IDEAS home Printed from https://ideas.repec.org/a/eee/soceps/v76y2021ics0038012120308120.html
   My bibliography  Save this article

Expense based performance analysis and resource rationalization: Case of Indian Railways

Author

Listed:
  • Bhatia, Vinod
  • Sharma, Seema

Abstract

With rapid economic growth in India, lot of emphasis has been given on railway infrastructure development in last few years. Indian Railways has been striving hard to bring down the costs and improve upon the operating ratio. The purpose of this study is to evaluate the efficiency performance of different railway zones and suggest cost saving strategies for its zones. The paper employs the Constant Return to Scale (CRS) and Variable Return to Scale (VRS) data-envelopment methods as well as performs sensitivity analysis with the set of variables to analyze the efficiency of sixteen railway zones over Indian Railways network. The study is based upon the data published by Ministry of Railways in Indian Railways Annual Statistical Statements. The results highlight the inefficiencies of different zones and suggest the changes that may be incorporated in inputs, by comparing the performance of underperforming units with that of best practice units. The study mainly suggests the importance of operating and working expenses as input parameters in benchmarking analysis while considering output in terms of passenger-kilometer and net ton-kilometers. Results obtained from Data Envelopment Analysis (DEA)-Malmquist Index show that technological innovation and staff management are important factors in cost reduction. The paper further highlights the important issues for consideration of different stakeholders in railway sector i.e. rail operators, policy makers, customers and infrastructure managers. The results give valuable insight on performance evaluation to Indian railway industry as well as comparable railway systems existing in other parts of globe.

Suggested Citation

  • Bhatia, Vinod & Sharma, Seema, 2021. "Expense based performance analysis and resource rationalization: Case of Indian Railways," Socio-Economic Planning Sciences, Elsevier, vol. 76(C).
    • Handle: RePEc:eee:soceps:v:76:y:2021:i:c:s0038012120308120
    DOI: 10.1016/j.seps.2020.100975
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0038012120308120
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.seps.2020.100975?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. William W. Cooper & Lawrence M. Seiford & Joe Zhu (ed.), 2011. "Handbook on Data Envelopment Analysis," International Series in Operations Research and Management Science, Springer, number 978-1-4419-6151-8, September.
    2. Gathon, H. -J. & Pestieau, P., 1995. "Decomposing efficiency into its managerial and its regulatory components: The case of European railways," European Journal of Operational Research, Elsevier, vol. 80(3), pages 500-507, February.
    3. Carey, Malachy & Crawford, Ivan, 2007. "Scheduling trains on a network of busy complex stations," Transportation Research Part B: Methodological, Elsevier, vol. 41(2), pages 159-178, February.
    4. Odeck, James, 2008. "How efficient and productive are road toll companies?: Evidence from Norway," Transport Policy, Elsevier, vol. 15(4), pages 232-241, July.
    5. Jain, Priyanka & Cullinane, Sharon & Cullinane, Kevin, 2008. "The impact of governance development models on urban rail efficiency," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(9), pages 1238-1250, November.
    6. Nadia Tahir, 2013. "Efficiency Analysis Of Pakistan Railway In Comparison With China And India," Articles, International Journal of Transport Economics, vol. 40(1).
    7. Cantos, Pedro & Manuel Pastor, José & Serrano, Lorenzo, 2012. "Evaluating European railway deregulation using different approaches," Transport Policy, Elsevier, vol. 24(C), pages 67-72.
    8. Yu, Ming-Miin, 2008. "Assessing the technical efficiency, service effectiveness, and technical effectiveness of the world's railways through NDEA analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(10), pages 1283-1294, December.
    9. Perelman, Sergio & Pestieau, Pierre, 1988. "Technical performance in public enterprises : A comparative study of railways and postal services," European Economic Review, Elsevier, vol. 32(2-3), pages 432-441, March.
    10. Kroon, Leo G. & Edwin Romeijn, H. & Zwaneveld, Peter J., 1997. "Routing trains through railway stations: complexity issues," European Journal of Operational Research, Elsevier, vol. 98(3), pages 485-498, May.
    11. Olli-Pekka Hilmola, 2010. "Analysing global railway passenger transport through two-staged efficiency model," International Journal of Information and Decision Sciences, Inderscience Enterprises Ltd, vol. 2(3), pages 273-284.
    12. Yu, Ming-Miin & Lin, Erwin T.J., 2008. "Efficiency and effectiveness in railway performance using a multi-activity network DEA model," Omega, Elsevier, vol. 36(6), pages 1005-1017, December.
    13. Zwaneveld, Peter J. & Kroon, Leo G. & van Hoesel, Stan P. M., 2001. "Routing trains through a railway station based on a node packing model," European Journal of Operational Research, Elsevier, vol. 128(1), pages 14-33, January.
    14. Mohammad Mahallati Rayeni & Faranak Hosseinzadeh Saljooghi, 2014. "Ranking and measuring efficiency using secondary goals of cross-efficiency evaluation - a study of railway efficiency in Iran," International Journal of Services and Operations Management, Inderscience Enterprises Ltd, vol. 17(1), pages 1-16.
    15. Olli‐Pekka Hilmola, 2007. "European railway freight transportation and adaptation to demand decline," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 56(3), pages 205-225, March.
    16. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    17. Miguel Urdánoz & Catherine Vibes, 2013. "Regulation and cost efficiency in the European railways industry," Journal of Productivity Analysis, Springer, vol. 39(3), pages 217-230, June.
    18. Feli X. Shi & Siew Hoon Lim & Junwook Chi, 2011. "Railroad productivity analysis: case of the American Class I railroads," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 60(4), pages 372-386, April.
    19. Chi-Hong (Patrick) Tsai & Corinne Mulley & Rico Merkert, 2015. "Measuring the Cost Efficiency of Urban Rail Systems An International Comparison Using DEA and Tobit Models," Journal of Transport Economics and Policy, University of Bath, vol. 49(1), pages 17-34, January.
    20. Laurino, Antonio & Ramella, Francesco & Beria, Paolo, 2015. "The economic regulation of railway networks: A worldwide survey," Transportation Research Part A: Policy and Practice, Elsevier, vol. 77(C), pages 202-212.
    21. Wilson, Paul W, 1993. "Detecting Outliers in Deterministic Nonparametric Frontier Models with Multiple Outputs," Journal of Business & Economic Statistics, American Statistical Association, vol. 11(3), pages 319-323, July.
    22. Yoshida, Yuichiro & Fujimoto, Hiroyoshi, 2004. "Japanese-airport benchmarking with the DEA and endogenous-weight TFP methods: testing the criticism of overinvestment in Japanese regional airports," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 40(6), pages 533-546, November.
    23. Steven Hackman & Edward Frazelle & Paul Griffin & Susan Griffin & Dimitra Vlasta, 2001. "Benchmarking Warehousing and Distribution Operations: An Input-Output Approach," Journal of Productivity Analysis, Springer, vol. 16(1), pages 79-100, July.
    24. Oum, Tae Hoon & Pathomsiri, Somchai & Yoshida, Yuichiro, 2013. "Limitations of DEA-based approach and alternative methods in the measurement and comparison of social efficiency across firms in different transport modes: An empirical study in Japan," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 57(C), pages 16-26.
    25. Chu, Xuehao & Fielding, Gordon J. & Lamar, Bruce W., 1992. "Measuring transit performance using data envelopment analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 26(3), pages 223-230, May.
    26. Pina, Vicente & Torres, Lourdes, 2001. "Analysis of the efficiency of local government services delivery. An application to urban public transport," Transportation Research Part A: Policy and Practice, Elsevier, vol. 35(10), pages 929-944, December.
    27. Zwaneveld, P.J. & Kroon, L.G. & van Hoesel, C.P.M., 1997. "Routing trains through a railway station based on a Node Packing model," Research Memorandum 030, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    28. Léopold Simar, 2003. "Detecting Outliers in Frontier Models: A Simple Approach," Journal of Productivity Analysis, Springer, vol. 20(3), pages 391-424, November.
    29. Thi Thanh Huyen Nguyen & Gervais Thenet & Khac Minh Nguyen, 2015. "Applying DEA sensitivity analysis to efficiency measurement of Vietnamese universities," Post-Print halshs-01595799, HAL.
    30. Carey, Malachy & Carville, Sinead, 2003. "Scheduling and platforming trains at busy complex stations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 37(3), pages 195-224, March.
    31. Yuan, Jianxin & Hansen, Ingo A., 2007. "Optimizing capacity utilization of stations by estimating knock-on train delays," Transportation Research Part B: Methodological, Elsevier, vol. 41(2), pages 202-217, February.
    32. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
    33. A. Charnes & W. W. Cooper, 1957. "Management Models and Industrial Applications of Linear Programming," Management Science, INFORMS, vol. 4(1), pages 38-91, October.
    34. PERELMAN, Sergio & PESTIEAU, Pierre, 1988. "Technical performance in public enterprises," LIDAM Reprints CORE 797, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    35. Mallikarjun, Sreekanth & Lewis, Herbert F. & Sexton, Thomas R., 2014. "Operational performance of U.S. public rail transit and implications for public policy," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 74-88.
    36. Jitsuzumi, Toshiya & Nakamura, Akihiro, 2010. "Causes of inefficiency in Japanese railways: Application of DEA for managers and policymakers," Socio-Economic Planning Sciences, Elsevier, vol. 44(3), pages 161-173, September.
    37. Oum, Tae Hoon & Yu, Chunyan, 1995. "A productivity comparison of the world's major airlines," Journal of Air Transport Management, Elsevier, vol. 2(3), pages 181-195.
    38. William W. Cooper & Lawrence M. Seiford & Kaoru Tone, 2007. "Data Envelopment Analysis," Springer Books, Springer, edition 0, number 978-0-387-45283-8, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Thiago Victorino & Carlos Rosano Peña, 2023. "The Development of Efficiency Analysis in Transportation Systems: A Bibliometric and Systematic Review," Sustainability, MDPI, vol. 15(13), pages 1-32, June.
    2. Elżbieta Szaruga & Elżbieta Załoga & Arkadiusz Drewnowski & Paulina Dąbrosz-Drewnowska, 2023. "Convergence of Energy Intensity of the Export of Goods by Rail Transport: Linkages with the Spatial Integration and Economic Condition of Countries," Energies, MDPI, vol. 16(9), pages 1-24, April.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marchetti, Dalmo & Wanke, Peter, 2017. "Brazil's rail freight transport: Efficiency analysis using two-stage DEA and cluster-driven public policies," Socio-Economic Planning Sciences, Elsevier, vol. 59(C), pages 26-42.
    2. Sarmento, Joaquim Miranda & Renneboog, Luc & Verga-Matos, Pedro, 2017. "Measuring highway efficiency : A DEA approach and the Malquist index," Other publications TiSEM 23264815-321e-45a3-83ee-9, Tilburg University, School of Economics and Management.
    3. Marchetti, Dalmo & Wanke, Peter F., 2019. "Efficiency in rail transport: Evaluation of the main drivers through meta-analysis with resampling," Transportation Research Part A: Policy and Practice, Elsevier, vol. 120(C), pages 83-100.
    4. Mallikarjun, Sreekanth & Lewis, Herbert F. & Sexton, Thomas R., 2014. "Operational performance of U.S. public rail transit and implications for public policy," Socio-Economic Planning Sciences, Elsevier, vol. 48(1), pages 74-88.
    5. Huang, Wencheng & Shuai, Bin & Sun, Yan & Wang, Yang & Antwi, Eric, 2018. "Using entropy-TOPSIS method to evaluate urban rail transit system operation performance: The China case," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 292-303.
    6. Niu, Yanliang & Li, Xin & Zhang, Jiangxue & Deng, Xiaopeng & Chang, Yuan, 2023. "Efficiency of railway transport: A comparative analysis for 16 countries," Transport Policy, Elsevier, vol. 141(C), pages 42-53.
    7. Le, Yiping & Oka, Minami & Kato, Hironori, 2022. "Efficiencies of the urban railway lines incorporating financial performance and in-vehicle congestion in the Tokyo Metropolitan Area," Transport Policy, Elsevier, vol. 116(C), pages 343-354.
    8. Mahmoudi, Reza & Emrouznejad, Ali & Shetab-Boushehri, Seyyed-Nader & Hejazi, Seyed Reza, 2020. "The origins, development and future directions of data envelopment analysis approach in transportation systems," Socio-Economic Planning Sciences, Elsevier, vol. 69(C).
    9. Wey, Wann-Ming & Kang, Chao-Chung & Khan, Haider A., 2020. "Evaluating the effects of environmental factors and a transfer fare discount policy on the performance of an urban metro system," Transport Policy, Elsevier, vol. 97(C), pages 172-185.
    10. José Solana‐Ibáñez & Manuel Caravaca‐Garratón & Ricardo Teruel‐Sánchez, 2020. "Stakeholder perception on corporate reputation and management efficiency: Evidence from the Spanish Defence sector," Corporate Social Responsibility and Environmental Management, John Wiley & Sons, vol. 27(5), pages 2381-2399, September.
    11. Thiago Victorino & Carlos Rosano Peña, 2023. "The Development of Efficiency Analysis in Transportation Systems: A Bibliometric and Systematic Review," Sustainability, MDPI, vol. 15(13), pages 1-32, June.
    12. Brida, Juan Gabriel & Deidda, Manuela & Pulina, Manuela, 2014. "Tourism and transport systems in mountain environments: analysis of the economic efficiency of cableways in South Tyrol," Journal of Transport Geography, Elsevier, vol. 36(C), pages 1-11.
    13. Karlaftis, Matthew G. & Tsamboulas, Dimitrios, 2012. "Efficiency measurement in public transport: Are findings specification sensitive?," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(2), pages 392-402.
    14. Jingliu Xu & Zhimei Wang & Shangjun Yao & Jiarong Xue, 2022. "Train Operations Organization in High-Speed Railway Station Considering Variable Configuration," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    15. Tavassoli, Mohammad & Faramarzi, Gholam Reza & Farzipoor Saen, Reza, 2014. "Efficiency and effectiveness in airline performance using a SBM-NDEA model in the presence of shared input," Journal of Air Transport Management, Elsevier, vol. 34(C), pages 146-153.
    16. Changhee Kim & Soo Wook Kim & Hee Jay Kang & Seung-Min Song, 2017. "What Makes Urban Transportation Efficient? Evidence from Subway Transfer Stations in Korea," Sustainability, MDPI, vol. 9(11), pages 1-18, November.
    17. Holden, R. & Xu, B. & Greening, P. & Piecyk, M. & Dadhich, P., 2016. "Towards a common measure of greenhouse gas related logistics activity using data envelopment analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 91(C), pages 105-119.
    18. Holvad, Torben, 2020. "Efficiency analyses for the railway sector: An overview of key issues," Research in Transportation Economics, Elsevier, vol. 82(C).
    19. Yu, Ming-Miin, 2008. "Assessing the technical efficiency, service effectiveness, and technical effectiveness of the world's railways through NDEA analysis," Transportation Research Part A: Policy and Practice, Elsevier, vol. 42(10), pages 1283-1294, December.
    20. Hao Zhang & Xinyue Wang & Letao Chen & Yujia Luo & Sujie Peng, 2022. "Evaluation of the Operational Efficiency and Energy Efficiency of Rail Transit in China’s Megacities Using a DEA Model," Energies, MDPI, vol. 15(20), pages 1-16, October.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:soceps:v:76:y:2021:i:c:s0038012120308120. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/seps .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.