-07.

o      = Capital Fund renewe= d after 8 years

o      = Increase in Appr.to= Capital Fund by 47%( 1185 Crs) in 06-07

II. Capital Investments

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Reduction in Govt. support b= y 15% in 05-06 and by 5% in 06-07.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Government support dropped f= rom 55% (8468 Crs) of total Capex (Capital expenditure ) in 04-05 to 38 % (7185 Crs) in 05= -06 and is placed at 29% ( 6800 Crs) of Capex in 06-07.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Railways’ own funding<= span style=3D'mso-spacerun:yes'> has increased from 25% of Capex in 04-05 (6888 Crs) to 42% ( 104= 47 Crs)   & 49% ( 12870 Crs) , largely due to incr= eased appr to DRF and Capital fund.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      In both 05-06 & 06-07, borrowings from IRFC funded 18% of the total capital investments.

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Appr to Capital fund increas= ed by 65% ( 1575 Crs) in 06-07.

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Appr to Development Fund dro= ps by 33% ( 397 Crs) in 06-07.

<= span style=3D'mso-list:Ignore'>o&nb= sp;      DRF gets increased appropria= tion by 40% ( 1221 Crs) in 06-07.

<= span style=3D'mso-list:Ignore'>o&nb= sp;      RVNL funding increased by 13= % (57 Crs) in 06-07.

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Capital investments maintain steady growth of 23% - 24% in 05-06 & 06-07.

o      = Steady increase in = share of revenue receipts ploughed back into capital   investment – from 31% = in 04-05 to 38% in 06-07.

= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Capex as a % of revenue expenditure shows a steady increase - 26% from 04-05 to 32% in 06-07.

ANALYSIS OF goods traffic

     = Annexure b

= Performance in 05-06 over 04-05

&= nbsp;

o      = A 11% ( 66 MT) incr= ease in loading (effect – 3578 Cr.) coupled with a 10% increase in rate/NTKm ( effect- 3287 cr) – due to rationalization of commo= dity classification (4000 class= es reduced to 80 ) helped earnings increase by 19%.(5793 cr.)

o      = However, average le= ad dropped by 17 kms. (2%) (effect of= 913 crs).

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Increase in loading was significant in iron ore for exports (10 MT, 26%). , Others (= 18 MT, 23%) and raw material for steel plants ( RM for SP) ( 9 MT 21%).

o      = Earnings increased significantly in iron ore (1000 Cr.65%), fertilizers ( 540 Cr. 46%) and RM = for SP ( 540 Cr. 41%).=

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o      = The rate/NTKm incre= ased significantly in iron ore (32%) , RM for SP (21%) and     foodgrains (20%)= which added 616 Cr. 324 cr. & 579 Cr. respectively
&= nbsp;

o      = A dip in average le= ad by 2% (17 kms.) lead to a loss of 913 crs. - significant commodit= ies were coal ( 3%, 526 crs.) others ( 5%, 246 crs.).<= /p>
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o      = Cement & fertil= izers movements were healthy - incr= eases in loading ( 9%, 18%) and longer leads ( 7%, 11%) helped increase of 21% ( = 500 Crs.) & 46% (543 Crs.) in earnings.=

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o      = A 14% drop in foodg= rain movement ( 12% in loading & 2% in&n= bsp; lead) offset by a 20% increase in rate/NTKm. resulted in<= span style=3D'mso-spacerun:yes'> earnings registering only a 4% in increase),=



Performance in 06-07 over 05-06

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= <= span style=3D'mso-list:Ignore'>o&nb= sp;      Increase in loading by 9% ( 58 MT - effect - 3204 Cr) with an over all 2% increase in rate /NTKm (e= ffect - 653 Cr.) due to further rationalization of commodity classification (= 80 classes reduced to 20 ) will together result in a likely increase in earnin= gs by 11% ( 3827 cr)

o      = Since actual movements have not yet taken place average lead has been assumed to be same ( effect of lead indicated as= 24 Crs. in the statement is due to rounding off of derived figures in the analysis an= d may be ignored.).

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ANALYSIS OF passenger traffic

     = Annexure c

= Performance in 05-06 over 04-05
&= nbsp;

o      = A 6% ( 643 million ) increase in number of passengers coupled with a 0.4% increase in average rate per PKm ( due to increase of t= he average lead in AC I class and AC III tier travel) helped passenger earnings increase by 7% = ( 72 Crs).

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o      = There was a signifi= cant increase in number of passeng= ers traveling by AC 3 Tier (24% ,= 4 million) and Others (21% , 3 million). AC II tier travel also registered an= increase of 18% ( 2 million). The addi= tional revenue on account of the above were Rs.228 Crs. (AC 3Tier) , 76 Crs.(Other= s) and 178 Crs. (AC 2Tier).

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o      = Ordinary II Class/S= leeper travel registered an increase of 9% ( 138 million), which contributed 255 C= rs.

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o      = Even though, there = was no increase in passenger fares, there was a slight increase in the average earnings per PKm from . 24.52 ps. to 24.62 ps., due to incr= ease in no. of passengers and average lead in AC I Class and AC 3 Tier.

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= Performance in 06-07 over 05-06.

=

=

o      = An increase of 10% = (582 million) in no. of passengers and 1% increase in average lead is likely to fetch an additional revenue of 1670 Crs. (11%).

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o      = Average leads are e= xpected to increase in AC I Class and Others by 11% & 18% respectively.

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<= span style=3D'mso-list:Ignore'>o&nb= sp;      A reduction in AC I and AC 2Tier fares will be offset by an increase in avg.lead = and no. of passengers as result of which, the earnings in both these classes are expected to register an incre= ase of 11% .

<= span style=3D'mso-list:Ignore'>o&nb= sp;      An over all increase of 10% = (63 million) in no. of passengers traveling by both Mail Express II and Sleeper Classes,= is likely to fetch an additional revenue of&n= bsp; 765 Crs. (11%). Simila= rly, a 10% increase in Ordinary II Class / Sleeper (170 million passengers) will fetch an additional 362 Crs.).

<= span style=3D'mso-list:Ignore'>o&nb= sp;      Suburban traffic is also exp= ected to increase by 10% resulting in additional earnings of 158 Crs.

=

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Dir/Ctara/0306