Apart from being a commercial organization; Indian Railways is required to engage in so called Social Service Obligations. What are they and what is their importance to India? Examine.
Indian Railways carries out several transport activities that are essentially uneconomic and have a larger interest in the economically disadvantaged sections of the society. Losses incurred on this account fall under the Social Service Obligation of Indian Railways.
- The losses related to the essential Commodities carried below cost
- Losses incurred in passenger and Other Coaching services
- Operation of the uneconomic branch Lines
- New Lines opened for traffic during the past 15 years.
Problems faced by Indian Railways
- Most of the money, the railway manages to earn is spent on its running. There is no scope for looking beyond the running operations.
- The operating ratio denotes the percentage of the money that goes into running the Railways. The surplus has declined and there are hardly any resources for development works.
- There is a rising dependence on budget. The Rail budget documents reveal that currently, Railways loses 23 paise per passenger per km.
Necessity in India
Apart from being a commercial organization, the Indian railway is hardly able to cover its expenses because of the massive Social Service Obligation imposed by years of populist budgets. Indian Railways is required to engage in certain uneconomic operations to provide affordable transport facilities to the financially weaker sections of society and to facilitate the movement of essential commodities at below normal costs. The losses incurred by Railways on this particular account are known as Indian Railways “Social Service Obligation”.