Indian Railways is one of the largest rail networks across the world.

It
covers a length of over 62,000 km and takes nearly about millions of
passengers on a daily basis.

The history of Indian railways is a long and rich starting its journey from
during the British rule in the country. British during their rule required a fast
mode of transport for troop movement and so they introduced trains. The
first train was introduced on April 16, 1853 from Bori Bunder to Thane and
comprised 14 carriages which could comfortably carry about 400
passengers. After that many new passenger trains were introduced that
spread across the length and breadth of India crossing the distance between
Jammu & Kashmir to Kanyakumari, and from Gujarat to Assam, crossing all
major cities between their routes including Kolkata, Chennai, Delhi,
Hyderabad, Kerala, Pune, Bangalore, and Mumbai.

It is also said that in the year 1985, early introduced steam locomotives were
replaced by diesel engines. Later in 1995, another revolution was introduced
in the railways; the revolution was computerization of entire railway
network.

Today the Indian rail system has three different gauges based upon the track
areas and rail traffic. These are the Broad Gauge, Meter Gauge, and Narrow
Gauge. Broad gauge is used in areas that have heavy traffic, meter gauge is
used where there is less traffic and narrow gauge is used in mountain ranges
like Nilgiri Mountain Railway and Darjeeling Himalayan Railway. These
three gauges are further divided into 17 different rail zones.

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The 17 rail zones that are essential part of the Indian railway system are
North, North East, North East Frontier, Eastern, South Eastern, South
Central, Southern, Central, Western, South Western, North Western, West
Central, North Central, South East Central, East Coast, and East Central.

With so many trains entering the railway industry, railway bookings has also
become a big challenge for daily commuters. Many people stand in line for
hours and hours to get one ticket. To ensure comfort of the commuters, rail
ministry has also come up with online rail booking system. E-tickets and I-
tickets have now started playing a big role in the industry and have delivered
a lot of convenience to train commuters with the ease of buying tickets
sitting at home.

Still, rail ministry is working harder and harder to improve the conditions of
the trains and increase more number of trains on all routes

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Passenger services
Indian Railways operates about 9,000 passenger trains and transports 17
million daily across twenty-eight states and three union territories (Delhi,
Puducherry (formerly Pondicherry) and Chandigarh). Sikkim, Arunachal
Pradesh, Mizoram and Meghalaya are the only states not connected.

The passenger division is the most preferred form of long distance transport
in most of the country. A standard passenger train consists of eighteen
coaches, but some popular trains can have up to 24 coaches. Coaches are
designed to accommodate anywhere from 18 to 72 passengers, but may
actually accommodate many more during the holiday seasons and on busy
routes. Most regular trains have coaches connected through vestibules.
However, "unreserved coaches" are not vestibule-connected with the rest of
the train.

There is a special provision in the Indian Railways Reservation System,

called Reservation against Cancellation or simply RAC. It is a for
passengers whose tickets have not yet been confirmed. Under this provision,
a berth is 'split' into two or more seats so that two people can share it as
opposed to a single person. This way maximum number of wait-listed
passengers can be accommodated in case of a cancellation (a berth getting
freed up). Typically a wait-listed passenger would be promoted to an RAC

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status when a berth is freed up (due to a cancellation). RACs can be
promoted to a regular berth also on

availability. RAC passengers still have to pay the full fare (as per the
railways reservation rules).

Production Services

A diesel locomotive of Indian Railways powering Express train, that runs in

Assam

The Indian Railways manufactures a lot of its rolling stock and heavy
engineering components. This is largely due to historical reasons. As with
most developing economies, the main reason is import substitution of
expensive technology related products. This was relevant when the general
state of the national engineering industry was immature.

Production Units, the manufacturing plants of the Indian Railways, are

managed directly by the ministry. The General Managers of the PUs report
to the Railway Board. The Production Units are:

• Chittaranjan Locomotive Works, Chittaranjan

• Diesel Locomotive Works, Varanasi
• Diesel-Loco Modernisation Works, Patiala
• Integral Coach Factory, Chennai
• Rail Coach Factory, Kapurthala
• Rail Wheel Factory, Bangalore

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Other independent units of Indian Railways are:

• Central Organization For Railway Electrification, Allahabad

• Central Organization For Modernization of Workshops, New Delhi

Important maintenance workshops on IR are:

• Southern Railway Workshop, Ponmalai (Golden Rock), Tiruchirapalli

• Rail Spring Karkhana, Gwalior

Bharat Earth Movers Limited, Bangalore (BEML) is not organisationally

related to the Indian Railways however it manufactures coaches for both the
Indian Railways and the New Delhi Metro system.

Freight Services

Indian Railway carries a huge variety of goods ranging from mineral ores,
fertilizers and petrochemicals, agricultural produce, iron & steel, multimodal
traffic and others. Ports and major urban areas have their own dedicated
freight lines and yards. Many important freight stops have dedicated
platforms and independent lines.

Indian Railways makes 70% of its revenues and most of its profits from the
freight sector, and uses these profits to cross-subsidise the loss-making
passenger sector. However, competition from trucks which offer cheaper
rates has seen a decrease in freight traffic in recent years. Since the 1990s,
Indian Railways has switched from small consignments to larger container
movement which has helped speed up its operations. Most of its freight
earnings come from such rakes carrying bulk goods such as coal, cement,
food grains and iron ore.

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Indian Railways also transports vehicles over long distances. Trucks that
carry goods to a particular location are hauled back by trains saving the
trucking company on unnecessary fuel expenses. Refrigerated vans are also
available in many areas. The "Green Van" is a special type used to transport
fresh food and vegetables. Recently Indian Railways introduced the special
'Container Rajdhani' or CONRAJ, for high priority freight. The highest
speed notched up for a freight train is 100 km/h (62 mph) for a 4,700 metric
tonne load.

Item Freight per tonne

Cement $12.96

Coal $13.71

Iron ore $15.19

Fertiliser $16.53

Raw materials for steel

$17.45
plants

Container service $18.58

Petroleum oil & lubricant $20.82

Food grains $23.65

Iron & finished steel $26.08

Other goods $15.79

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Railways traverse through the length and breadth of the country covering
63,140 route kms as on 31.3.2002, comprising broad gauge (45,099 kms),
meter gauge (14,776 kms) and narrow gauge (3,265 kms). As the principal
constituent of the nation’s transport system, Indian Railways own a fleet of
2,16,717 wagons (units), 39,236 coaches and 7,739 number of locomotives
and manage to run 14,444 trains daily, including about 8,702 passenger
trains. They carry more than a million tonne of freight traffic and about 14
million passengers covering 6,856 number of stations daily.

Indian Railways have been the prime movers to the nation and have the
distinction of being one of the largest railway systems in the world under a
single management. Railways being the more energy efficient mode of
transport are ideally suited for movement of bulk commodities and for long
distance travel.

The Indian Railway system is managed through zones and operating

divisions. There are also six production units engaged in manufacturing
rolling stock, wheels and axles and other ancillary components to meet
Railways’ requirements.

The formation of policy and overall control of the railways is vested in Railway g the
Chairman, Financial Commissioner and other functional Members for Traffic,
Engineering, Mechanical, Electrical and Mechanical, Electrical and

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Indain railways is enjoying complete state of MONOPOLY. Indain
railways has a sufficient control on railway transpotation and sevices . There
is no economic competition for the railway services, and there is no
subsitute of railway transpotation and services. they provide and a lack of
viable substitute goods.

Market structure of Indian Railway as Monopoly

Number and size distribution of sellers
Single seller
Number and size distribution of buyersUnsecified
Production differentiation No close substitutes
Conditions of entry and exit Entry prohibited

The Indain railway transport is one of the largest and busiest rail networks in
the world, transporting seventeen million passengers and more than one
million tonnes of freight daily. Indian Railways also known as IR is a
Department of the Government of India, under the Ministry of Railways and
is the world's largest commercial or utility employer, with more than 1.6
million employees and enjoys a monopoly on India's rail transport.

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A cost is the value of money that has been used up to produce
something, and hence is not available for use anymore. In business,
the cost may be one of acquisition, in which case the amount of
money expended to acquire it is counted as cost. In this case,
money is the input that is gone in order to acquire the thing. This
acquisition cost may be the sum of the cost of production as
incurred by the original producer, and further costs of transaction
as incurred by the acquirer over and above the price paid to the
producer. Usually, the price also includes a mark-up for profit over
the cost of production.

Following are the types of cost:

1: Opportunity cost:

In accounting, costs are the monetary value of expenditures for

supplies, services, labor, products, equipment and other items
purchased for use by a business or other accounting entity. It is the
amount denoted on invoices as the price and recorded in
bookkeeping records as an expense or asset cost basis

Opportunity cost, also referred to as economic cost is the value of

the best alternative that was not chosen in order to pursue the
current endeavour—i.e., what could have been accomplished with
the resources expended in the undertaking. It represents
opportunities forgone

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2. Sunk cost

In economics and business decision-making, sunk costs are costs

that cannot be recovered once they have been incurred. Sunk costs
are sometimes contrasted with variable costs, which are the costs
that will change due to the proposed course of action, and
prospective costs which are costs that will be incurred if an action
is taken. In microeconomic theory, only variable costs are relevant
to a decision. Economics proposes that a rational actor does not let
sunk costs influence one's decisions, because doing so would not
be assessing a decision exclusively on its own merits. It is
important to note that the decision-maker may make rational
decisions according to their own incentives; these incentives may
dictate different decisions than would be dictated by efficiency or
profitability, and this is considered an incentive problem and
distinct from a sunk cost problem

3 Marginal cost

In economics and finance, marginal cost is the change in total cost

that arises when the quantity produced changes by one unit.
Mathematically, the marginal cost (MC) function is expressed as
the derivative of the total cost (TC) function with respect to
quantity (Q). Note that the marginal cost may change with volume,
and so at each level of production, the marginal cost is the cost of
the next unit produced.

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 As compared to road transport, the railways have a number of
intrinsic advantages. Railways are five to six times more energy
efficient, four times more efficient in land use and significantly superior
from the standpoints or environment impact and safety. Indian
Railways, therefore, rightly occupy pride of place in the growth and
development of the nation.
Railways, being the prime infrastructural sector of the country,
need to expand and develop to keep pace with the growth of Indian
economy. The massive investment needed for the development of the
railway system has not been fully available. The budgetary support to
the railways has been increasing, but is far from adequate and has not
been keeping pace with the throw-forward.

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