Current Economic Statistics and Review For the
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Theme
of the week: Finances of Indian Railways: A Magnificent Turnaround*
“ The primary business of a railway is not to spend money nor even to save money but to earn it; and as a means to earning money, it must be free to spend it.” Introduction
Finances of Indian Railways have registered a magnificent turnaround in 2005-06. It is magnificent because it is achieved without resorting to beaten path of across-the- board upward revision in passenger and freight rates, but by following a fresh transport management strategy of raising the quality of services, reducing unit cost and even sharing the resultant gain with customers and offering some competition to alternative modes of transport particularly at the higher end of travel. This impressive turnaround has been achieved, as the railway minister aptly mentioned in his budget speech of 2006-07, by the same railway men through their dint of sincere work acumen, devotion and determination. The physical assets were put to maximum use by using innovative methods of operation to bring about this historical turnaround. This smart pick-up in railway finance has happened at a time when experts/economists have been expressing the opinion that railway finances were enmeshed in a terminal debt trap. Financial Accounts of the Indian Railways : Separation and Key FeaturesAcworth Committee 1920-21 recommended that the railway finances should be separated from General Finances and it was separated from General Finances in 1924-25. Primary objective underlying this separation was to secure stability for civil estimates by providing for an assured contribution for railway revenues and also to introduce flexibility in the administration of railway finances. Under the ‘ Separation Convention 1924’ the Railways are required to pay dividend on the capital, which was financed by Central Government, at a rate fixed by the Railways Convention Committee of the Parliament. Under
Article 112 of the Constitution of India, a statement of estimated
receipts and expenditures of the Government of India has to be laid
before the parliament in respect of every financial year which runs from
1st April to 31st March. This statement is known
as Budget Statement. Railway finances in Budget statement shows the total revenue receipts, revenue and works expenditure, distribution of receipts over expenditure and position of various funds which Railway keep with the Central Government viz., Depreciation Reserve Fund, Development Fund, Pension Fund, Capital Fund and Railway Safety Fund etc. Revenue receipts of the railways consist of earnings from passenger traffic, other coaching earnings (which include parcel and luggage), earnings from goods traffic and sundry other earnings like rent, catering receipts, interest and maintenance charges from outside bodies and other non-traditional areas such as leasing of right of way, commercial utilisation of land and air space and commercial publicity on rolling stock and station buildings. There are also other miscellaneous receipts like receipts of the Railway Recruitment Boards from sale of application forms and examination fees, etc. and the Government’s share of surplus profits which includes receipts from subsidised Railway companies in which the Government has no capital interest. Subsidy from general revenues in respect of dividend relief and contribution from Central Road Fund for financing safety works is also accounted in miscellaneous receipts. Total of all these items makes up the total receipts of railways. Expenditure incurred by the railways is on revenue account and on works account. Revenue account consists of ordinary working expenses incurred by various department of railway in their day-to-day working. Other miscellaneous expenditure like expenditure on railway board, audit, surveys and appropriation to depreciation reserve fund, pension fund and dividend payment to general revenue all included in Total expenditure. Trends
in Railway Finances: A Summary
Gross revenue receipts of Indian Railways which was Rs. 263 crore in 1950-51 accelerated to Rs. 59,978 crore in 2006-07(BE) i.e. by an impressive 228 times during the fifty six year of its operation. This works out to be 10.2 per cent compounded annual rate of growth (Table 1). Net traffic receipts (Gross revenue receipts-Working expenses) at Rs. 53 crore in 1950-51 increased at a slower rate to Rs.9,581 crore and the compounded annual growth rate works out only 9.7 per cent during this period (Table 2). Railways dividend to general revenue rose to Rs.3,871 crore in 2006-07 from Rs. 33 crore in 1950-51 and CAGR works out 8.9 per cent only (Table 3). The dividend liability of the railways is calculated after taking into account the reduced rate of 6.5 per cent (earlier 7 % on the dividend paying capital of the railways) recommended by Railway Convention Committee in 2005-06 and the latest estimates of capital-at-charge and include dividend payable to general revenue, grant in lieu of passenger tax, contribution to railway safety fund, appropriation to pension fund and payment to differed dividend if any. The working expenses rose from Rs.210 crore to Rs. 50,397 crore i.e. by 241 times during the same period. Compounded annual growth rate works out to be 10.3 per cent which means working expenses have escalated at a slightly faster rate than gross revenue receipts.(Table 1). Operating ratio, the relation between operating expenses and gross traffic receipts, which was 79.8 per cent in 1950-51 came down to 74.7 in 1963-64, but thereafter it hovered around 83 to 93 percent till 1999-00. In 2000-01 it touched 98.3 per cent , there after there is steady improvement and it came down to 84 per cent in 2005-06 partly due to increase in operating efficiency such as reducing the turnaround of wagons from 6 days to the reported less than 3 days in 2005-06 and partly due to change in account method such as excluding the lease amount from calculating the working expenses. However, it can be safely said that Indian Railways are one of the most successful railway system in the world in keeping their operating ratio around 90-92 per cent compared to other modern railway system of the world, all of which have much higher operating ratio. Still, in spite of keeping the operating ratio at a comparative low figure Indian Railways have faced utter failure in their attempt to increase their gross revenue to the desired level till 2005-06, as their hands are tied against implementing any rise in passenger fares because of socio-political compulsion and also Indian Railways transport mainly low tariff subsidised bulk commodities. In 2005-06, there was a smart turn around in railways revenue generation. Net revenue as percentage of capital-at-charge varied between 5.8 percent in 1950-51 and 9.0 per cent in 2003-04 and it is budgeted to be about 10.0 per cent in 2006-07 (Table 1). On the other hand, working expenses cannot be brought down as major portion of the expenditure is due to employees remuneration and welfare (Rs.22246 crore in 2003-04), repairs and maintenance (Rs.9493 crore and is budgeted to be Rs.12549 crore in 2006-07) and fuel charges (Rs.7928 crore and is budgeted to be Rs.10822 crore in 2006-07). Ordinary working expenses gone up from Rs.180 crore in 1950-51 to 38,300 crore in 2006-07 (BE) (Table 2). Out of the total working expenses of Rs.38,300 crore , operating expenses viz. expenditure on rolling stock, traffic and fuel formed 52.6 per cent, in this fuel alone consumed 28.3 per cent. Expenses on repairs and maintenance of permanent ways and works, motive power, carriages and wagons, and plant and equipment forms about 32.8 per cent (Table 4). Hence serious efforts are called for by Indian Railways to increase their revenue when ever it becomes necessary. However, mere increase in tariff of 8 to 10 per cent in the next five years as recommended by Shri Rakesh Mohan Committee (IR –2001), is not sufficient, the more important objective should be to increase the productivity by adopting innovative operating strategies and efficiency of employees and also efforts should be made to reduce operating expenses. Here it is worth mentioning that the average increase in freight traffic in terms of net tonne kilometre has been 21.0 percent per year and in passenger traffic passenger kilometres is 16.5 percent during the last 56 years. This clearly shows that with a low rate of investment in inputs, the indices of traffic output have shown a remarkable achievement. Appropriation
of the Surplus
The excess or short fall in revenue i.e. the residual after discharging the dividend liability rose from Rs.15 crore in 1950-51 to Rs.32 crore in 1960-61 , but there after due to comparatively low net revenue receipt there was short fall in revenue of Rs 20 crore and Rs. 198 crore in 1970-71 and 1980-81 respectively. However, from 1985-86 Indian Railways registered only excess in revenue in the next 21 years and in 2006-07 it is budgeted at Rs. 4,673 crores (Table 1). The excess revenue is appropriated to the development fund, the safety fund and the capital fund, depending upon the actual needs. These funds are meant to finance part of plan requirements. However, appropriation to capital fund is made only after necessary appropriation to development fund and safety fund. In case there is a no excess or not enough excess to be transferred to development fund and capital fund, temporary loan is obtained from General Revenues to finance the expenditure to be met out of these funds. Development fund is used to finance expenditure on passenger and other railway users’ amenities work, staff welfare work, un-remunerative operating improvements and safety works. Safety fund is used for financing the work relating to conversion of unmanned level crossings and for construction of road over bridge (ROB), road under bridge (RUB) at busy level crossings. Capital fund is used for works chargeable to capital. The movements of resources in these funds for the last decade is depicted in Table 5. In addition to these funds, in 1999 RCC recommended setting up of another fund viz., Railway Safety Fund (RSF) and it is in operation w.e.f 01-04-2001. The RSF is financed through railway revenues, transfer of funds by the central government from the central road fund and contribution made from the railway safety works fund out of the dividend paid to the general revenue. This fund is mainly used for building road over bridge (ROB) and road under bridge (RUB) with the aid of state government. Works expenditure is financed from capital borrowed from the general revenues and also by internal resources viz., capital fund, depreciation reserve fund, development fund, railway safety fund and from revenue in the case amenities and improving un-remunerative operating improvements when the overall expenditure is below certain limits. The internal generation of revenue, which was Rs.275 crore in 1980-81 rose to Rs.10610 crore in 2006-07(BE) or at an average annual growth rate of 15.1 per cent during the last 26 years . At the same time contribution from general revenue grew at a slower pace of 9.7 per cent (Table 6). The uses of resources reveals that while the addition to assets rose from Rs. 611 crore to Rs. 7,424 crore, the replacements of assets rose substantially from Rs. 940 crores to Rs. 16,285 crore. Repayment of loan with interest in 2006-07 (BE) is Rs. 1,539 crore.(Table 6). Deferred
Revenue Fund (DRF) is a transitory fund used in adverse circumstances
when Indian Railways are not able to defray its obligation to pay
dividend to general revenue for the capital asset which had been
procured from the financing provided by general revenue i.e. the
capital-at-charge . The outstanding in this fund is a liability of the
railway and is paid back in lump sum or in instalment by railway when
the circumstances become favourable to do so. The outstanding in the
fund in 2001-02 at Rs. 2,823 is brought down to Rs. 664 crores in
2006-07 by railways. Freight TrafficFreight Traffic is the backbone of the Indian Railway Finances as it provides about 65 to 70 per cent of the total earnings. IRs witnessed a phenomenal growth in freight traffic during the past 56 years. Revenue earnings from originating tonnage in freight traffic has gone up by 289 times i.e. from Rs.39 crore in 1950-51 to Rs. 40,320 crore in 2006-07 (BE) i.e. by a massive 28,907 per cent with an average annual growth of 516 per cent during the 56 years. Today IRs carries nearly 2 million tones of freight traffic every day. However the average lead for freight traffic ie average distance travelled by one tonne of revenue earning goods gone up from 513 kms in 1950-51 to 754 km in 1980-81 , there after it dipped to 660 kms by 2000-01 and it hovered around there till now. Consequently, net tonne km i.e. transportation of one tonne goods over one kilometer , moved up by 442 billion NTK to reach 480 billion NTK in 2006-07(BE) from 38 billion NTK in 1950-51 thus registering an annual increase of 20.8 per cent . Average rate per tonne km which shows the impact of the increase in freight rates has been consistently going up from 3.2 paise in 1950-51 to 84.1 paise in 2006-07 at an average annual growth of 29.1 per cent during the last 56 years (Table 7). But, at the same time, the average cost of transportation of commodities had moved up much faster than the average rate of earnings per tonne kilometre. Freight rates on IRs are tailored to meet the needs of the economy and are basically based on the principle of gross subsidization. This made the spread of freight rates very wide. More over large number of commodities moved by IRs in unit train loads. These commodities, known as bulk commodities includes coal, cement, fertilizers, mineral oil etc. Railways encourage movement of unit train load commodities and hence introduced unit train load rates which are much lower than the normal wagon load rates. These bulk commodities forms about 90-95 per cent in all the last five and half decades of IRs operation. More over IRs have to fulfill their social obligation also by moving commodities like food grain, sugar, salt, sugar cane, oil seeds, bamboos, fruits and vegetables etc. The loss incurred in moving these commodities was Rs. 329 crore in 2002-03, however it is estimated to be only 55 crore in 2005-06 . Trend in composition of revenue-earning freight traffic indicates that coal movement, remains the main revenue earner for the Railways as it forms about 39-42 per cent of total earnings. The earnings per net tonne kms of coal at Paise 89 in 2006-07 is better than that of the earnings from fertiliser, foodgrains etc (Table 8). Commodities like iron and steel, mineral oil, cement and non-ferrous metals, which are usually moved in net train load, are high profit yielding commodities as compare to fertilizer and ores. If IRs can attract more of net train load of above profit earning commodities, it can earn more revenue. Although traffic in Mineral Oil, Cement etc. has not shown any drop during the past 56 years, in respect of many other commodities there has been a consistent drop in tonnage during this period. The shift of non-bulk profitable traffic to the road transport has been adversely affecting the finances of the railways. A study conducted by the Indian Foundation of Transport Research and Training revealed that while freight traffic in railways has grown by 30.6 per cent in the last five years, inspite of the rising fuel prices and tyre prices, freight traffic by roads have grown up by 53.1 per cent during the same period. Moreover, during this 5 year period cost of transporting by road transport has grown by 66 per cent , the freight charges of the railways in the same period have grown only by 8 to 10 per cent . Road transport sector had increased their capacity additions by 822 million tonne by adding a fleet of 10.60 million goods carriages , on the other hand railway has increased its capacity by 8 to 10 per cent in the past five years. Both the mediums of transport have their own advantages. The tremendous increase in road freight traffic despite odds only prove that there is no alternative to the last mile connectivity that road provides which pips railways in the over all freight traffic. The study also reveals that the roads have larger share in retail parcel cargo over shorter distances than railway . Railways were preferred over road when high density cargo like cement and iron ore were to be hauled over long distances. IRs have taken a number of steps to increase the net load per wagon and the net load per train which resulted in commendable performance. These efforts are visible as the average net load per train on IRs have been going up from year to year. Average net load per train in 2003-04 was 1,526 tonnes on BG against 489 tonnes in 1950-51. Effective utilization of the locomotive has shown good improvement as the net tonne km per engine hour which were 3,283 km for BG in 1950-51 have rose to 16,723 km in 2003-04. More over net tonne kms per goods train hour which was 8,590 for BG in 1950-51 have gone up to 39,770 in 2006-07 i.e. by 363 percent showing an average increase of 6.5 percent per year during the last 56 years. Wagon kms per wagon per day went up from 62.3 kms in 1950-51 to 187.3 kms in 2003-04. As a result Net tonne kilometers per tonne of wagon capacity per annum which were 11,833 kms in 1950-51 increased to 42,237 kms by 2003-04 and Net tonne kms per wagon per day recorded a compound annual growth rate of 2.5 per cent during the last 53 years. Track utilization is measured by density of traffic in terms of Net tonne kms per route kms in BG has been improving year to year , NTKms increased to 8.14 million in 2003-04from 1.50 million in 1950-51 i.e. by almost 6 times during the 53 year period. In spite of massive dieselization and electrification, the improvement in average speed of goods trains is minimal i.e. from 17.4 km/hour in 1950-51 to 23.3 km/hour in 2003-04. Wagon turnround was 11 days for BG in 1950-51 with an average lead of 513 kms has came down to 6.7 days in 2003-04 with an average lead of 684 kms. It has reported that wagon turn round would be less than 3 days in 2005-06. However, some questions remain to be answered, the important one being that with the present capacity of wagons whether IRs can increase its total freight volume with its rickety rakes whose freight over-loading has already gone up by 10 to 17 per cent. The carrying capacity per wagon has been increased to 65 tonnes. Moreover, without adding new wagons , cut in freight unit cost to 53 paise per net tonne km from 61 paise per net tonne km in 2000-01 will reach saturation point soon.. Hence, the Railways have to concentrate on overcoming capacity constraints to increase their revenue earnings. In this connection, it may be mentioned that in the budget speech 2006-07 railway minister has told that RDSO is designing new high capacity wagons which can carry upto 70 tonnes. Also by using aluminium and stainless steel the payload to tare weight ratio will be brought down. He also told that in the future the Railway is intend to manufacture 25-tonne axle load wagons which can carry loads upto 80 tonnes and whose payload to tare weight ratio is around 4:1. Passenger TrafficThe Indian Railway system is one of the biggest transporters of passengers in the world. IRs, which transported 1,284 million passenger in 1950-51 , in the next 56 years i.e. in 2006-07 carried 6,400 million passengers. Passenger kilometres involved in this huge transportation activity were 682,655 million in 2006-07 which is about 18 per cent of total world railway passenger kilometres. In 1950-51 the passenger kilometres was 66,517 million. The overall passenger carried by IRs have been of the order of 398.4 per cent showing an average annual rate of increase of 7.1 per cent. It means IRs carries 17.5 million passengers a day . Passenger earnings rose from RS. 98 crore in 1950-51 reached Rs. 16,800 crore in 2006-07, out of which lower class earnings was Rs. 13,627 crores in 2006-07 as against Rs. 85 crores in 1950-51. Though there is a substantial increase in passenger earnings the average rate at 25 paise per kms in 2004-05 is still the lowest as compared to any other mode of transport (Table 7). It is on account of this low rate that the IRs is losing substantial amount. Many committees recommended increases in passenger fares seeing the ever widening gap between cost of providing service and the return from the same. But social and political compulsion kept the rate at the low end. While the transportation effort involved in dealing with passenger traffic is substantial, IRs is recovering hardly 28 per cent of their total earnings from passenger traffic . The freight traffic yields about 72 per cent of total railway earnings in 2006-07. Hence there is every reason why passenger traffic should not contribute at least one-third of total railway revenue at any given time and for each financial year to cut down passenger traffic losses. It is interesting to note that the cross subsidy in passenger fares had touched Rs.4,500 crores due to unchanged ticket fares for the last three years. Earnings per passenger kilometre which was 12 paise in 1991-92 more than doubled at 25 paise in 2004-05. While the earnings from upper class grew by 2.3 time during the said period , the growth in earning from second class was only 1.9 times. Non-suburban earnings went up from 13 paise in 1991-92 to 27 paise in 2004-05. upper class non suburban passenger paying 2.1 times more in 2004-05 compared to what he was paying in 1991-92.(Table 9 ). Table 9 depicts passenger earnings, passenger kilometre and earning per passenger kilometre which reveal how suburban travel is subsidised by non-suburban travels and second class travel is subsidised by upper class travel. Suburban passenger traffic earning 13 paise per passenger kilometre in 2006-07 is said to be the lowest amongst many modes of transport. Suburban passenger fares were fixed at a very low level in 1950-51 and the practice has been followed till now. However, this kind of soft approach to suburban passengers can be justified on the following grounds. 1.
Suburban trains in 2. The services provided by the Railways in suburban train is nothing to write about. 3. All the more, the losses incurred by the Railways due to high subsidisation of suburban passenger travel is meagre because of heavy overcrowding. 4. Railway Minister has reduced the suburban fare by Rs. 1 each a year ago (March 2005). This could have been avoided and the resources generated could be better utilised for giving improved services for the highly harassed suburban passengers. Of course, in recently days the Railways have been trying to upgrade their suburban services. Once the Railways are successful in their endeavour to give a comfortable travel to their suburban passengers, it can think of raising their income from this source by enhancing the tariff rates. Even among different segments of passenger traffic, the Indian railways have shown more than due consideration to passenger travelling on monthly season tickets in the suburban section. Passenger Fares and Freight ChargesThe
Indian Railway, no doubt, is the cheapest mode of transport in In the past, selective segments of passenger traffic were subjected to ad-hoc increases in fares. This has resulted in several distortions in the overall and relative fare structure. Fare structure was to be rationalised by smoothening and establishing relativity of fares of various classes of travel. This would help in improving revenue generation from passenger traffic. Ratio of passenger earning per passenger kilometre to freight earning per tonne kilometre gives an idea about the distortion in pricing. A ratio of one is widely believed as a financially desirable norm. A World Bank study has compared the ratio of passenger and freight earnings per unit. In China, Austria, France and Korea, this ratio is more than one and it is around 0.6 to 0.8 in a few other countries, viz., Indonesia, Malaysia, Thailand, while in India this ratio was 0.5 in 1951 and has steadily came down to 0.3 in recent years, which is one of the lowest in the world. This indicates that the Railways suffer from drastic distortions in pricing as reflected in the ratio of passenger earning to freight earning which is around 0.3 per cent in recent years. In this context, the Expert Group on Indian Railways 2001 (Chairman: Rakesh Mohan) has recommended an annual adjustment of about 10 per cent increase in second class sleeper fares and 8 per cent in second class ordinary fares on a continuous basis for about five years, assuming about 6 percent inflation. The Budget for 2006-07 introduced a dynamic pricing policy for freight and passenger traffic. Passenger tariff was proposed to be rationalised so as to reduce the fares at the top end by 18 per cent and 10 per cent for AC-I and AC-II class. While there is no across-the-board increase in freight tariff, albeit some sort of rationalisation has occurred by reducing the number of commodity groups from 80 to 28. Freight rates of highest classification was proposed to be reduced and made less than double than that of the lowest classification over the next three years. The
Budget proposed to introduce a ‘Dynamic Pricing Policy’ for freight
as well as passenger for peak and non peak seasons, premium and
non-premium services and for busy and non-busy routes. According to this
policy, while the rates for non-peak season, non-premium service and
empty flow direction will be less than the normal rates, the rates for
peak season and premium services would be higher than normal. The
non-peak season for the freight segment would be between July 1st
to October 31st and for the passenger segment it would be
between January 15th to April 15th
and July 15th to September 15th. Social Obligations Dual role of a public utility and a commercial undertaking imposes on the Railways the obligation to meet the transport requirements of all sections of the community along with the attainment of socio-economic objectives. Also, the Railways have to generate adequate revenues to meet the total expenses of running the enterprise and provide for the development and plough back for dividend. The Railways do not have total freedom to adjust their freight and fare corresponding to increases in the price of various inputs used by them. In view of this, the Railways sustain losses in the operation of suburban and short distance passenger services and uneconomic branch lines. Further, certain commodities, specially those which are required for consumption by the poorer sections of society and which have a direct bearing on the cost of living of the masses, like food grains, salt for edible use, fruits and vegetables, etc. are carried at concessional rates which do not cover the cost of operation. Besides, relief supplies to flood-hit and drought-hit areas are carried free of charge. These are the social obligations, i.e., social costs which railways are called upon to bear as a public utility undertaking. The financial cost of such obligations of the Railways is estimated to be about Rs.8,545 crores in 2005-06 as against only Rs. 124 crore in 1970-71. This social cost works out to 15.6 per cent of the gross traffic receipts or 18.7 per cent of the gross working expenses and it was 12.3 per cent and 14.6 per cent, respectively, in 1970-71 (Table 10 ). Most foreign railway systems get financial support from their exchequers for financing social service obligations out of the operation of uneconomic services. This is done to provide a cost effective and eco-friendly transportation. This support is provided in various forms and for different purposes like: 1. Compensation for losses on account of socially reduced tariffs. 2. Outright grants to cover deficits. 3. Soft loan to meet deficits 4. Financial support to maintain viability of the system and earn marginal profits. 5. Writing off of accumulated debts and unproductive capital. 6. Support for investment and infrastructure maintenance. According to the statistics published by Jane’s World Railways (2004-05 edition), the state support provided to some foreign railways for meeting social services obligation viz-a-viz Indian Railway is shown below. State Support in Some Selected Countries’ Railway Systems vis-à-vis the Indian Railways
In addition , Indian Railways have to incur another financial burden on account of Uneconomic Branch lines. Based on the recommendation of Uneconomic Branch Lines Committee, 1969, all narrow gauge lines and such lines that join the main line network at one end only are termed as branch lines. A review of such lines during 2004-05 indicated that 110 (50 BG, 39 MG and 21 NG) branch lines were uneconomical and the Railways incurred a loss about Rs. 405 crores excluding dividend, on their account. Several high-level committee have unanimously recommended that all such uneconomic branch lines, where alternative modes of transport exist or can be developed, should be closed down so as to reduce, to the extent possible, the losses which accrue to the Railways year after year. However, state governments are reluctant to do so. Hence it is suggested that if state governments do not agree to close down such lines, state governments should share Railway’s loss at 50:50 basis. Instructions have been issued for closure/dismantling of 21 such lines .In order to enable state governments for closure of the remaining 38 lines, the Railways are ready to offer financial assistance. The Railways are justified in closing huge loss-making lines. But the question is whether such closures are justified only because these services are loss making. The Railways are duty bound to continue with these services as a social obligation. Moreover, the Railways are more eco-friendly and cheapest mode of transport as compared to road transport The Indian Railways have shown to the world that they can turnaround the entire system into a vibrant one. Hence, instead of trying to close these lines or going to state government for a contribution to the extent of 50 percent revenue losses, they should see how to make these lines more viable by increasing their operational efficiency after finding out what ails these lines. The principle for the Railway services should be that supply creates its own demand. Indian Railways’ Assets and LiabilitiesCapital-at-charge for the Indian Railways as set out in the accounts is the sum made available by General Revenues for investment of the Railways. This sum extended to Railways is a kind of perpetual loan and railway pay a dividend to general revenues every year at the rate fixed by railway convention committee. It is 6.5 per cent of the capital-at-charge in 2005-06. It excludes cost of assets created out of depreciation reserve fund, development fund, capital fund, railway safety fund and special railway safety fund or revenue. On the other hand, the Block account – forming an annual appropriation account for the Railways indicate the total capital assets including the value of assets financed from the above funds. Table 11 shows total value of railway assets under broad categories from the Block account excluding only value of assets created from revenue as their replacement will be financed from current revenue. It can be seen from this that while 52 per cent of assets created from the finance from general revenues, 48 per cent of the Railway assets creation finance came from other funds. More over this funds financed 55 per cent of standard engineering works and 45 per cent of rolling stocks in 2005. This share was 25 per cent and 8 per cent in 1977 which shows the reliance of railway more and more on other funds ie internal resource generation and public borrowings rather than general revenue in recent years. Performance of Zonal RailwaysIndian Railways, for administrative consideration, is divided into 16 Zonal railways as per geographical areas. It was only 9 zonal railways till 2002-03, but 7 more zones were created in 2003-04. The performance of the newly created zonal railways during 2005-06 were impressive . However, four zonal railway viz. southern railway, eastern railway, north eastern railway and north-east frontier railways were perpetual loss makers. Their operating ratio ie working expenses over gross earnings expressed as percentage were always more than 100 (Table 12). This continuous loss making cannot be ascribed to high social expenditure in these zones. Hence railway have to study these zones performance and find out what ails them and take corrective measures to rectify the illness so that these zones can be more productive. Will
this turnaround model sustainable ? The year 2005-06 was the golden year in the history of the Indian Railways as it is the year when the Railway finances have registered a magnificent turnaround in spite of various experts warning that IR was heading to a terminal debt trap. This dramatic turnaround, as iterated by the railway minister in his budget speech 2006-07, is achieved by the sincere and efficient work of its 1.4 million employees using the same infrastructure in an innovative and efficient way without resorting to the beaten path of across-the-board upward revision in freight and passenger tariffs. Nevertheless, the question is, will this be sustainable or is it a short-term phenomenon. All the presently available indicators are not sufficient to make a honest judgement. However, if one goes by the first quarter performance of the Railway in 2006-07, the present euphoria will at least continue for the current year too and the Railways will achieve its budgeted income. The modern management mantras: unit costs, volume increase and competition, all these are apt if the system can take the increasing work load, which it is suppose to take. The Railway’s capacity augmentation model to achieve higher revenue targets is not sustainable in the long haul- thus opine transport analysts and management gurus. Freight overloading on the rickety rake has already gone up from 10 to 17 per cent. Wagon turn-around is reached less than 3 days by resorting to 24 hours loading and unloading. Without adding new wagon with preferably 80 tonnes loading capacity, cuts in freight unit cost is unlikely. The attempt to contain passenger losses by increasing seating capacity and occupancy will have some impact in increasing the revenue, but it cannot be stretched beyond a point with the existing infrastructure. V K Agarwal, former chairman of Railway Board, while appreciating the effort put in by the railway employees also adds that much of the turnaround story have to do with a booming economy. He is of the opinion that wagon capacity cannot be increased from the present level of 65 tonnes. One way to overcome capacity constraint is to add a few more lines to busy segments before the dedicated freight corridor actually comes up. Another former Railway Board chief, Ashok Bhatnagar, is of the opinion that the real challenge for the Railways is to enhance the carrying capacity as lack of demand is not the problem , but the ability to keep pace with 8-10 per cent growth in freight volume in the next decade which is about 700 million tonnes now. Some analysts suggests that IR should have at least 6 corridors connecting 4 metros. Overloading is just an interim measure. More and more lines that can give business must be developed urgently. The
Indian Railways, by going high tech, are trying to improve efficiency
and reliability of services and also scale down operating and
maintenance cost to increase profit.
By adding 10 more coaches to the existing 14 coaches, the
Railways will augment seating capacity in about 190 popular passenger
carrying trains. This additional capacity will enable the Railways to
earn Rs. 200 crore additionally every year. The Railways have already
purchased engines capable of pulling this longer train. However, the
platform length in many stations has to be lengthened to accommodate
these 24 coach trains. Railway wishes to introduce a device called End
of Train Telemetry (EOTT) to communicate with engine drivers and to
provide information about condition at the rear of the train that are
important to the operation of train such as brake pressure and car
motion. By introducing this technique, Railways can avoid rear guard
wagon or can convert them into passenger coaches. The Railways are also
working one new signalling and collision devices as well as use of GPS
for tracking trains. The Railways also want to introduce high-speed
bullet trains to connect inter-cities. Railways plan to manufacture
25-tonne axle load wagons which can carry loads up to 80 tonnes and
whose payload to tare weight is around 4:1. In order to increase the
share of the Railways in the transportation of commodities like motor
vehicles, petrochemicals, etc. the Railways need special wagons , the
technology for which at present is not available in Commercially, the world rail transport has had a mixed record. Most rail systems, including urban rapid transit systems, are highly subsidised and have never or rarely been profitable, though their indirect benefits are often immeasurable. However, the Indian Railways performance in the last five and a half decades ahs been highly impressive also in fact their performance has been profitable in a majority of the years. Passenger rail in nearly all countries is dependent on government subsidies, but the Indian Railways get a very meagre amount as subsidy vis-à-vis their operating expenses. Now, the Indian Railways, like the Indian economy, have entered the threshold of a new century. The achievements so far have been indeed commendable, but the gap is equally mind boggling. The Railways have got about 235 projects pending for implementation. The resources generated in recent years though impressive, are barely sufficient to get these projects going, but in the meantime, new demands, like introduction of Bullet Trains and construction of a ‘Dedicated Multimodal High Axle Load Freight Corridor’ with computerised control, have been thrust on the system. The Railway are anxious to fulfil them too. But, they will have to adopt equally innovative methods’ to finance and execute them. Hence, they have to encourage public partnership and promote schemes of public-private partnerships on a massive scale for the expansion and development of this vibrant and premier railway system in the world and serve the transport needs of 1.3 billion populace by effecting significant improvement in rail services. Also, corporatisation of the railways, with specified social goals should be the eventual strategy to attain all of these goals set out above. * This note is prepared
by R.Krishnaswamy
References
Highlights of Current Economic Scene AGRICULTURE State
trading Corporation (STC) has finalized its 5th wheat import
tender for 16.7 lakh tonnes, floated on August 30, 2006. For this tender
it had received 8 bids from Glencore International AG of Switzerland (6.5
lakh tonne at a price range of $223 to $250 per tonne), AWB (6.3 lakh
tonne-$225-257), AC Toefer (5.4 lakh tonne-$227-267), Adani Global (2.82
lakh tonne-$239-251), Cargill (2.2 lakh tonne-$244-261), Concordia (1.8
lakh tonne-$232-241), Louis Dreyfus Corporation (1.24 lakh tonne), Agrico
Trade and Finance (1 lakh tonne-$242-260). While Glencore International AG
of
Thus, the wheat import by the central government has touched around 55 lakh tonnes at an increasing cost. The lowest contract price in the latest tender has been $223 per tonne as against the contract price of $178.75 per tonne of the first tender. The centre has allowed private parties to import wheat at zero duty and it would be applicable till December 31. The government had earlier reduced the customs duty on wheat imported on private account from 50 per cent to five per cent, which was effective from June 28 till December 31, 2006. As
per the estimates of Cotton Advisory Board, the cotton output has been
pegged at 270 lakh bales for the cotton year (October – September)
2006-07, an increase of 10 per cent over the 244 lakh bales of 170 kgs
each recorded during the previous season. This spurt in the output has
been projected despite 2.16 lakh hectares and 3.22 lakh hectares of sowing
area in major cotton producing states like Maharashtra and The
government of Andhra Pradesh has released a special credit package with an
outlay of around Rs 606 crore for the flood-hit districts namely,
Srikakulam, Vizianagaram, The centre has fixed the cut-off rates for maize stocks in Andhra Pradesh at Rs 570 per quintal. Food Corporation of India (FCI) would take the necessary steps to lift the stocks. FCI had floated a tender enquiry towards sale of 2.5 lakh tonnes of maize procured by the state agencies during kharif and rabi 2005-06. Crisil
has launched Agricultural Risk Monitor, a measure for agricultural lending
risks. The measure would track the impact of rainfall on crops and thus
the rainfall risk would in turn assess chances of loan recovery based on
the rainfall risk index for crops and would advise farmers on the
probability of a good harvest. The risk monitor would cover 15 States and
30 crops and the analysis would be done on a state-crop combination. The
risk profile of a crop would be rated on the scale of 0-100; the higher
the number more risky the crop. IndustryAutomobiles The
heavy industries and public enterprises ministry has announced that annual
revenue from the country's automobile sector could grow to $ 145 billion
by the year 2016 backed by the rapidly growing domestic demand for
vehicles. The Indian automobile sector currently generates revenues of $34
billion a year, around 3-4 per cent of the country's gross domestic
product and the ministry expects this figure to increase to more than 10
per cent by 2016. The ministry has said the centre would support
automobile firms manufacturing fuel-efficient vehicles and those using
alternative fuels and has recognised that the two major challenges before
the auto industry are the development of efficient engines to minimise
energy consumption and promotion alternative fuels. Also, the auto sector
should be able to provide additional employment to 25 million people by
2016. The ministry has commented that the first phase of liberalisation,
which was only investment oriented has been crossed and now in the second
phase there should be investment in innovation and energy security. The
draft `Automotive Mission Plan 2006-2016' that aims to make The Indian auto sector has seen a slew of large announcements, including a fresh Rs 3,000 crore investment from Maruti Udyog and a Rs 900 crore ($ 200-million) investment plan from Honda Siel. Both the auto majors are targetting the small car market with Maruti planning a new model and Honda Siel poised to make a debut in the segment. Paper InfrastructureOverall Riding on robust growth of crude petroleum, petroleum refinery products and coal, the index of six core infrastructure industries has grown by 9 per cent in July 2006 as compared with 2.3 per cent in the same period last year. During April-July 2006-07, the six core infrastructure industries, with a combined weight of 26.7 per cent in the Index of Industrial Production (IIP) with base 1993-94, has grown by 7 per cent as against 6.1 per cent during the corresponding period of the previous year. Crude petroleum production has increased by 4.1 per cent in July 2006 as against a negative growth rate of 3.9 per cent in July 2005 and 1.2 per cent during April-June 2006-07 as compared to (-)1.6 per cent during the same period of 2005-06. Petroleum refinery production has shot up by 12.6 per cent in July 2006 compared to a 3.6 per cent growth in July 2005 and has witnessed a turnaround to grow at 12.1 per cent in April-July 2006-07 compared to a negative 2.8 per cent during the same period of 2005-06. Coal production has increased by 10.6 per cent in July 2006 as compared to a negative growth of 1.6 per cent in July 2005 while it has grown by 8.3 per cent during April-July 2006-07 as compared to an increase of 5.3 per cent during the same period of 2005-06. Electricity generation has increased by 8.6 per cent in July 2006 compared to a negative growth rate of 1 per cent in July 2005 and a growth of 6.1 per cent during April-July 2006-07 compared to a 5.3 per cent increase during the same period of the previous year. Cement production has increased by 13.3 per cent in July 2006 compared to 3.6 per cent in July 2005 and a 10.5 per cent increase during April-July 2006-07 compared to an increase of 11.3 per cent during the same period the previous year. Finished (carbon) steel production has gone up by 8 per cent in July 2006 as against 10.4 per cent in July 2005 and has registered a 7.1 per cent increase during April-July 2006-07 compared to a 12.7per cent growth during the same period of 2005-06. A major slowdown in power generation as well as steel and cement production resulted in a fall in the overall infrastructure growth to 6.2 per cent in June 2006 compared with 8.3 per cent in the corresponding period in the last fiscal year. The cumulative growth in the six core sectors would have been lower but for the rebound in crude production and petroleum refining. Power The Maharashtra Electricity Regulatory Commission (MERC) has approved a transmission loss level of 4.85 per cent for the network of Maharashtra State Electricity Transmission Company (MahaTransco) for 2006-07. Similarly, the Commission has not approved MahaTransco’s projection of transmission loss of 6 per cent but considered 4.6 per cent for 2005-06. The Commission in its order on the MahaTransco’s annual revenue requirement proposal for 2006-07 has commented that the transmission loss of 4.85 per cent for the current fiscal year has been fixed, keeping in view the additional power flows from the eastern corridor and some uncertainties in the western corridor generation. The
government's key reform tool in the power sector — the Accelerated Power
Development and Reforms Programme (APDRP) — is facing a problem in the
form of bogus claims being furnished by states declaring "loss
reduction" carried out by them in the power distribution sector which
entitle them to a proportionate grant from the central government. The
power ministry has turned down incentive claims furnished by states
totalling around Rs 5,400 crore over the last three years, with Karnataka,
Tamil Nadu, Ethanol A national programme to blend 5 per cent ethanol with petrol is set to take effect from November 1has been declared by the government, excluding the states in the North East, Jammu and Kashmir, Lakshadweep and Andaman and Nicobar Islands. The petroleum and natural gas ministry has directed oil marketing companies (OMCs) for early implementation of the Ethanol Blended Petrol Programme on a national scale and the OMCs have been given the complete freedom to protect their commercial interests in arriving at workable ethanol pricing to take forward this programme. The process of procurement of ethanol by the OMCs through national competitive bidding has commenced with OMCs issuing public notice for procurement of indigenous anhydrous ethanol in different states. Steel Major steel producers have decided to reduce the cost of steel by Rs 600-1,000 per tonne in rural areas by absorbing the cost of transportation and distributors' margins. This follows an appeal by the steel ministry to keep the prices of steel at reasonable levels to safeguard the interests of the common man. The steel majors have decided to make available items of common consumption in the rural districts or blocks through their dealer network at the same price as applicable at metros. The cost of transportation as well as distributors' and wholesalers' margin will be borne by the producers and would result in relief of about Rs 600-1,000 per tonne to the individual customer in hinterland. All main producers have decided to adopt villages around their plant and as part of their corporate social responsibility (CSR) to help develop these villages as model steel villages. In various schemes to promote health, education and livelihood, steel would be used in items such as storage beans, bullock carts, buildings such as school buildings, health centre buildings, water tanks, waiting sheds. Cement Floods
in key states, Maharashtra, Aviation The
International Civil Aviation Organisation (ICAO) has projected high growth
in the scheduled airline passenger traffic during the next three years
over the world. According to ICAO forecasts, scheduled passenger traffic
is expected to grow by 6.1 per cent, 5.8 per cent and 5.6per cent during
2006, 2007 and 2008, respectively. Due to continued expansion of the
global economy in 2005, as per ICAO, the traffic is estimated to have
grown by 8 per cent to 3,720 billion PKPs (passenger kilometers
performed). The study adds that the middle east and asia pacific regions
will account for maximum growth; Between 2006-08, traffic will register
highest growth in the Middle East with an average annual growth rate of
10.7 per cent and Asia-Pacific region is expected to experience strong
traffic growth rates averaging 6.73 per cent, well above the world average
of 5.83 per cent. At the same time, the airlines of the InflationThe annual point-to-point inflation rate based on wholesale price index (WPI) has gone up to 5.01 per cent for the week ended August 26, 2006 from 4.91 per cent during the previous week. The inflation rate was lower at 3.33 per cent in the corresponding week last year. The WPI in the week under review has gone up a tad by 0.1 per cent to 205.3 from the previous weeks’ level of 205.1 (Base: 1993-94=100). The index of ‘primary articles’ group (weight 22.02 per cent) has increased by 0.3 per cent to 205.7 from its previous week’s level of 205, mainly due to an increase of 0.4 per cent in the price index of both, the ‘food articles’ and ‘non-food articles’. The index of ‘food articles’ has gone up to 207 from 206.2 in the previous week, mainly due to the higher prices of bajra, gram, maize, wheat, arhar and fruits and vegetables. Similarly, the index of ‘non-food articles’ has increased to 186.7 from 185.9, mainly due to the higher prices of niger seed, raw silk, raw cotton, castor seed, cotton seed and groundnut seed. The index of ‘fuel, power, light and lubricants’ group (weight 14.23 per cent) has remained unchanged at its previous week’s level of 328.3. The index of ‘manufactured products’ group constituting the maximum of 63.7 per cent of total weight, has also remained unchanged at it’s previous week’s level of 177.7. The latest final index of WPI for the week ended July 1, 2006 has been revised upwards; as a result both, the absolute index and the implied inflation rate stood at 203.8 and 5.21 per cent as against their provisional levels of 203.3 and 4.96 per cent, respectively. BankingThe Reserve Bank of India (RBI) in its recent annual report has emphasized the need for banks to make efforts to increase their disbursements to small and marginal farmers to 40 per cent of their direct advances under the Special Agriculture Credit Plans (SACPs) by March 2007. Two public sector banks and 12 private sector banks fell short of the target of 40 per cent as on March 2005. During 2004-05 the share of agriculture advances, as a percentage of net bank credit, increased in respect of public sector banks but decreased in respect of private sector banks. RBI has also stated the need for considering a comprehensive public policy on risk management in agriculture, not only as a means of relief for distressed farmers but as an ingredient for more efficient commercialised agriculture. SBI
Cards has become the second largest credit card company in the country by
issuing 2.92 million cards as on August 15, 2006. SBI cards, a joint
venture between State Bank of On
an application by the Reserve Bank of Public
Finance
The
direct tax collection of the union government has seen a remarkable
increase of 50.3 per cent
amounting to Rs 42,917 crore during April-August 2006 over the
corresponding period of the previous year ( Rs 28,554 crore). The
corporate tax collection has recorded a huge rise of
70.37 per cent during the period under consideration to Rs 22,587
crore (Rs 13,528 crore during April-August 2005). On the other hand,
income tax collections (including fringe benefit tax, securities
transaction tax and banking cash transaction tax) have gone up by 32.91
per cent to Rs 20.330 crore (Rs 15,296 crore).
Indirect tax revenues of the Centre grew by 23.82 per cent in
April-July 2006 to Rs 75,353 crore (Rs 60,854 crore) Financial MarketsCapital
Markets Primary
Market Gwalior
Chemical Industries Ltd is to tap the primary market through the issue of
shares in a price band of Rs 71-85 between September 11 and 14. Secondary
Market The
market has remained buoyant for the second week in September on the back
of continued inflow from FIIs and as oil prices dipped to a 5-month low.
The BSE Sensex rose 140.63 points, to finish on 11,918.65, for the week
ended Friday (8 September 2006). The S&P CNX Nifty has gained 36
points, to close at 3,471.45. The BSE Sensex has surged 136 points on
September 4th on the back of a strong US and steady Asian and
European markets. Another major trigger has been the government’s
statement that status quo remains on participatory notes. While
BSE Sensex registered gain of 1.19 per cent BSE Mid-cap and Small-cap have
registered 4.02 per cent and 3.73 per cent, respectively. Among the
sectoral indices of BSE except for BANKEX and IT all others have
registered positive. A circular issued by Stock Holding Corporation of India Limited (SHCIL) to trading members asking them to submit cash as collateral against shares last month (August 2006) has withdrawn, after intervention by the Securities and Exchange Board of India (SEBI). The circular had created confusion in broking circles and it has been felt that the move would dry up volume from the stock exchanges. In the circular, SHCIL, a leading clearing member, has blamed National Securities Clearing Corporation Limited (NSCCL) for the move. As NSCCL has asked clearing members such as SHCIL to submit the auditor's certificate indicating that the securities pledged in favour of NSCCL has owned by clearing members. However, being a professional clearing member, SHCIL does not own the securities, which are received by SHCIL from its trading members on account of collateral. As such it has proposed to replace these securities with cash. India-dedicated
funds have started receiving inflows in recent months, which has resulted
in a steady influx from FIIs in Indian stocks since late July 2006.
However, a section of the market expects correction in the near term, as
there has been a sharp rally over the past few days. From a low of
10,085.91 on 21 July, the Sensex has jumped 1,832.74 points (18.1 per
cent), to current 11,918.65. Derivatives
The daily average turnover on the NSE’s futures and options segment has increased to Rs 20,171 crore from Rs 24,960 crore in the previous week. Government
Securities Market Primary
Market RBI
has conducted the sale (re-issue) of 7.59 per cent Government Stock 2016
and 7.50 per cent Government Stock 2034 for a notified amount of Rs.6,000
crore and Rs.3,000 crore, respectively. The cut-off yields for the 7.59
per cent Government Stock 2016 and 7.50 per cent Government Stock 2034
have been 7.76 per cent and 8.45 per cent, respectively. Under
the weekly T-Bill auctions, RBI has mopped up Rs 2,000 crore and Rs 2,500
crore through 91-day T-Bill and 182-day T-Bill. From this, RBI has raised
Rs1,500 crore and Rs1,000 crore under the Market Stabilisation Scheme
(MSS) through 91-day T-Bill and 182-day T-Bill, respectively. The cut-off
yields for the 91-day and 182-day T-Bill have been 6.44 per cent and 6.74
per cent, respectively. The
cut-off yield in 91-day T-Bill auction has remained steady at 6.44 per
cent during the week. The cut-off yield in 182-day T-Bill auction has
moved higher to 6.74 per cent as against the previous cut-off yield of
6.72 per cent. Secondary
Market Call
rates during the period (September 4-8) has ranged between 6.07 per cent
and 6.09 per cent, while repo rates has stood between 5.96 per cent and
6.03 per cent and the CBLO rates ranged between 5.89 per cent and 6 per
cent. The daily average outstanding amounts in the LAF (reverse repo)
operations conducted during the period have been Rs 42,145 crore vis-à-vis
Rs 12,964 crore and Rs 14,616 crore for CBLO and Call market,
respectively. The
Governing Council of the ECB has left unchanged the minimum bid rate on
the main refinancing operations, the interest rates on the marginal
lending facility and the deposit facility at 3 per cent, 4 per cent and 2
per cent, respectively. The
Bank of England's Monetary Policy Committee has maintained the official
Bank rate (paid on commercial bank reserves) at 4.75 per cent. The Bank of
Canada has retained its target for the overnight rate at 4.25 per cent.
The Bank of Japan has continued the uncollateralised overnight call rate
to remain at around 0.25 per cent. Reserve
Bank Board of The
weighted average yield to maturity (YTM) of 7.59 per cent Government Stock
2016 bond has been 7.78 per cent on September 08, 2006 as compared to 7.88
per cent on September 01, 2006. The 1-11 year YTM spread has decreased by
6 bps to 94 bps. Bond
Market During
the week under review Rs 5,700 have been mobilised by 6 issuers including
4 banks 1 central and a state each, the highest mobilisations have been by
the SBI wherein it mobilized Rs 2,400 crore. Foreign
Exchange Market The
6-month forward premia fell to 1.34 per cent by the end of the week
(August 28) as against 1.37 per cent at the beginning of the week
(September 4). The Rupee spot rate has appreciated slightly to Rs 46.20 on
September 08, 2006 from Rs 46.44 at the start of the week. Foreign
Exchange reserves have increased by US$ 1,132 million and stood at US$
166.46 billion for the week ended September 1, 2006. RBI
has notified that the regulated entities in Indian financial sector
investing overseas in any activity will have to comply with the conditions
stipulated in Regulation 7 of the Notification No.FEMA120/RB-2004. Also
trading in Commodities Exchanges overseas and setting up JV/WOS for
trading in Overseas Commodities Exchanges will be reckoned as financial
services activity and will require clearance from the Forward Markets
Commission (FMC). Commodities
Futures derivatives NCDEX
has all set to launch spot market on electronic platform in Rajasthan and RBI
said that trading in commodity exchanges based abroad on setting up joint
ventures or wholly-owned subsidiary for the same will qualify as financial
services activity will need a clearance from FMC. Corporate SectorAditya
Birla Group has entered into a 70:30 joint venture (JV) agreement with
China based Hubei Jing Wei Chemical Fibre Company. Under the agreement,
the Aditya Birla Group, thorough its cellulose companies, including Grasim
Industries, Thai Rayon Public Company and P. T. Indo Bharat Rayon, Most of the major steel companies have increased the galvanised steel prices by Rs 500-1000 per tonne. JSW Steel and Ispat Industries have hiked prices by Rs 500-750 per tonne, on the back of rising zinc prices. Uttam Galva has increased prices in the range of Rs 500-1000 a tonne. The price increase primarily accounts for the steep increase of the zinc prices, a key input material for galvanising. For every tonne of galvanised steel 40 kg of zinc is required. Hyundai Motor India Limited has discontinued the sale of Terracan, its top-end sports utility vehicles, in the country due to the market’s poor response to the vehicle. The company has sold only 200 Terracans in 2005. Ashok Leyland’s total sales has stood at 6,483 vehicles including exports during August 2006 as compared to 4,737 vehicles a year ago, registering arise of 37 per cent. The company’s exports during August 2006 have registered a whooping 137 per cent rise at 786 units as against 331 units over August 2005. During April-August 2006, the company has sold total 28,754 vehicles against 22,340 vehicles including exports, a 29 per cent rise. Era Construction has secured order worth Rs 114.8 crore from Rail Vikas Nigam Limited for laying railway tracks on Bhatapara Urkura (Chattisgarh) section on the South East central Railway. LabourAs far as the progress of the ‘National Rural Employment Guarantee Scheme’ (NREGS) is concerned, which was launched by the government in February 2006, the latest figures from the Ministry of Rural Development are not very optimistic. The scheme, which has promised guaranteed employment to every rural household for at least 100 days per year has been able to provide employment to only 83 lakh people, while two crore people had registered under the scheme. The state-wise number of job cards issued and the actual workers on the field are as follows:
In
most of the states where the programme is being implemented, it has been
observed that the number of jobs created under various public works
programme has been far short of the number of jobs required. For instance,
in Orissa, while 21 lakh households have job cards, only seven lakh people
have been actually employed, which shows that there is no sufficient work
to absorb the entire pool of labourers. However, some states like Tripura
and External SectorDespite
*These statistics and the accompanying review are a product arising from the work undertaken under the joint ICICI research centre.org-EPWRF Data Base Project. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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