Recently, the Standing Committee on Health and Family Welfare submitted its report to the Parliament on the National Commission for Human Resource for Health Bill, 2011.  The objective of the Bill is to “ensure adequate availability of human resources in the health sector in all states”.  It seeks to set up the National Commission for Human Resources for Health (NCHRH), National Board for Health Education (NBHE), and the National Evaluation and Assessment Council (NEAC) in order to determine and regulate standards of health education in the country.  It separates regulation of the education sector from that of professions such as law, medicine and nursing, and establishes professional councils at the national and state levels to regulate the professions. See here for PRS Bill Summary. The Standing Committee recommended that this Bill be withdrawn and a revised Bill be introduced in Parliament after consulting stakeholders.  It felt that concerns of the professional councils such as the Medical Council of India and the Dental Council of India were not adequately addressed.  Also, it noted that the powers and functions of the NCHRH and the National Commission on Higher Education and Research (to be established under the Higher Education and Research Bill, 2011 to regulate the higher education sector in the country) were overlapping in many areas.  Finally, it also expressed concern over the acute shortage of qualified health workers in the country as well as variations among states and rural and urban areas.  As per the 2001 Census, the estimated density of all health workers (qualified and unqualified) is about 20% less than the World Health Organisation’s norm of 2.5 health workers per 1000 population. See here for PRS Standing Committee Summary. Shortfall of health workers in rural areas Public health care in rural areas is provided through a multi-tier network.  At the lowest level, there are sub health-centres for every population of 5,000 in the plains and 3,000 in hilly areas.  The next level consists of Primary Health Centres (PHCs) for every population of 30,000 in the plains and 20,000 in the hills.  Generally, each PHC caters to a cluster of Gram Panchayats.  PHCs are required to have one medical officer and 14 other staff, including one Auxiliary Nurse Midwife (ANM).  There are Community Health Centres (CHCs) for every population of 1,20,000 in the plains and 80,000 in hilly areas.  These sub health centres, PHCs and CHCs are linked to district hospitals.  As on March 2011, there are 14,8124 sub health centres, 23,887 PHCs and 4809 CHCs in the country.[i]  Sub-Health Centres and Primary Health Centres

  • § Among the states, Chhattisgarh has the highest vacancy of doctors at 71%, followed byWest Bengal(44%),Maharashtra(37%), and Uttar Pradesh (36%). On the other hand, Rajasthan (0.4%), Andhra Pradesh (3%) and Kerala (7%) have the lowest vacancies in PHCs.
  • § Nine states do not have any doctor vacancies at all at the PHC level. These states includeBihar, Jharkhand andPunjab.
  • § Ten states have vacancy in case of ANMs.  These are: Manipur, Uttar Pradesh, Chhattisgarh,Gujarat,Goa, Himachal Pradesh, Tamil Nadu, Haryana, Kerala and Andhra Pradesh.
  • § The overall vacancy for ANMs in the country is 5% while for doctors it is 24%.

Table 1: State-wise comparison of vacancy in PHCs

 

Doctors at PHCs

ANM at PHCs and Sub-Centres

State Sanctioned post Vacancy % of vacancy Sanctioned post Vacancy % of vacancy
 Chhattisgarh 1482 1058 71 6394 964 15
 West Bengal 1807 801 44 10,356 NA 0
 Maharashtra 3618 1326 37 21,122 0 0
 Uttar Pradesh 4509 1648 36 25,190 2726 11
 Mizoram 57 20 35 388 0 0
 Madhya Pradesh 1238 424 34 11,904 0 0
 Gujarat 1123 345 31 7248 817 11
 Andaman & Nicobar Isld 40 12 30 214 0 0
 Odisha 725 200 28 7442 0 0
 Tamil Nadu 2326 622 27 9910 136 1
 Himachal Pradesh 582 131 22 2213 528 24
 Uttarakhand 299 65 22 2077 0 0
 Manipur 240 48 20 984 323 33
 Haryana 651 121 19 5420 386 7
 Sikkim 48 9 19 219 0 0
 Meghalaya 127 23 18 667 0 0
 Delhi 22 3 14 43 0 0
 Goa 46 5 11 260 20 8
 Karnataka 2310 221 10 11,180 0 0
 Kerala 1204 82 7 4232 59 1
 Andhra Pradesh 2424 76 3 24,523 2876 12
 Rajasthan 1478 6 0.4 14,348 0 0
 Arunachal Pradesh  NA  NA NA NA NA 0
 Assam  NA  NA NA NA NA 0
 Bihar 2078  0 NA NA NA 0
 Chandigarh 0 0 NA 17 0 0
 Dadra & Nagar Haveli 6 0 NA 40 0 0
 Daman & Diu 3  0 NA 26 0 0
 Jammu & Kashmir 750  0 NA 2282 0 0
 Jharkhand 330  0 NA 4288 0 0
 Lakshadweep 4  0 NA NA NA 0
 Nagaland  NA  NA NA NA NA 0
 Puducherry 37 0 NA 72 0 0
 Punjab 487 0 NA 4044 0 0
 Tripura  NA  NA NA NA NA 0
 India 30,051 7,246 24 1,77,103 8,835 5
Sources: National Rural Health Mission (available here), PRS.Note: The data for all states is as of March 2011 except for some states where data is as of 2010.  For doctors, these states are Bihar, UP, Mizoram and Delhi.  For ANMs, these states are Odisha and Uttar Pradesh.

 

Community Health Centres

  • § A CHC is required to be manned by four medical specialists (surgeon, physician, gynaecologist and paediatrician) and 21 paramedical and other staff.
  • § As of March 2011, overall there is a 39% vacancy of medical specialists in CHCs.  Out of the sanctioned posts, 56% of surgeons, 47% of gynaecologists, 59% of physicians and 49% of paediatricians were vacant.
  • States such as Chhattisgarh, Manipur and Haryana have a high rate of vacancies at the CHC level.

Table 2: Vacancies in CHCs of medical specialists

  Surgeons Gynaecologists Physicians Paediatricians
State

% of vacancy

 Andaman & NicobarIsland 100 100 100 100
 Andhra Pradesh 74 0 45 3
 Arunachal Pradesh NA NA NA NA
 Assam NA NA NA NA
 Bihar 41 44 60 38
 Chandigarh 50 40 50 100
 Chhattisgarh 85 85 90 84
 Dadra & Nagar Haveli 0 0 0 0
 Daman & Diu 0 100 0 100
 Delhi 0 0 0 0
 Goa 20 20 67 66
 Gujarat 77 73 0 91
 Haryana 71 80 94 85
 Himachal Pradesh NA NA NA NA
 Jammu & Kashmir 34 34 53 63
 Jharkhand 45 0 81 61
 Karnataka 33 NA NA NA
 Kerala NA NA NA NA
 Lakshadweep 0 0 100 0
 Madhya Pradesh 78 69 76 58
 Maharashtra 21 0 34 0
 Manipur 100 94 94 87
 Meghalaya 50 NA 100 50
 Mizoram NA NA NA NA
 Nagaland NA NA NA NA
 Odisha 44 45 62 41
 Puducherry 0 0 100 NA
 Punjab 16 36 40 48
 Rajasthan 57% 46 49 24
 Sikkim NA NA NA NA
 Tamil Nadu 0 0 0 0
 Tripura NA NA NA NA
 Uttar Pradesh NA NA NA NA
 Uttarakhand 69 63 74 40
 West Bengal 0 57 0 78
 India 56 47 59 49
Sources: National Rural Health Mission (available here), PRS.

[i].  “Rural Healthcare System in India”, National Rural Health Mission (available here).  

Recently, the Indian Railways announced rationalisation of freight fares.  This rationalisation will result in an 8.75% increase in freight rates for major commodities such as coal, iron and steel, iron ore, and raw materials for steel plants. The freight rates were rationalised to ensure additional revenue generation across the network. An additional revenue of Rs 3,344 crore is expected from such rationalisation, which will be utilised to improve passenger amenities. In addition, the haulage charge of containers has been increased by 5% and the freight rates of other small goods have been increased by 8.75%. Freight rates have not been increased for goods such as food grains, flours, pulses, fertilisers, salt, and sugar, cement, petroleum, and diesel. In light of this, we discuss some issues around Railways’ freight pricing.

Railways’ sources of internal revenue

Railways earns its internal revenue primarily from passenger and freight traffic. In 2016-17 (latest actual figures available), freight and passenger traffic contributed to about 63% and 28% of the internal revenue, respectively. The remaining is earned from miscellaneous sources such as parcel service, coaching receipts, and platform tickets.

Freight traffic: Railways majorly transports bulk freight, and the freight basket has mostly been limited to include raw materials for certain industries such as power plants, and iron and steel plants. It generates most of its freight revenue from the transportation of coal (43%), followed by cement (8%), food-grains (7%), and iron and steel (7%). In 2018-19, Railways expects to earn Rs 1,21,950 crore from its freight traffic.

Railways fig1

Passenger traffic:  Passenger traffic is broadly divided into two categories: suburban and non-suburban traffic.  Suburban trains are passenger trains that cover short distances of up to 150 km, and help move passengers within cities and suburbs.  Majority of the passenger revenue (94% in 2017-18) comes from the non-suburban traffic (or the long-distance trains).

Within non-suburban traffic, second class (includes sleeper class) contributes to 67% of the non-suburban revenue.  AC class (includes AC 3-tier, AC Chair Car and AC sleeper) contributes to 32% of the non-suburban revenue.  The remaining 1% comes from AC First Class (includes Executive class and First Class).

Railways’ ability to generate its own revenue has been slowing

The growth rate of Railways’ earnings from its core business of running freight and passenger trains has been declining.  This is due to a decline in the growth of both freight and passenger traffic.  Some of the reasons for such decline include:

Freight traffic growth has been declining, and is limited to a few items

Growth of freight traffic has been declining over the last few years.  It has declined from around 8% in the mid-2000s to a 4% negative growth in mid-2010s, before an estimated recovery to about 5% now.

The National Transport Development Policy Committee (2014) had noted various issues with freight transportation on railways.  For example, Indian Railways does not have an institutional arrangement to attract and aggregate traffic of smaller parcel size.  Further, freight services are run with a focus on efficiency instead of customer satisfaction.  Consequently, it has not been able to capture high potential markets such as FMCGs, hazardous materials, or automobiles and containerised cargo.  Most of such freight is transported by roads.

Figure 2_Railways

The freight basket is also limited to a few commodities, most of which are bulk in nature.  For example, coal contributes to about 43% of freight revenue and 25% of the total internal revenue.  Therefore, any shift in transport patterns of any of these bulk commodities could affect Railways’ finances significantly.

For example, if new coal based power plants are set up at pit heads (source of coal), then the need for transporting coal through Railways would decrease.  If India’s coal usage decreases due to a shift to more non-renewable sources of energy, it will reduce the amount of coal being transported.  Such situations could have a significant adverse impact on Railways’ revenue.

Freight traffic cross-subsidises passenger traffic

In 2014-15, while Railways’ freight business made a profit of about Rs 44,500 crore, its passenger business incurred a net loss of about Rs 33,000 crore.17  The total passenger revenue during this period was Rs 49,000 crore.  This implies that losses in the passenger business are about 67% of its revenue.  Therefore, in 2014-15, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.67.

These losses occur across both suburban and non-suburban operations, and are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers.  According to the NITI Aayog (2016), about 77% to 80% of these losses are contributed by non-suburban operations (long-distance trains).  Concessions to various categories of passengers contribute to about 4% of these losses, and the remaining (73-76%) is due to fares being lower than the system costs.

The NITI Aayog (2016) had noted that Railways ends up using profits from its freight business to provide for such losses in the passenger segment, and also to manage its overall financial situation.  Such cross-subsidisation has resulted in high freight tariffs.  The NTDPC (2014) had noted that, in several countries, passenger fares are either higher or almost equal as freight rates.  However, in India, the ratio of passenger fare to freight rate is about 0.3.

Fig 3_Railways

Impact of increasing freight rates

The recent freight rationalisation further increases the freight rates for certain key commodities by 8.75%, with an intention to improve passenger amenities.  Higher freight tariffs could be counter-productive towards growth of traffic in the segment.  The NTDPC report had noted that due to such high tariffs, freight traffic has been moving to other modes of transport.  Further, the higher cost of freight segment is eventually passed on to the common public in the form of increased costs of electricity, steel, etc.  Various experts have recommended that Railways should consider ways to rationalise freight and passenger tariff distortions in a way to reduce such cross-subsidisation.

For a detailed analysis of Railways revenue and infrastructure, refer to our report on State of Indian Railways.