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(v)
Dedicated to my MAA Late Uma Rani De whose wish, to see her graduate son, cound not be fulfilled because of her sudden ultimate death in 1955.
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(vii)
PREFACE It is universally recognized that in order to overcome the rigidities inherent in a less developed country (LDC), the state must play a positive role. The provision of social and Economic overheads in LDC falls mostly under the state activities. The need for basic services like Railways, Road Transport, Telecommunication, Gas, Electricity is imperative for future development. Economic Development is not possible without education. Public health measures assume great importance in LDCs mainly because they help in the development process by augmenting labour productivity and efficiency and also by reducing the mortality rate, which controls rate of population growth. These basic socio-economic services are often referred to as PUBLIC SYSTEMS. Development of such Public systems entails large investment. Again investments in such Pubic utilities are rising and their benefits accrue over long period. At independence in 1947, India was ALDC with low per capita income, low rate of capital formation, low human quality and low industrial output compared to total output. The people of independent India adopted Parliamentary form of democracy. The democratic Government embraced mixed economy, where the state and the private entrepreneur were to play their role for socio-economic development of the country in a planned manner. This development process calls for economic overheads. Because of resource constraints and lack of capacity of private enterprise, such large scale investment in public systems with high gestation period was left to the initiative of the state. Subsequently management of such infrastructural facilities was vested with Government departments. However, use of such facilities by the general masses was either highly subsidized or was totally free. During the first four decades after independence, there was accelerated growth of economic development. This resulted increased per capita income, moderate rate of capital formation, better human quality and large volume of population. Servicing of 100 crore population demands increase in size of the economy and social upliftment of people. The Government of India adopted liberalized open market economy in 1991 for increasing the size of the economy. Rapid increase in volume of economy requires more efficient modern public systems. The Government Policy stated that provision for Public utility services does not necessarily imply that they shall be owned and operated by the state. The state may approve the plan for a particular project, provide finance and other necessary constructional facilities to a private concern which would construct and own it. Its working might, however, be regulated by the state. Since last 14 years after opening of the economy in 1991, the Government have welcomed private investment for development of Infrastructural facilities all over the country. Ironically since 1990 and till today there is a minority Government at the center, but may or steps were taken for restructuring and reform in Infrastructural sector for its modernization, upgradation and additional capacity creation. The principal objective is to accelerate the rate of economic activities. The modernized and new public systems are required to be managed in an efficient
manner such that the masses could obtain reliable services at an affordable price. This requires trained Managers for Management of Public systems. Keeping this in mind, the Government of India embarked upon a course on Public systems Management and requested eminent management Institutes of the country to implement same such that trained manpower could be made available for Public systems Management. Thanks to the initiative of late (Dr) A C Roy, Former Chairman of Calcutta Port Trust (CPT) and the then Director of the Premier Management Institute of this country, Indian Institute of Social Welfare & Business Management (IISW & BM), who responded positively to the call of the Government and introduced the PSM Courses. Over the last decades all the universities in the country introduced Public systems management as one of the core subject in BBNA and MBA courses. However, a comprehensive book for the benefit of the student community for such a vast subject was yet to be published. I convey my sincere thanks to the faculty members of Management Education Center (MEC), Heritage Institute of Technology (HIT), Kolkata for their continuous encouragement in preparing this book. I also acknowledge the valuable contributions from numerous friends among academicians, students, practicing Engineers and professional managers, discussions with whom spread over long period, helped in no small manner in formulating the ideas presented here. I am grateful to Dr. Bani K. Sinha, Director, MEC, HIT, Kolkata for the pains taken by him in editing this book. Finally thanks are also due to Shri U Bhaskaran, who prepared typescript with considerable effort and care. Swiss Park Kolkata 700033
BARUN KUMAR DE
CONTENTS
Preface 1.
2.
(vii)
Introduction
1
1.0
Organizational Form and Alternate Motives of a Firm
2
1.1
Development of Public System in India
5
1.2
Management of Public Systems
9
Health Care Management
19
2.0
Human Health
19
2.1
Disease and Prevention
20
2.2
Global Health Patterns
21
2.3
Current Pattern of Death and Disease
22
2.4
Biological Hazards
24
2.5
Health Care Management
25
2.6
Health Policy and Health Care Programme of the Government of India
25
2.7
Constitutional and Administrative Framework for Health Care
28
2.8
Enactments on Prevention and Health Safety Aspects
28
2.9
Need for Proper Perspective in Health Policy and Administration
28
2.10
Disease Control Programme
30
2.11
National Mental Health Programme
33
2.12
National Surveillance Programme for Communicable Diseases
33
2.13
Guinea Worm Eradication Programme
33
2.14
Yaws Eradication Programme
33
2.15
National Cancer Control Programme
33
2.16
Medical Relief and Supplies
34
2.17
World Bank Assisted Capacity Building Project on Food Safety
35
2.18
Ayurveda, Yoga and Nuturopathy, Unani, Siddha and Homoeopathy (Ayush)
36
2.19
Institutionalisation of Health Delivery System
37
2.20
Integrated Management of Neonatal and Childhood Illnesses
43
(x) 3.
Hospital Management
46
3.0
Introduction
46
3.1
Hospital Planning
46
3.2
Hospital Infrastructure
47
3.3
Size of Nursing Unit
49
3.4
Record Keeping in Hospital
50
3.5
Contents of Medical Records
50
3.6
Medical Record Keeping
51
3.7
Application of Medical Records
51
3.8
Quality of Medical Records
52
3.9
Materials Management in Hospitals
53
3.10
Stores Management
56
3.11
Inventory Management
56
3.12
Leasing of Hospital Equipment
58
3.13
Maintenance Management in Hospital
58
3.14
Maintenance Management
59
3.15
Importance of Statistics of Failure
60
3.16
Classification of Maintenance
62
3.17
Spare Parts Management
62
3.18
Hospital Maintenance
63
3.19
Management of Hospital Waste
64
3.20
Infectious Waste Management
64
3.21
Computers in Hospital Administration
66
3.22
Medical Informatics and Telemedicine
67
3.23
Marketing Management and Public Relations in Hospital
68
3.24
Marketing of Hospital Products
68
3.25
Financial Management and Cost Containment in Hospital
70
3.26
Funding of a Hospital Project
71
3.27
Hospital Project Preparation
73
3.28
Hospital Project Apparaisal
74
3.29
Hospital Project Risk Analysis
75
3.30
Working Capital Management in Health Care Services
76
3.31
Profit Centre and Cost Centre
77
3.32
Cost Reduction and Cost Control
77
3.33
Personal Management, Administration and HRD in Hospital
78
3.34
Performance Appraisal
81
3.35
Training
82
(xi) 3.36
4.
5.
Organisation Structure of a Private Hospital
83
3.37
Organisation Structure of a Government Hospital
87
3.38
Quality Control in Health Care in Hospital
88
3.39
ISO 9000
89
3.40
Environment of Quality Control
89
Transport Management Roads, Road Transport and Railways
91
4.0
Introduction
91
4.1
Transport Systems
91
4.2
Transport Economics
93
4.3
Effect of Charge in Fuel Price on Transport Economy
96
4.4
Logistic Management
98
4.5
Logistic Support for General Cargo
99
4.6
Roads
102
4.7
Road Expansion and Strengthening Programme
104
4.8
National Highways
104
4.9
State Sector Roads
106
4.10
Border Roads Organisation
107
4.11
Road Transport
107
4.12
Resources Generation
108
4.13
Railways
109
4.14
Operations
111
4.15
Research and Development
113
4.16
Passenger Coaches
114
4.17
Wagons
114
4.18
Economics and Commercial
116
Transport Management Air Transport and Water Transport
122
5.0
Introduction
122
5.1
Water Transport
123
5.2
Water Transport Facilities
123
5.3
Indian Ocean Going Vessels
125
5.4
Aids to Navigation
126
5.5
Human Resources Development
127
5.6
North South Transport Corridor
128
5.7
Sea Ports
128
5.8
Ship Yards
129
5.9
Chartering
130
(xii) 5.10
6.
7.
Civil Aviation
130
5.11
Regulatory Functions
130
5.12
Infrastructural Functions
132
5.13
Operational Functions
132
5.14
Human Resources Development
133
5.15
Expansion of Civil Aviation Activities
133
5.16
Future of Civil Aviation in India
134
Management of Power Sector in India
135
6.0
Blue Print for Power in India
135
6.1
Wastages of Energy
137
6.2
Efficiency
138
6.3
Transportation of Energy Resources
139
6.4
Generation Losses
140
6.5
Transmission and Distribution Losses
143
6.6
Utilisation Losses
146
6.7
Conservation of Energy
146
6.7A
Need for Energy Conservation
147
6.8
Conservation Technique
148
6.9
Conservation in Electric Supply Company
149
6.10
Energy Audit
149
6.11
Need for Energy Audit
150
6.12
Energy Intensity
150
6.13
Power Sector Development in India
150
6.14
Need for Power Sector Reforms
151
6.15
Power Sector Reforms
151
6.16
Objective, Role and Responsibilities of SEBS
152
6.17
Reform Process
153
6.18
Restructuring Options
153
6.19
Organization Structure of Unbundled SEBs
156
6.20
Status of Power Sector Reform in India
162
Management of Public Sector Undertaking
163
7.0
Indian Industrial Scene
163
7.1
Public Sector Undertaking
164
7.2
Growth of Public Sector Undertaking
165
7.3
Role of Public Sector in Economic Development
168
7.4
Working of Public Sector Undertakings
169
(xiii)
8.
9.
7.5
Organisation Structure of Central Public Sector Companies
173
7.6
Future of Public Sector Companies in India
175
Management of Posts and Telegraphs
177
8.1
Postal Services
177
8.2
Financial Services
179
8.3
Tele Communications
180
8.4
Growth of Postal Services
181
8.5
Socio Economic Issues of Postal Services
182
8.6
Growth and Economics of Telecommunication Sector
182
8.7
Future of Posts and Telegraphs
184
Management of Education
185
9.1
Education — A Public System
185
9.2
Education in India
186
9.3
Primary Education in India
186
9.4
Higher Education in India
189
9.5
Higher Technical Education in India
190
9.6
Management of Educational Institutions
191
Questions
194
Bibliography
199
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INTRODUCTION
In the developing economies, the need for projects aimed at building up essential infrastructure is necessary, regardless of immediate returns in money terms. The experience of economic development, even in Japan, has shown that appropriate projects for meeting this vital need requires static investments, including aids from international development agencies. At the root of this investment tangible returns mismatch, lies the paradigm that economic activities must generate quantifiable returns, at least after a gestation period. The concept of intangible social benefits as a balancing item on the credit side is being used in recent decades, largely on impressionistic basis. With increasing marketisation of the global economy, it should, however, be possible to reasonably quantify the trade off to test its efficacy over a period. In 1844, Jules Dupuit of France discussed the subject of social cost benefit analysis in his paper on utility of public works. At the beginning of this century, Professor A. C. Pigou in his work on welfare economics pointed out the distinction between private cost and benefit as opposed to social cost benefit. An economic transaction which yields profit or gain to an individuals or group of individuals may not necessarily bring corresponding advantage or benefit to the society and in its worst form may even bring disadvantage or misery to the society. The need for building up of economic overheads including roads, buildings, hospitals transport system, water supply, power supply for sustained economic growth was felt by all the developing countries in the beginning of industrialization. Normally implementation of such projects is left at the hand of the Government mainly because of the following reasons: • Necessity of large capital outlay, and • Commercial unviability. In most cases large projects for public utility were not commercially viable at least in the short run. Therefore, these projects for infrastructural facilities should be appraised mainly from the point of view of social benefits being derived out of such investments and not merely on return on investment as computed under conventional accounting. The concept of return on investment may be used for determining the type and quantum of tariff required for healthy maintenance and up-keep of such public property.
1
2
PUBLIC SYSTEMS MANAGEMENT
The socialist and communist countries have considered social cost and benefit as the principal yard-stick for setting up of country’s policy. In democratic countries, social cost and benefit have been given due weightage and, even in the USA, the question of social benefit is gaining momentum resulting in increased Government intervention in private business. India is a developing economy with vast under developed rural population and a few pockets of urban industrial areas to serve a minority privileged class people. Thus social cost and benefit should form the principal guiding factor for appraisal of industrial projects in this country with a view to quickly removing poverty. Absence of immediate rural industrialization will result in stagnation in consumption of the end products produced at the few urban industrial pockets resulting in uneconomic overall industrial operation, negative growth rate and entering of the vicious circle. For speedy regionally balanced industrialization, social cost benefit analysis should be the principal guiding factor.
1.0
ORGANIZATIONAL FORM AND ALTERNATIVE MOTIVES OF A FIRM DifferentTypes Types ofof Firm s Different Firms Business Business
P rivate Sector
Individual O w nership Joint H indu Fam ily
Joint Sector
Collective O wnership
P artnership
D epartm ental O rganizaion
Joint S tock Com panies
P ublic Lim ited Com panies
P ublic Sector
S tatuory Corporations
G overnm ent Com pany
C ooperatives
Private Lim ited Com panies
Figure 1.1: Different Types of Firms
The organizational form of a firm may restrict the choice of the goal or the motive to be pursued. As for example, small firm run by a sole proprietor may intend to pursue the motive of profit maximization but for a corporate sector this objective may not have any validity because of separation of management from the ownership. The manager in this situation may be interested in maximizing their own utility rather than profits. It can, therefore, be said that two aspects of a firm viz organizational form and the choice of goals are interrelated. In industrial economics a business firm may be identified on the basis of characteristics like the type of business it is doing, its size and pattern of ownership. The organizational pattern of the firms on the basis of their ownership is shown in Figure 1.1 above. All firms doing business can be first classified into three categories as follows: • Private sector • Public sector • Joint sector The meaning of these sectors is self-explanatory. In private sector the ownership is exclusively in the hands of private individuals, whereas in the public sector, the State
INTRODUCTION
3
(Central or State Government) owns the firm. In the case of joint sector, the Government, private entrepreneurs and the public together share the ownership, management and control of the firm.
Public Sector Companies The public sector plays a vital role in the socialistic and mixed economies for three reasons as follows: 1. To gain control of the commanding heights of the economy. 2. To promote critical development in terms of social gains or strategic value rather than primarily on consideration of profits. 3. To provide commercial surplus with which to finance the economic development of the country. In order to achieve these broad objectives Government companies are established in appropriate numbers. The important forms of organization of such companies will be as below: 1. Departmental Organizations (like Post and Telegraphs, Railways, Broadcasting, and Defence undertakings in India): Under this system, companies are organized like any other Government department. The company will be managed by a top executive appointed by the ministry or Inter-departmental board responsible for that. 2. Public Corporations: These companies are established under the specific acts of the Parliament or State Legislature. They are called statutory corporations such as Damodar Valley Corporation (DVC), the Life Insurance Corporation of India (LIC), the Indian Airlines Corporation, etc. They are established in the interest of public with best possible management. The capital is usually provided by the Government and the corporation is managed according to the provisions of the Act. They are given autonomy for their internal management but the broad policies are decided by the Government. Their annual reports are placed before the Parliament as they are answerable to it for their activities. Public service rather than profit maximization becomes the main aim of such corporations. 3. Government Companies: A Government company, according to the Indian Companies Act 1956, is any company in which not less than fifty one percent of the share capital is owned by the Central or by any State Government or Governments, or shared partly by the Central and State Governments. This is a popular form of public enterprise. It is organized under the existing provisions of the Companies Act just like any other joint stock company. Steel Authority of India Ltd. (SAIL), Bharat Heavy Electricals Ltd. (BHEL), and Hindustan Shipyard Ltd. (HSL) are a few examples of such companies.
Joint Sector The concept of Joint Sector implies the participation of both the Government and the Private Sector in business. Under this organization, a firm is owned and run jointly by the Government and the Private Entrepreneur. This is done in order to strengthen the spirit of mixed economy effectively. The Public Sector and the Private one work together under the
4
PUBLIC SYSTEMS MANAGEMENT
same roof and put a mutual check on each other. The best aspects of these two types of organization are combined together in the interest of the public. A Joint Sector can be formed in India according to the companies Act, 1956. Following the Act the Government of India formulated the guidelines for formation of the Joint Sector Company through the participation of (a) the Government, (b) the Private Entrepreneur, and (c) the financial institutions and investing public. The advantages of the Joint Sector are: (1) it helps to foster the industrial development with social justice, (2) it helps to check the growth of monopolies and malpractice in the business, (3) it provides scope for more financial viability and strength, (4) it combines the best of both the systems, and (5) it makes nationalization unnecessary. There are limitations also. First, there may be conflict between the two parties; secondly, it may lead to managerial autonomy making the owners passive in business. During the last years of Second World War, ideals opposed to the restoration of old imperialism were spreading throughout the world. At Brazzaville was held in January 1944, the first imperial conference of free France presided over by General de Gaulle. It recommended the development of local assemblies to voice colonial opinion, employment of natives in the public services and direct representation of all colonial people of France in the French Parliament. The United Nations charter adopted in 1945 created a system of colonial trusteeship which replaced the system of mandates. After the Second World War most of the colonies started declaring independence. Most of these new born countries embraced democracy. The aim of the Government of these countries is to do welfare of the masses. At independence, most of these countries were having the status of an under developed economy or developing economy and were having the following characteristics: • Low industrial output compared to total output, • Low per capita income, • Low rate of capital formation, • Low human quality, and • Low technology. Political stability demands economic progress, which increases living conditions of masses. Economic growth is a measure of economic progress. Economic growth refers to sustainable increase in per capita income and compounded over time. Economic development is economic growth plus change. Economic development follows capital formation. According to Singer, capital formation consists of both tangible goods like plants, tools and machines and intangible goods like high standards of education, health, scientific tradition and research. The same view was expressed by Kuznets. Increased rate of capital formation requires amongst others socio-economic factors, a growing modern infrastructural facilities or economic overheads like roads, water supply, transportation, power, communications, health care, and education systems. The 1993 Nobel Laureates Fogel and D.C. North have extended the concept of
INTRODUCTION
5
infrastructure or economic overheads to include the legal system, especially to set of property rights that can be enforced. Most economists advocated that these infrastructural facilities should be provided by the Government. The economic overheads are referred to as Public Systems since these should be available for use by all citizens without any reservations. Immediately after independence most countries in the world adopted planned economic development, where Public Systems were conceived, designed, built, operated and administered by the Government. Thus the Government owned and administered the Public Systems as Cost Centers. Expenditure for maintenance of such Public Systems was met through budgetary support in the form of allocation by the Government. Use of such Public Systems was free or highly subsidized. An analysis of cost structure of such Public Systems indicates that these projects are capital intensive and were having large gestation period. Subsequently in a planned protected economy under democratic Government, such Public Systems might not be a commercially viable business proposition.
1.1
DEVELOPMENT OF PUBLIC SYSTEMS IN INDIA
India adopted planned economic development where the State and private capital were required to actively participate in accelerating the development process. Immediately after independence, the Government of India announced its Industrial Policy in April 1948. The aim was to have a mixed economy where Public Sector and Private Sector were expected to operate side by side. In pursuance of this, industries were classified into four categories as follows: • Exclusive monopoly in Arms and Ammunition, Atomic Energy and Railway Transport; • Government controlled new undertakings in Coal, Iron and Steel, Telephone, Telegraph, Aircraft, and Shipbuilding, etc.; • Basic consumer and capital goods industries under State Regulation and Control; and • Other industries under co-operative and private enterprise. This Policy also underlined the role of cottage and small industries and of foreign capital in industrializing the Indian economy. This policy remained in operation for eight years but could make little impact on the industrial scene of the country because the First Five year plan was modest, especially with regard to investment in the Industrial Sector. In April 1956, the Government of India announced a new Industrial Policy which was necessitated by certain important economic and political development in the country; the adoption of constitution of India in 1950 enunciating the Directive Principles of State Policy; the successful completion of the First Five Year Plan; the acceptance by the Parliament of the Socialist Pattern of Society in December 1954; and the launching of the Second Five Year Plan with emphasis on industrialization.
Industrial Policy Resolution of 1956 The industrial policy resolution laid down the following objectives of the Industrial Policy, which have since been incorporated in all the Five Year Plans of the country.
6
PUBLIC SYSTEMS MANAGEMENT
• To accelerate the growth rate of the economy; • To speed up industrialization; • To expand public sector; • To develop heavy, basic and key industries; • To build co-operative sector; • To reduce disparities in income and wealth; • To prevent private monopoly and concentration of economic power at the hands of few individuals; • To undertake State trading on an increasing scale; and • To develop and build new undertakings and set up new transport facilities by the State. In pursuance of these objectives industries were classified into three categories as follows: • First 17 industries were kept in Schedule A. These are the exclusive responsibility of the State. They included Arms and Ammunition, Atomic Energy, Iron & Steel, Heavy Machineries, Coal, Oil, Power, Rail Transport, etc. • Second 12 industries were kept in Schedule B. These would be progressively State owned and the Private Sector will also supplement the effort of the State either singly or with State participation. They included Aluminum and other Non-Ferrous Metals, Chemicals, Drugs, Pharmaceuticals, Fertilizer, Road and Sea Transport, etc. • Development of all the remaining industries in schedule C was left to the initiative and enterprise of the private sector. It could be observed from above that the Indian Parliament resolved to maintain exclusive monopoly of the State in respect of development of the following Public Systems: • Rail Transport • Road Transport • Water Transport • Air Transport • Electric Power Generation, Transmission and Distribution • Post and Telegraph In accordance with the industrial policy resolutions 1956 the task to build a Cooperative Sector was incorporated in all the Five Year Plans for fulfillment. Before constitutional amendment of 1976, education was the exclusive responsibility of the States. The constitutional amendment as above included education in the concurrent list. Public Health remained the responsibility of the State. Thus at independence in 1947, Public Systems in India were the exclusive monopoly of the Government. The Public System in India is required for the masses for their increased economic activity. This necessitates study of population growth pattern of the country. Table 1.1 below shows the population growth of India from 1901 to 2001.
INTRODUCTION
7
TABLE 1.1 Population growth in India from 1901- 2001 Census Year
Population in million
% of total population
Rural
Urban
Total
Rural
Urban
1901
213
26
239
89.2
10.80
1921
223
28
251
88.8
11.20
1941
275
44
319
86.1
13.90
1951
299
62
361
82.7
17.30
1991
629
218
847
74.3
25.70
a2001
743
286
1029
72.2
27.78
Source: India, 2005; Ministry of Information and Broadcasting, Government of India.
This shows that in 50 years time between 1951 and 2001, the population in India increased by 285%. The population growth shows continuous increase in urban population and continuous fall in rural population over last one hundred years ending 2001. Population growth and living standard of masses is a function of education. Table 1.2 below shows plan expenditure of the Government of India on different sector of education. TABLE 1.2 Plan expenditure on different sector of education between 1951 and 2007 Figures in% Periods.
Elementary education
Secondary education
Adult education
Higher education
Others
Technical education
First plan (1951-56)
58 (870)
5 (83)
–
8 (117)
15 (227)
14 (215)
Fourth Plan (1969-74)
50 (3743)
@
2 (126)
25 (1883)
13 (936)
10 (786)
Seventh plan (1985-90)
37 (28494)
24 (18315)
6 (4696)
16 (12011)
3 (1980)
14 (10833)
Eighth plan (1992-97)
48 (10940)
24 (52311)
5 (11421)
10 (20944)
3 (7398)
10 (21987)
Nineth plan (1997-02)
65.7 (145233)
10.5 (23227)
2.4 (5204)
10.3 (22709)
1.6 (3492)
1.4 (3235)
Tenth plan (2002-07)
65.5 (287500)
9.9 (43250)
2.9 (12500)
9.5 (41765)
1.4 (6235)
10.7 (47000)
Source: Planning Commission @ analysis of budget expenditure, Ministry of HRD, Government of India. Note: Figures in brackets are in million of rupees. @ : Included under elementary education.
8
PUBLIC SYSTEMS MANAGEMENT
The Table above shows that the Government has planned expenditure of Rs. 438250 million in the education sector during the tenth plan period against Rs. 220960 million spent during the period 1997-02. It is also observed that the Government has gradually increased expenditure for primary education. This reflects the intention of the Government to implement the 86th Constitutional Amendment of 2002 making elementary education as fundamental right for children in the age group of 6-14 years. The Table shows the commitment of the Government in promoting technical education in the country. Communication plays an important role in socio-economic upliftment of a country. Since independence in 1947 the Government was holding monopoly for all types of communication in the country. Table 1.3 below shows the growth of postal services in the country. TABLE 1.3 Growth of post offices during the period 1947-2003 Particulars
YEARS 1947
2003
Rural
Urban
Total
Rural
Urban
Total
19184
4160
23344
139280
16557
155837
Population in million
299
62
361
743
286
1029
Number of post offices per million persons
64
67
65
187
58
151
Number of post offices
Source: Department of Posts & Telegraph, Government of India.
This shows that the Government has increased large number of post offices but because of population explosion, work pressures on post offices have increased considerably. In subsequent chapters it will be seen that the products of postal services have increased in many folds. The telephone services are being slowly privatized. The Indian Railways, which offers the principal mode of transportation for freight and passengers, is having a running track of 82492 km as on March 2003, compared to 59315 km in March 1951. The Railway carried 49708 lakh passengers and 5187 lakh tons of cargo during 2002-03 compared to 12840 lakh passengers and 930 lakh tons of cargo during 1950-51. India has one of the largest road networks in the world aggregating to about 3.32 million km as on March 2003. In addition, Golden Quadrilateral (GQ) connecting four metro cities Delhi-Mumbai-Kolkata-Chennai and aggregating length of about 5846 km is under construction. A north-south and east-west corridor road project of about 7300 km is also under construction. In the field of Water Transport and Air Transport the Government has made significant progress. 5600 km coast line of the country is serviced by 12 major ports and 185 other ports. The Indian ports have handled 390 million tons of cargo during the period 2003-04 as against 20 million tons cargo handled in 1950-51.
INTRODUCTION
9
The Air Transport activities have been increasing substantially. As on March 2004 the country is having 126 Airports including 11 international Airports, 86 domestic Airports and 29 civil enclaves at Defence Airfields. The installed Electric Power Generation Capacity in the country has increased from 1400 MW in 1947 to 112058.42 MW as on March 2004. Power generation during 2003-04 was 558.134 billion kWh. It could be seen from above that the Government invested large sum of money in building Public System, operating and maintaining as cost center. This has generated a national income of Rs 734358 crores in 1994-95 and a per-capita income of Rs 8070 in 199394 prices. The per-capita commercial energy consumption in 1994-95 registered a low figure of 9 Giga-Joules (GJ) as against the world average of 60 GJ. An analysis of Public Health System in India shows that life expectancy at birth in 1990 is 58 years against 69 years in China and 65 years in the world. The child mortality rate in India in1990 was 127 against 43 in China and 96 in the World.
Monitoring of Public Systems The infrastructure and Project monitoring Division (IPMD) in the Ministry of Statistics & Programme Implementation, Government of India, monitors the performance of country’s eleven key infrastructure sectors, namely, Power, Coal, Steel, Railways, Shipping and Ports, Telecommunications, Cement, Fertilizer, Petroleum, Road and Civil Aviation. It prepares and submits monthly review reports and capsule reports on the performance of infrastructure sectors, inter-alia to the Prime Ministers office and Cabinet Secretariat. The growth rate in respect of each infrastructure sector since 1997-98 and the production/achievement during 2003-04 is given in Table 1.4. This shows that the existing level of Government owned Public Systems under Government administration and control could not meet the requirement for further increase in size of the economy. This calls for modernization of the existing Public Systems in the country for increased productivity and improved quality of services. This also demands additional modern infrastructural facilities which would add to increasing the size of the economy. Thus the task could be broadly classified into the following categories: • Modernization of the existing Public Systems. • Building of additional Public Systems with State of the art technology. • Efficiency in Management of the Public Systems.
1.2
MANAGEMENT OF PUBLIC SYSTEMS
In this book management of following Public Systems particularly relevant for a developing economy with large population has been discussed: • Hospital and Healthcare Management • Rail Transport • Roads, Bridges and Road Transport • Water Transport • Air Transport
10
TABLE 1.4 : ANNUAL GROWTH RATE OF INDUSTRIAL INFRASTRUCTURE SECTORS S.No.
Sector
1997-98 per cent
1.
Power
6.6
6.6
7.1
3.9
3.1
3.2
5.0
559.12 BU
2.
Cost
3.6
–2.0
3.0
3.6
4.2
4.4
5.6
355.73 MT
3.
Finished Steel
0.61
–1.5
12.5
6.7
4.3
9.2
6.9
36.93 MT
4.
Railway Revenue Earnign Freight Traffic
5.0
–2.0
8.4
3.7
4.0
53
7.5
557.39 MT
10.6
0.1
8.0
3.4
2.4
9.0
9.9
344.52 MT
13.0
36.1
40.2
6.4
–2.6
–35.6
–32.1
30,39,524 Lines
5.
Cargo Handled at Major Ports
6.
Telecommunications : (a) Net addition in Switching Capacity
1998-99 per cent
1999-00 per cent
2000-01 per cent
2001-02 per cent
2002-03 per cent
2003-04 per cent
Actuals (2003-04) (provisional)
(b) New Telephone Connections
27.1
16.4
29.7
20.5
–4.7
–39.8
129.6
78,04,857 Nos.
(c) Cell Phone connections
N.A.
N.A.
N.A.
N.A.
N.A.
119.2
115.3
1,34,66,758 Nos.
(d) Village Public Telephone
–24.4
–13.5
–8.3
1.0
107.3
–36.0
–82.6
7,935 Nos.
Cement
9.1
5.6
14.0
–2.8
9.5
8.8
6.1
123,44 MT
8.
Fertilizers Production
17.1
3.7
4.8
2.9
–0.5
–1.1
–1.8
14.20 MT
9.
Petroleum (a) Crude Oil
2.8
–2.8
–2.2
1.5
–1.2
3.2
1.0
33.38 MT
(b) Refinery
3.6
5.2
25.3
20.3
3.7
4.9
8.2
121.76 MT
(a) Export Cargo handled
–0.2
–4.4
10.8
5.1
4.1
13.3
1.0
3,87,148 Mt T
(b) Import Cargo handled
1.4
–2.4
16.2
3.6
–1.0
18.6
13.8
2,22,535 Mt T
(c) Passengers handled at international Terminals
3.1
0.0
0.0
4.6
5.0
4.8
6.5
130.98 Lakh PAX
(d) Passengers handled at Domestic Terminals
–2.8
0.3
7.4
7.7
–5.7
9.6
13.1
192.65 Lakh PAX
47.6
68.6
32.9
1.1
53.5
–5.9
6,718 Kms
137.5
82.5
28.8
–8.2
16.3
–14.0
123 Nos.
10.
11.
Civil Aviation
Roads (a) Upgradation of Highways
–34.9
(b) Rehabilitation/constrcution of bridges –62.5
BU – Billion Units; MT – Million Tonnes; Mt. T – Matric Tonnes1 – Saleable Steel
PUBLIC SYSTEMS MANAGEMENT
7.
INTRODUCTION
11
• Public Sector Undertaking • Posts, Telegraphs and Communication • Education • Electric Power Generation, Transmission and Distribution The existing Public Systems in India were conceived around 1950s when the population was 361 millions with an urban population of 62 millions only. The Public Systems were installed principally to develop and serve urban economy consisting of 62 millions people. As a result the rural sectors continued to remain backward. Over the years there was depreciation of such assets, which reduced productivity and quality of services of such age old Public Systems. It is, therefore, necessary to refurbish such Public Systems and modernize same for increased efficiency of operation. In addition, new Public Systems have to be installed for integration of rural economy with the urban open market economy for increasing the volume of economic activities. Such new Public Systems should be of modern design for giving desired efficiency. All such activities require large capital and all such projects would have large gestation period. In line with international practice the Government has allowed private participation in such modernization and new construction activities. This was considered essential because of capital formation with private Indian individuals over last five decades and the Government is committed to invest in social sector for sustainable socio-economic development. This has also become feasible because of development of entrepreneurship skill with Indian people. Ownership and management of such Public Systems at the hands of private sector/corporate sector will not operate as cost center. Thus the Public System management at the hands of private sector/corporate sector includes operation of the system as profit center. As the paying capacity of general masses is gradually increasing, the price/tariff for use of such Public Systems is required to be kept low. In most of the cases the Government may try to administer such prices, at least to start with implementation of such plan. This indicates that such projects would have large pay-back period. A project requiring large capital outlay, large gestation period and low unit prices of output is having long pay-back period. Such business in public utility services requires Government assistance at least in terms of making available of low cost capital and free land. This is likely to reduce the capital cost of the project. Subsequently the low tariff structure is likely to attract general masses.
Resources for Public Systems In accordance with the above policy, the Government introduced infrastructure bonds and promoted investment in such bonds by the general public through fiscal benefit. A strategy of Build-Own-Operate-Transfer (BOOT) scheme for participation of private entrepreneur in such capital intensive Public Systems business was introduced. In such schemes, the Government allots to the prospective private entrepreneur, free of cost for an agreed period of time, suitable land such that the existing infrastructure could be modernized and/or new modernized Public Systems could be installed. These could be operated by the entrepreneur builder as a commercial proposal and thereafter transfer the total property to the State as per agreement.
12
PUBLIC SYSTEMS MANAGEMENT
Boot projects have their origin at Turkey, where the formula for building of mega projects in infrastructural sector was tried in 1980s. There are two parts in a Boot project, viz, the principal project promoter (usually the Government) and a private participant. The private participant usually arranges the finance required for the project, build the project and maintain the project during the contracted period. Finally, the private party transfers the project to the principal at no cost. During the contracted period, the private participants own and operate the facilities and earn profit on investment. The contract between the principal and the private participant is known as the “Concession Agreement”. All the terms of the contract, like the concession offered by the principal, the role of the private participant, the terms of financial arrangement, construction, maintenance, revenue realization, termination of the contract etc, are contained in the Concession Agreement. The land required for such projects are normally acquired by the Government (principal) and offered to the private investor for construction of the projects as per the terms of the concession agreement. The period of contract (after which, the private participant is to hand over the project to the principal) is generally very high ranging from 20 to 40 years or more, depending upon the pay-back period of the project. The pay-back period of such projects is very high in view of huge investment required and comparatively low returns on investment. Some of the other variants of BOOT projects are as follows: BOO (Build-Own-Operate) Projects: The private investors execute the project, own and operate for the whole life. As owner of the asset, it can be mortgaged to banks/financial institutions for raising loans. BOLT (Build-Operate-Lease-Transfer) Projects: The private investor builds and operates the project for a specified period of time. After end of the pre-fixed period, the investor hands over the project to the Government (the principal) on lease. The Government, which takes over the project in the capacity of lessee, pays agreed periodical rent to the private investor for rest of the life of the project. There are also some other variants of BOOT Projects like BTO (Build-Transfer-Operate), BRT (Build-Rent-Transfer), BOD (Build-Operate-Deliver), BOOST (Build-Own-OperateSubsidize-Transfer) etc.
Public System—A Service Provider It follows from above that management of Public Systems requires specialized competence for its social acceptance and commercial viability. The Public System is basically a service provider industry. To make such services customer friendly and socially acceptable; the price and quality should be acceptable to the users. The services offered should be safe, secured, and reliable for its acceptance by the society. Reliability of a product and/or services originates from quality. These criteria demand innovation in Public Systems Management (PSM). The products are required to be suitably designed for all market segments for satisfaction of respective customers. This is also likely to maximize revenue collection within administered prices. Quality, safety and security of services lead to reliability. Reliable services demand use of field tested proven technology in designing and building the infrastructure and its regular and scientific maintenance. The number of users of a Public System normally increases with time. When a Public System
INTRODUCTION
13
is first made available for public use, the masses generally takes time to use such new facility changing their earlier habits and behaviour pattern. However, with passage of time such behavioural pattern gradually changes and the people start using the new Public System. In the premises of such consumer behaviour pattern, the capacity of the newly constructed Public System and its efficiency gradually reduces over time because of depreciation arising out of seasonal climate changes, even if the facilities remained unused or partially used. In absence of a scientific maintenance management, the capacity and reliability of services from such Public Systems deteriorate rapidly when people get accustomed to use such services. Thus maintenance, up-keep, modernization and innovation are essential for PSM.
Revenue Management Pricing and revenue management constitute important element of PSM. In developing countries with large population, prices for use of Public Systems are generally administered by the Government. Whereas most of the Governments are concerned about the paying capacity of common person, the Government is less worried about other users who are having disposable income. In a highly populous country like India, the number of people who could afford to pay for buying comfort is rapidly increasing. This criterion demands product diversification and introduction of innovative products for revenue maximization. In road projects, bridge projects, water supply projects etc differential tariff structure is likely to maximize revenue from different customers. The toll charges for use of different roads and bridges could be different for pedestrians, cyclists, motor-cyclists, passenger car of various horse-power ratings, commercial passenger carriers, light commercial vehicles; heavy commercial vehicles etc. Such tariff differential is likely to increase capacity utilization of the Public System. This will increase revenue collection. However, appropriate management systems have to be installed at the revenue collection point for minimum loss of time to customer and for proper accountability of revenue collection unit. In a water supply projects various quality of water may form the product line. Accordingly, the water may be called potable water, water for bathing, and water for washing. The prices may be fixed suitably in consultation with Government. This will reduce wastage of water, conserve water and satisfy all sections of the population, while maximizing revenue for the business. In health care and hospital business, the prices of bed-charges may be fixed depending upon degree of comfort to the patient. This will generate 4/5 types of tariffs, which will increase capacity utilization of the hospital. Modern diagnostic clinics are equipped with machines and instruments with state-of-the art technology. Such modern facilities generate reliable services. Differential tariff structure for use of such facility during day time and during odd hours of the day (say between 20.00 hours and 24.00 hours) is likely to increase capacity utilization of the already created facility while serving the lower income group of the society. In the field of electric power distribution, at present the tariff structure is based on voltage rating at the consumer terminal. However, the product can be further differentiated in terms of quality of supply and time of supply for increased capacity utilization of the already installed generation unit.
14
PUBLIC SYSTEMS MANAGEMENT
In passenger transport sector, buses with different speeds and number of stoppages constitute mail, express or local transport services with different fares for traveling the same distance. Again different comfort level in the same bus at the same time and in the same route could create different product. This increases capacity utilization. The Indian Railways have since increased revenue collection by product differentiation in all sectors of railway operations. The domestic airlines in India have also launched various innovative passenger fair structures for sustenance in market competition. Revenue generation and revenue collection forms important part of revenue management. It is to be remembered that capacity utilization and hence cash in-flow increases with increased speed of operation. In service industry, increased operational speed increases number of customers. Revenue generation from most of the Public Systems is on cash basis. The main delay in providing service to customer may arise from delay in accepting revenue against receipt. All such activities connected with collection of cash from customers for services provided/ being provided should be computerized for accuracy, speed of operation and efficient accounting. This will also reduce cost of manning of such revenue collection system.
Quality Management Reliable quality of services is a matter of necessity for social acceptance of an infrastructural facility. Reliability encompasses safety and security of services. Operational safety emanates from field tested technology used in building the Public Systems besides maintenance. A well designed preventive maintenance management systems would generally eliminate possible breakdown of services during operation. A well conceived spare parts management employing VED (Vital-Essential-Desirable) will reduce inventory cost while reducing possible breakdown time. A computerized statistical record of maintenance is expected to identify the components/sub-assemblies/assemblies requiring replacement. These would increase operational efficiency, reduce down time of the service providing facility and increase safety during operation. Subsequently the number of accidents in such facilities would be minimum. This will add to reliability of services. Security aspect of masses using Public System is becoming a matter of concern in all parts of the world. In a road and/or a bridge project security of customers using such facility against dacoits, forceful snatching, etc is required to be suitably ensured with appropriate system of surveillance and control. Security in all public transport against possible hijacking and/or possible man-handling of any passenger has to be strictly enforced. Security to patients undergoing treatment in a health organization from external agencies has to be arranged. Thus security forms an important component of quality services expected from a service provider. It is seen that quality of services, safety and security of services adds in branding a service as reliable product. Once a service is branded as reliable, the number of users increases. This increases the capacity utilization of the already built Public System. This ultimately increases revenue and shorten the pay-back period. It is important to note that the cost of providing security for a Public System constitute a major cost element. Therefore, security management of a Public System is gaining importance.
Commercial Management of Public Systems In open market economy, contract for starting a business venture in Public Systems demands competitive bidding. In normal circumstances, the appropriate Government short
INTRODUCTION
15
lists the prospective entrepreneurs depending upon information provided by the bidders in a document called “Expression of Interest”. Only such short listed organizations are permitted to offer their bids against tender documents prepared for such work by the Government and/ or Government appointed consultant. The offers are received; analyzed and only sociocommercially acceptable bidder is awarded the contract. In case of take over of a Government owned Public System, analysis of such offers is simple and generally depends upon the prices being paid, the payment terms quoted and the perspective plan of management of the system including rehabilitation of the existing employees and payment to creditors including payment of statutory liabilities. In case of new Public System proposed to be built on BOOT/BOLT /BOT basis, the offers are analyzed based on type of financing, re-payment schedule to financial institutions and Government and the proposed tariff being charged to users of such services. Building of new Public Systems necessarily requires environmental clearance from appropriate Government. This environmental clearance includes a socially acceptable rehabilitation plan for the project oustees. Thus for a new Public System the project is required to be appraised from the point of view of social cost and benefit arising from such additional new facility. All the above components of the proposed project would have a bearing on technology that should be chosen for building the project. Choice of technology has a direct relation with capital cost of the Public System. The choice of the type of project financing has a relation with the Government policy. In the recent past the Government of India has decided to entertain majority foreign direct investment (FDI) in promoting and developing high quality Public Systems in India. Accordingly, some of the existing national/international airports are being modernized with majority participation of FDI. New airports are being constructed at strategic locations with majority participation of FDI. Similar actions are being initiated in the areas of development and construction of sea-ports. FDI is usually accompanied by technology and management from the foreign investors. The hospital and health care sector requires majority FDI participation for accelerated growth of quality health delivery systems for the busting population. With total WTO compliance from the year 2005, FDI is expected in this sector. Quality of higher education and particularly higher technical education is needed to be upgraded immediately to comply with market demand. This calls for higher investment and innovative management in this sector. With total WTO compliance as above flow of FDI in this sector is expected. The Government of India allowed majority FDI in the field of electric power generation during early 1990s. The foreign company came to India and invested in power project. However, such venture commercially failed to take off because the only purchaser of such bulk power, the State Electricity Boards were bankrupt. Subsequently the model adopted for improving the quality of electrical energy and making electricity available to all Indians at affordable price could not meet the commercial capabilities of the purchasers.
16
PUBLIC SYSTEMS MANAGEMENT
COMPARISON OF MANAGEMENT FUNCTION OF PUBLIC SYSTEM, PUBLIC SECTOR, CORPORATE SECTOR AND PRIVATE SECTOR The style of management of any establishment depends upon mission, vision and objective of the organization. The commercial objective of all types of organization is reasonable return on investment with healthy growth. For social acceptance of any business venture, the mission and vision should be around improvement in living condition of human-being. The Public System necessarily deals with services. Thus Public Systems are service providers. Services, when available should be used otherwise they are considered loss. A service cannot be stored. The passenger seats in an aircraft for a particular flight, if not filled, is a loss to the organization. A public sector, corporate sector or a private sector, deals in projects/products/services. Thus there is distinct difference in management style of Public Systems from management of public sector, corporate sector and private sector generally as follows: 1. A private sector, corporate sector or a public sector may deal in the business of product/ project/Public System. Public System refers to service provider. 2. Generally public sector, private sector and corporate sector are registered as company as per companies Act, 1956. There are public sectors which are operating as a department of the Government. The public sector companies are Article 12 of the Constitution of India. The Public Systems organization may be governed by a Board of Trustees or may be registered as company under the companies Act 1956. 3. The capital cost and gestation period of a Public System is high. The capital cost of commercial projects conceived and built by private company/corporate sector/ public sector may be high but care is taken to see that the gestation period is low and the pay-back period is kept low. 4. The prices of services available from a Public System are generally administered by the appropriate Government. The prices of end product of a private company, corporate sector and also public sector company are determined by market forces. However, prices of end products of some public sector companies in the oil sector are still administered by the Government of India. 5. The product line of companies in the private sector, corporate sector or public sector could be changed; killed and new products could be introduced as part of company’s policy to suit the objective after such were approved by the Board of Directors of the concerned company and agreed to by the shareholders. The Public Systems are basically public utilities. These services could not be normally stopped without permission from the appropriate Government. However, the main service could be suitably packaged to cater to all market segments and for maximizing revenue collection. 6. The Public Systems are generally used by general masses irrespective of their sex, age, income or habit. However, products or services not covered by the purview of public utilities are manufactured for specific market(s). 7. The demand for a product or service originates from income and taste of household. This again depends upon economic development and growth. Economic growth is directly related to availability and growth of Public Systems.
INTRODUCTION
17
8. In case of private sector and corporate sector the share capital and the debt capital comes from different sources. The share capital and the debt capital, in case of public sector, come from the same source. Therefore, the cost of capital for both forms of financing should remain same. Here lies the major difference between the basic philosophy of a private company and a public sector company. The main objective of a private company is maximizing earning per share with a healthy growth. The earning per share is given by:
E= where,
(P − I) (I − T) − D N
E = Earning per share P = Profit before interest and tax I = Interest T = Tax rate in % P = Preference dividend N = Number of equity shares
The above equation indicates that an element of debt-capital is essential to maximize E. The cost of three types of capital is given by:
Cost of Equity Capital =
Earning per Share Market Price per Share
Cost of Preference Capital =
Dividend per Share Market Price per Share
Cost of Debt Capital = Rate of Interest (1–Tax Rate) Thus, for a healthy company cost of Debt-Capital is much lower than other form of financing. This calls for a debt financing components in the capital structure. The objective of public sector on the other hand is to maximize return on investment and not always to maximize earning per share. It could be observed that most of the public sector companies are earning a satisfactory profit before interest, but the trading results show a loss mainly because of high interest burden, higher depreciation on Assets and finally on low Asset turn over ratio. Thus PSM is a different ball game all together. The Tenth Five Year Plan (2002-07) mandated a GDP growth rate of 8% per annum against 5.5% achieved during the Ninth Five Year Plan (1997-2002). Accordingly, the Government is committed to accelerate reform of Labour Laws, early enactment of Electricity Bills, Communication Convergence Bill, Abolition, restriction and decontrol of private road transport passenger services and private sector participation of road maintenance, early adoption of Aviation Policy, etc. This will attract more players in the business of building and operating of more Public Systems. This will increase competition among service providers of Public Systems, which will ultimately benefit the masses and improve the living conditions of Indian citizens.
18
PUBLIC SYSTEMS MANAGEMENT
Social Cost Benefit Analysis Social cost and benefit for appraisal of Public Systems project have assumed significant importance with altered industrial policy of the country, where the public sector undertakings have earlier been required to play a catalyst role in industrialization. Unlike other financial parameters, social cost and also social benefits are yet to be quantified. While attempts should be made to quantify such cost, it is expected that at least broad guidelines for identification of such cost areas are formulated and the levels of benefits expected are indicated. Such guidelines would be of help more purposefully in Public Systems project appraisal in an industrial country like India which consider the social dimension to be of vital importance. Anchored on democratic socialism would provide new insights on judging the overall rate of return on investment, especially in a public sector undertaking. As a cogent example, industrialization vis-a-vis pollution of water and air may be considered. Industrial units situated in and around Kolkata are reported to be polluting the River Hooghly and the air which brings miseries to public at large external to such industrial units. The concerned industries might be earning profit, which is enjoyed by the promoters, Shareholders, employees and other agencies directly connected with the project but the general public suffers miseries in terms of pollution. The dichotomy of private cost and benefit as opposed to social cost and benefit has assumed significant importance in the field of project appraisal where most profitable projects are selected. Here normally costs and benefits which would accrue to the owner(s) are considered but the cost and benefit external to the project are not considered.
HEALTH CARE MANAGEMENT
2.0
HUMAN HEALTH
The end of twentieth century reveals that in many world regions today, many people are living longer, reflecting many of the advances of human ingenuity and modern life. Better food and housing, fewer instances of child labour, more efficient and safer working places, improved access to health care, and reduced levels of pollution are all factors contributing to these gains in public health. Not all regions share equally in this improvement. Progress has been slow in subSaharan Africa, the world’s poorest region, whose life expectancy lags some 25 years behind that of wealthiest nations. A huge gap in health status exists between rich and poor nations. Similarly within countries—even the rich countries in the world—the poor suffers far worse health than do the wealthy. A principal factor driving these disparities are that environment based health risks— from mosquito borne diseases to chemical contaminants to indoor air pollution. Table 2.1 below shows populations, economic indicators, and progress in health by demographic region, 1975-90. TABLE 2.1 Population, economic indicators and progress in health by demographic region, 1975-1990 Item
Sub-Saharan Africa
India
China
Population in millions in 1990
510
850
1134
444
798
5267
Deaths in millions in 1990
7.9
9.3
8.9
3.0
7.1
50.0
Per-capita income in US $ in 1990
510
360
370
2190
19900
4000
(–)1.0
2.5
7.4
(–)0.1
2.2
1.2
Child mortality in 1975
212
195
85
104
21
135
Child mortality in 1990
175
127
43
60
11
96
Growth Rate in per-capita income in % per year during 1975-90
Latin Established America and Market Caribbean Economies
World
(Contd.) 19
20
PUBLIC SYSTEMS MANAGEMENT
Life expectancy at birth (year) in 1975
48
53
56
62
73
60
Life expectancy at birth (year) in 1990
52
58
69
70
76
65
Source: The World Bank, World Development Report, 1993
It is seen from above that India and China were having almost same per-capita income in 1990 but the deaths in China in 1990 was only 0.78% of the population against deaths in India which was 1.09% of population, and deaths in World which was 0.95% of population. Life expectancy at China increased to 69 years in 1990 against 58 years at India and 65 years in the World. These established that China has adopted and pursued an innovative Public Health Policy. Such Health Policy is one of the main reasons for increase in labour productivity at China.
2.1
DISEASE AND PREVENTION
Despite vast improvement in health globally over the past several decades, in poorest regions, one in every five children does not live to see their fifth birthday. This number translates into 11 million childhood deaths each year, mostly due to illness such as diarrhea and acute respiratory infections. Insect-borne diseases also exact a heavy toll; malaria alone claims 1 to 3 million lives every year, again, most of the children. Health problems vary dramatically from region to region, reflecting geography, climate and perhaps most important, a country’s level of economic development and policy choices. Many health problems are associated with poverty and lack of essential resources, chief among them are sufficient and clean water, food, shelter, fuel and air. These problems underlie the 17 million deaths each year from infectious diseases. Indeed, the World Health Organization (WHO) has called Poverty as world’s biggest killer. Other threats to health are associated with the development process itself. Socio-economic development is critical for improving human health and well-being. Yet, if not well managed, economic growth can exact a major toll on environment and health. It is inarguable that many environment related risks can be reduced through preventive actions, and this approach provides a clear and achievable route for better public health in developing and developed nations. Diarrhea and acute respiratory infections, linked with water contaminated from human wastes and air filled with smoky fumes, respectively, are two top killers of children in the developing world today. Thus addressing these two risks alone would provide health benefits of global proportions. Implementing preventive actions to reduce environmental threats to health risk will entail devising public policies and making financial investment that explicitly recognize the relationship between environment and health. Many actions, which are not being carried out currently and yet are practical, sensible and cost effective, can be taken up now. One of the best opportunities to improve health through preventive action is through efforts to improve the household and community environment in developing countries. Such actions include expanding access to water, sanitation and hygiene education, ensuring that garbage is collected and disposed of properly, promoting the use of clean house hold fuels and controlling the insect and animal vectors that carry diseases, especially the mosquitoes that transmit Malaria, dengue fever, yellow fever and other tropical illness. Such improvement would contribute to reducing the 17 million deaths each year from infectious diseases.
HEALTH CARE MANAGEMENT
21
The damaging effects of lead (Pb) on child development and adult health have been well documented through past three decades of research. Encouraging the phase out of Pb from gasoline is a clear example of prudent and affordable prevention. Evidence from numerous countries reveals that although the health benefits of phasing lead out of gasoline are great, the cost is relatively low. Devising uniform practices for international trade in toxic offers another opportunity for preventive action that will greatly benefit both developed and developing nations. After substantial reduction of pesticide subsidy and implementing integrated pest management, Indonesia has increased crop yields and reduced insect resistance problems as it reduced overall pesticide use and pesticide related health risks.
2.2 GLOBAL HEALTH PATTERNS Global health conditions improved more in past half century than in all of the years before. World wide life expectancy has risen to an average of 65 years and death rates declined especially among young children. Figure 2.1 below shows trend in life expectancy between 1950 and 1995. Figure 2.2 below shows mortality trend in children under age of 5 years between 1960 and 1995. It could be observed that there is rising trend in life expectancy in the World. Subsequently the mortality trend in children under 5 years of age shows gradual but steady reduction. This improvement in public health is mainly related to health consciousness amongst masses and concerted effort by both Government and non-Government organizations to improve environmental conditions of the poor. Other factors which improved health over the past century includes rising prosperity, improved nutrition, safer work place condition, better housing and advances in health care—all important determinants of health. Rising Life Expectancy (A g e in yea rs) 80 75 70 65 60 55 50 45 40 35 1 95 0 1 95 5 1 96 0 1 96 5 1 97 0 1 97 5 1 98 0 1 98 5 1 99 0 1 99 5 W orld L ess de velo p ed M ore D e velop ed Source : U n ited N a tio ns (U .N .) P op ulatio n D ivisio n, D em o gra ph ic In dica to rs. 1 95 0-2 050 (Th e 19 96 R e visio n) (U .N ., N e w York. 1 99 6).
Fig. 2.1 Trends in Life Expectancy, 1950-95.
22
PUBLIC SYSTEMS MANAGEMENT
Declining Death Rates (D e aths p er 1,0 00 births) 3 00 2 50 2 00 1 50 1 00 50 25 1 96 0
1 96 5
1 97 0
1 97 5
H ig h In co m e C ou ntrie s
1 98 0
1 98 5
1 99 0
1 99 5
H ig h M id dle Incom e C o un tries
L ow M idd le In co m e C ou ntrie s
L ow Inco m e C o un tries
Source : U n ited N a tio ns C h ildre n ’s F un d (U N IC E F ) S tate o f the W orld ’s C h ildre n 1997 (U N IC E F, N e w York, 1 99 7 ).
Fig. 2.2 Mortality Trends in Children Under Age 5, 1960-95.
2.3 CURRENT PATTERN OF DEATH AND DISEASE Tables 2.2, 2.3 and 2.4 below show leading causes of death in 1990 in the World, in the Developing countries, and in the Developed countries respectively. Table 2.2 Leading Causes Of Death In The World In 1990 Causes of Death
# Deaths in thousands
% total Deaths
All causes
50467
—-
Ischemic heart disease
6260
12.4
Cerebrovascular disease
4381
8.7
Lower respiratory infection
4299
8.5
Diarrheal disease
2946
5.8
Condition arising during prenatal period
2443
4.8
Chronic obstructive pulmonary disease
2211
4.4
Tuberculosis
1960
3.9
Measles
1058
2.1
Road traffic accident
999
2.0
Trachea, bronchus and lung Cancer
945
1.9
Source: World Health Organization
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Table 2.3 Leading Causes Of Death In Developing Countries in 1990 Causes of Death
# Deaths in thousand
% total Deaths
All causes
39,544
—
Lower respiratory infections
3,915
9.9
Ischemic heart disease
3,565
9.0
Cerebrovascular disease
2,954
7.5
Diarrheal disease
2,940
7.4
Conditions arising during the prenatal period
2,361
6.0
Tuberculosis
1,922
4.9
Chronic obstructive pulmonary disease
1,887
4.8
Measles
1,058
2.7
Malaria
856
2.2
Road traffic accidents
777
2.0
Source: World Health Organization, Harvard School of Public Health, and the World Bank, Geneva, 1996 Table 2.4 Leading Causes of Death in Developed Countries in 1990 Causes of Death All causes Lower respiratory infections
# Deaths in thousand
% total Deaths
10,912
—
385
3.5
Ischemic heart disease
2,695
24.7
Cerebrovascular disease
1,427
13.1
523
4.8
Trachea, bronchus, and lung cancer Chronic obstructive pulmonary disease
324
3.0
Colon and Rectum cancer
277
2.5
Chronic obstructive pulmonary disease
324
3.0
Stomach cancer
241
2.2
Self-inflicted injuries
193
1.8
Road traffic accidents
222
2.0
Diabetes mellitus
176
1.6
Source: World Health Organization, Harvard School of Public Health, and the World Bank, Geneva, 1996
The Tables above show that the epidemic of chronic or non-communicable diseases is no longer limited to the developed regions. Indeed, chronic diseases, which include cancers, heart disease and stroke accounted for 56% of all deaths globally in 1990. Infectious diseases have by no means disappeared, however, in fact they accounted for a considerable 34% of all deaths in 1990.
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Chronic diseases are nearly twice as important in the developed countries, where they account for about 86% of all deaths. By contrast, in the poorer countries, they account for approximately 47% of all deaths. The biggest contrast, however, can be seen in the patterns of communicable diseases, which account for just over 6% of all deaths in developed countries and nearly 42% in the developing world.
2.4 BIOLOGICAL HAZARDS Researchers have established a rigid relation amongst Poverty, Health and Environment. Life expectancy, a well established indicator of national health rises with increase in per capita GDP. Child mortality rate also decline with rising income of household. Of all the environmental hazards human encounter, the most formidable and adversaries remain the micro-organisms—viruses, bacteria, protozoa and helminthes (parasitic worms). Upto 17 million deaths per year are attributable to these infections and parasitic agents, almost all in the developing countries, along with hundreds of millions of cases of sickness. Table 2.5 below shows the diseases, causes of infection, and the suggested cost effective preventive measures. Table 2.5 Diseases, Causes of Infection and Remedial Measures Name of the Diseases
Causes of Infection
Suggested Remdial Measures
Malaria, Chagas disease, Dengue fever, Yellow fever Schistosomiasis
Insect borne diseases
Modifying environment to reduce the breeding, feeding or resting places for the vector is a major part of disease control. Improved sanitation reduces the cycle of infection
Most diarrheal diseases, Cholera, Hepatitis A, Most intestinal worms.
Water borne & food borne diseases
Adequate provision for water, sanitation, drainage and hygienic food preparation and storage.
Common eye and skin infection
Water borne diseases
Improved water supply including provision for washing and sanitation
Accidental burns
Size and quality of home
Road accidents
Settlement, neighbourhood and layout of roads
Diseases and injuries in workplace
Toxic chemicals, dust in work Strict compliance to labour place, inadequate protection to legislations and environmental workers from heat, machinery protection acts. and noise
Tetanus
The pathogen enters the human body through any cut or wound
Rapid treatment and immunization against Tetanus
Measles and pertussis
Transmitted through aerosols, with increased transmission in overcrowding dwellings. Overcrowding, inadequate ventilation, dampness and indoor air pollution
Immunization against the disease.
Acute respiratory infection
Roads should be laid out on technical considerations only.
Air pollution to be removed
(Contd.)
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Tuberculosis; meningitis and rheumatic fever
Overcrowding and poor ventilation increases the risk of disease transmission
Patients should be staying in well ventilated rooms
Maternal and prenatal health
Affect the mother
Improved health care and provision for safe delivery is needed
Source: David Satterthwaite et al, The Environment for Children, Earthscan Publications Ltd, London, 1996, pp 8-9
The Table above shows links between Disease/Injury and the environment. These diseases could be broadly grouped under four heads as follows: • Strong relationship between disease/injury and environment. • Important relationship between disease and environment but other factors are also important • Relationship between disease and environment but other factors are more important. • Important relationship between disease and environment but most cost effective means of addressing it is through non-environmental means.
2.5 HEALTH CARE MANAGEMENT The hospital and health care is an important Public System for sustainable socioeconomic development of a society/country. This component of infrastructure includes amongst others the environmental hygiene, public health and curative facilities. Functioning of these components is largely dependant upon the policy of the concerned Government. Infant mortality rate (IMR), Life expectancy at birth and Crude death rate are some of the sensitive indicators for benchmarking of health status of a country. These health indicators could be improved over time in various ways including improvement of public health, coupled with infectious disease prevention and control as also application of modern medical practices in diagnosis and treatment of various ailments. Health care policy of a country/society is directly related to economic growth. Appropriate health and family welfare policy of a country increases labour productivity, production volume, and GDP and helps in accelerating the pace of economic development. It is, therefore, essential to install a scientific management system for preparing a modern hospital and health care system of a country for continuously improving upon the quality and quantity of such services. Management of health care system is a necessity for developing nations because of resource crunch and continuous increase in population. Installation of a scientific management system in this essential component of Public System will result in increased capacity utilization of the existing diagnostic and treatment facilities besides improving upon general hygiene for reduction in infectious and communicable diseases.
2.6 HEALTH POLICY & HEALTH CARE PROGRAMME OF THE GOVERNMENT OF INDIA The Government of India is committed to provide health for all Indian citizens by the year 2000. Today the population in the country has crossed 100 crores. A recent UN study predicted a population of 139 crores by the year 2025.
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The Ministry of Health and Family Welfare, the Government of India, constituted Survey and Development Committee in 1943 under the chairmanship of Sir Joseph Bhore. The committee’s recommendations for future development of health sector in India were based on following principles: • That no Indian individual should fail to secure adequate medical care because of inability to pay for it. • The health programme, must from the very beginning, lays special emphasis on preventive work with consequential development of environmental hygiene. • The health services should be placed as close to the people as possible in order to ensure maximum benefit to the community to be served. • It is essential to secure the active co-operation of the people in the development of health programmes, and active support of the people is to be sought through the establishment of health committee in every village. • The doctor, who is the leader of the health team, should be a Social Physician who should combine remedial and preventive measures to cater maximum benefits to the community. The Bhore committee laid special stress on provision for safe drinking water, sanitation and housing. The committee insisted that medical relief and preventive care must be provided as soon as possible to the vast rural population of the country. The Srivastava Committee in 1975 suggested that the primary health care should be provided within the community itself through specially trained health workers. The experience of the Government in the field of mass programmes like Family Planning, malaria and other communicable diseases was found unsatisfactory. In 1973, the Government took decision that each sub-centre in rural India would be manned by a trained female health worker and a trained male health worker known as multi-purpose worker to provide health service in the form of a package. An important milestone in India’s health service development was reached with signing of the ALMA-ATA declaration (WHO-UNICEF Sponsored International Conference on Primary Health Care) on September 12, 1978 recommending full health by 2000 AD. Health care system in India is based, with some modifications, on the recommendations made by the Bhore committee in 1943. In line with these recommendations, we have a three tier health management system. The public health systems in all the States of the country also consist of three tiers. At the bottom there are primary health care facilities where basic health services are provided with emphasis on preventive and primitive aspects such as family planning, maternal and child health, treatment of minor ailments, malarial treatments and spraying, sanitation and public health education. The primary health care thus concentrates on awareness creation, drive for prevention against malarial and water-borne diseases, drive for primary vaccination, and treatment of minor ailments. The management of such health care centers is under the control of the Directorate of Health Services of the respective State Governments. Such services are given free of cost to the community. In the middle are the first referral hospitals or secondary level hospitals consisting of hospitals of various bed strengths ranging between 300 and 550 beds. These first referral
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hospitals provide in-patient and out-patient care with diagnostic and treatment facilities which are not available at the primary level. The provision of services at the first referral level is inadequate and this tier does not provide for critical support needed at the primary level. The first referral hospitals are highly subsidized. The beds are mostly available free of cost to patients. A small percentage of existing beds are serviced at a nominal price, which is also subsidized. The out-patient department is free of any charges. The services include diagnostics, standard surgery, medical treatment etc. Food and general medicines are supplied free of cost to all patients. At the top of the health structure are the tertiary hospitals including teaching hospitals. These hospitals are manned and equipped to provide specialized treatment. In addition, most of the States are also having specialized hospitals dedicated for treatment of particular diseases such as TB hospitals, mental hospitals, infectious diseases hospitals, leprosy hospitals etc. A case study of the State of West Bengal in India about the health delivery system indicates the following parameters: The State has an area of 88757 Sq.Km and a population of 68 million. The State has 914 primary health centers and 249 block health centers catering to about 75 million people living in 19 districts with 344 community blocks. The State also has 175 community subdivisional State general and district hospitals aggregating a total of 19,964 beds. All these hospitals and health care centers including the non-teaching tertiary hospitals are under the administrative control of the Director of the State Health Services under the Ministry of Health and Family Welfare. The teaching hospitals are under the administration of the Director of Health Education under the Ministry of Health and Family Welfare. The Government of West Bengal also has a Homeopathy teaching hospital and a dental teaching hospital at the State’s capital at Kolkata. For adequate Nursing services, the Government of West Bengal operates a number of Nurses teaching and training centers within the State. The medical colleges under the State Government offer full time degree courses leading to MBBS, MD and MS. These institutions also offer Post graduate Diploma courses in various specialized areas. The State capital, Kolkata has a number of special purpose hospitals and research centers operating under the administrative control of the Government of India, notably the Chittaranjan Cancer Research Center, All India Institute of Hygiene and Public Health, etc. The national sample survey utilization data showed preference for allopathic system of medicine both for hospitalization and ambulatory cases. The preference for allopathic system was universal and not influenced by household characteristics like income bracket, social class, taste, literacy, etc. In West Bengal 77% hospitalized cases were found to have used public hospitals in rural areas, 75% hospitalized cases in the State were found to have utilized public hospitals in urban areas. About 8% of the population utilized private hospitals and nursing homes in rural areas and 24% of the population utilized nursing homes in urban areas. The occupancy rate at the first referral hospitals are nearly 100%. About 95% of the public hospitals in the State offered services free of cost to the patients compared to only 7% free services rendered by the private sector. Institutional weakness in health systems resulted in low level of efficiency. It was observed that the referral systems were highly in-effective, clinical skill at the first referral hospitals were below standard and the technical support at the primary level was weak.
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Health care facilities at the primary and first referral hospitals in most of the States in India were observed to be facing operational deficiencies due to general and technical inefficiencies. As a result, the tertiary hospitals in the urban sectors were getting burdened with patients from rural and suburban areas. The situation further deteriorated due to shortages of diagnostic facilities and shortages of trained personnel in key areas of services. A good health delivery system calls for availability of medicines and appliances at affordable prices. The Government of India installed public sector Company like Indian Drugs and Pharmaceuticals Ltd. for manufacture of basic drugs for supply to private sector Pharmaceutical companies. Central public sector companies like Hindustan Antibiotiques Ltd., Hindustan Latex Ltd., State public sector Company like Durgapur Chemicals Ltd., etc were created to meet the demand for delivery of health systems. A large number of sick pharmaceutical companies in the private sector were nationalized to ensure free flow of life saving medicines to general masses at affordable prices. The private sector companies including the multi-national companies were given selective licenses by the Government of India for manufacture and sale of life saving drugs at affordable prices. The Government has also installed Drug Control Directorate for keeping check on quality and prices of drugs in the market.
2.7 CONSTITUTIONAL AND ADMINISTRATIVE FRAMEWORK FOR HEALTH CARE Under the Indian constitution, the items Public Health and Sanitation; hospitals and dispensaries are on the State list. Items like population control and family planning; medical education; adulteration of food stuffs and other goods; drugs and poisons; medical profession; vital statistics; including registration of births and deaths and lunacy and mental deficiency finds place in the concurrent list.
2.8 ENACTMENTS ON PREVENTION AND HEALTH SAFETY ASPECTS The following acts have been enforced for health safety: • The Water (Prevention & Control of Pollution) Act, 1974 • The Air (Prevention & Control) Act, 1981 • The Environment (Protection) Act, 1986 • The Factories Act, 1948 • The Mines Act, 1952 • The Motor Vehicle Act, 1939 • The Hazardous Waste (Management & Handling) Rules, 1989 • The Prevention of Food Adulteration Act, 1954 and Amendments of 1964, 1976 and 1986. • The Drugs & Cosmetic Act, 1940
2.9 NEED FOR PROPER PERSPECTIVE IN HEALTH POLICY AND ADMINISTRATION Improvement in health and nutritional status of the population has been one of the major thrust areas for the social development programmes of the country. Over the last five decades, India has built a vast health infrastructure and man power at primary, secondary
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and tertiary care in Government, voluntary and private sectors. However, there is wide intra-regional and intra-State disparity in health service coverage. The major factors responsible for the poor functional status of the health system are as follows: • Mismatch between personnel and infrastructure. • Imbalance in stress on curative and preventive aspects. • Lack of continuing medical education (CME) programmes for orientation and skill up gradation of personnel. • Lack of appropriate functional referral system. • Absence of well established linkages between different components of the system. • Efficient management of resources. • Need to stress upon preventive and promotive aspects. • Need for development of medical cooperatives and cadre for medical services. • Imperative of Globalization. The Government of India has planned the following programmes in the health sector: • A programme has been initiated with the avowed objective of providing specialty and super-specialty medical care in the backward States. The imbalances in the availability of tertiary care hospitals/medical colleges is also sought to be mitigated by ensuring high quality services to the uncatered areas. Under this programme, 6 AIIMS like institutions are proposed to be established in the States of Bihar, Madhya Pradesh, Chattisgarh, Orrisa, Rajasthan and Uttaranchal, and one medical college each in the States of Andhra Pradesh, Jharkhand, Jammu & Kashmir, Tamilnadu, Uttar Pradesh and West Bengal will also to be upgraded to the level and standard of AIIMS. • With a view to improving disease surveillance programme to ensure early detection of warning signals and impending outbreaks, a comprehensive disease surveillance programme at the district level is being launched. It would facilitate the study of the disease patterns including new emerging diseases and would provide data to monitor programmes of the disease control and help in optimizing allocated resources. • Hospital infection control and waste management has been incorporated as an essential component of health delivery systems. National Hospital Waste Management Committee has been constituted to co-ordinate and provides guidelines in this regard. • Empowered Action Group (EAG) was set up in the Ministry of Health & Family Welfare to bolster the effects in improving of health delivery systems in backward States which manifest high fertility and mortality rates. The underlying objective is to promote environment for provision of quality services particularly in terms of demographic indices. The activities undertaken are capacity building to ensure single window clearance point for policy decisions and provision of special assistance.
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• Nutrition Pilot Project has been launched in 51 districts of the country in order to reduce the magnitude of under nutrition in adolescent girls and pregnant and lactating woman. The scheme envisages provision of free supply of food grains to the identified families. The health care and Family welfare management of the Government of India could be broadly classified under the following broad heads: • Pre-planned disease control programmes of various types for prevention and control of diseases. • Medical Relief and Supplies. • Institutionalization of the Health Delivery Systems. • Family Welfare.
2.10 DISEASE CONTROL PROGRAMME The following Central Government sponsored disease control programmes have been initiated for prevention and control of diseases.
National Vector Borne Disease Control The directorate of National Vector Borne Disease Control Programme (NVBDCP) is the national Level nodal agency for monitoring and coordinating the centrally sponsored schemes. The major responsibilities of the Directorate include policy and strategy formulation monitoring, technical and financial support to the States. The NVBDCP is being implemented for prevention and control of vector borne diseases, namely Malaria, Filaria, Kala-azar, Japanese Encephalitis and Dengue. The State Government is responsible for implementation of this programme.
Malaria Malaria is an acute parasitic illness caused by Plasmodium falciparum or plasmodium vivax. Mosquitoes transmit malaria in India. The main clinical presentation is fever with chills, nausea and headache. The diagnosis is confirmed by microscopic examination of blood sample. At the time of Independence in 1947; there were an estimated 75 million malaria cases and 0.8 million deaths annually. The Government launched the National Malaria Control Programme (NMCP) in 1953. DDT spraying resulted in sharp decline in malaria. In 1958 NMCP was converted to the National Malaria Eradication Programme (NMEP). The strategy was highly successful and the cases were reduced to about one lakh and deaths due to malaria were eliminated by 1965-66. In 1977 the Modified Plan of Operation (MPO) was launched with the immediate objective to prevent deaths and to reduce morbidity due to malaria. The programme was integrated with primary health care delivery system. The blanket approach of insecticidal spraying was changed to selective indoor residual spray by stratifying areas based on cases per one thousand population in a year i.e., the annual parasite incidence (API) of two and above. The State Governments are responsible for planning, implementation and monitoring of the programme.
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Filaria Lymphatic Filariasis is a serious debilitating and incapacitating disease. The transmission is through mosquitoes, namely, Culex quinquefaciatus. The infected person may develop swelling of limbs and genitals which keep on increasing making the person incapacitated. The National Filaria control programme is being implemented since 1955. At present about 51.71 million urban population is being protected through recurrent anti-larval measures by 206 control units and 199 filaria clinics. The National Health Policy, 2002 has envisaged the goal of Lymphatic Filariasis elimination by the year 2015.
Dengue Fever/Dengue Haemorrhagic Fever Dengue fever is a viral disease, which is transmitted by Aedes Aegypti mosquitoes. Aedes Mosquitoes breed in stagnant clean water in man made containers such water coolers, used tyres, disposable cups and other water storage containers.
Japanese Encephalitis Japanese Encephalitis (JE) is an acute viral illness with high case fatality and longterm complications. The vector breeds in large paddy fields and similar large water bodies. The vector is an out door rester and feeder. This habit of mosquitoes makes the control strategy difficult. An Indigenous Vaccine was developed by the Central Research Institute (CRI) which was found to be effective.
Kala-Azar Kala-azar is a parasitic disease caused by Leishmania Donovani transmitted by sand flies Phelbotomus Argentipes. The disease is prevalent among socio-economic poorer section of the society living in rural areas. The infected person suffers from recurrent fever, loss of appetite, loss of weight and progressive enlargement of spleen. The disease is chronic if not treated and leads to death. National Health Policy 2002 has envisaged the goal of Kala-Azar elimination by the year 2010.
Tuberculosis TB is a serious public health problem in India. India accounts for nearly one third of Global TB burden. Each sputum positive case, if not treated, infects 10 to 15 persons per year. Two persons die from TB in India every three minutes and over 1000 people every day. National Tuberculosis Control Programme (NTCP) was launched in the country in 1962. Since, the programme did not make any significant epidemiological impact in its three decades of implementation; it was reviewed by an Expert committee in 1992. Accordingly, Revised National TB control programme (RNTCP) using DOTS strategy was launched on March 26, 1997. This is being implemented in the country in a phased manner with assistance from multi-lateral agencies.
Leprosy The National Leprosy Programme was launched by the Government in 1955. It was redesignated as the National Leprosy Eradication Programme (NLEP) in 1983. The programme was expanded with the assistance from the World Bank from the year 1993-94 to 2000 as the first National Leprosy Elimination Project. The second phase of NLEP was started from
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April 1, 2001 for a period of three years with the objective of eliminating leprosy by 2005. Free Multi Drug Therapy (MDT) is available at all sub-centers, PHCs and Government hospitals and dispensaries. Four nation-wide Modified Leprosy Elimination Campaigns (MLEC) have been conducted from 1998 to 2003 to create mass community awareness about leprosy and to undertake leprosy case detection drive with prompt MDT. The prevalence rate of leprosy has been reduced from 57.6 per 10,000 populations in 1981 to 2.44 per 10,000 populations by March 2004.
Blindness Control The National Programme for Control of Blindness (NPCB) was launched by the Government of India in the year 1976. Development of eye care infrastructure has been one of the important initiatives under the programme. The services provided under the programme include free cataract surgery including IOL implantation. Detection and correction of refractive errors in children and collection and utilization of donated eyes for treatment of corneal blindness are other important activities of the programme.
National AIDS Control Organisation The Government is implementing a Comprehensive National AIDS Control Programme throughout the country. The programme implementation has been completely decentralized to the States. The second phase of the programme was launched in April 1999 with the following two broad objectives: • To reduce the spread of HIV infection. • To reinforce the capacity of the Government to respond to HIV/AIDS on a long term basis.
Sexually Transmitted Diseases The control of Sexually Transmitted Diseases (STDs) is an integral component of the National AIDS Control Programme since 1992. This has two objectives: • To reduce prevalence of STDs • To prevent short term and long term morbidity and mortality due to STDs. NACO has established 735 in numbers of STD clinics till March 31, 2004 with one STD clinic in each district of each State. Each STD clinic has one STD specialist or a Doctor fully trained to manage STDs and is equipped with laboratory support for the diagnosis and treatment of STDs. NACO ensures a continuous adequate supply of STD drugs.
Iodine Deficiency Disorders Iodine is an essential micronutrient with an average daily requirement of 100-150 micrograms for normal human growth and development. Deficiency of iodine may cause Goitre and other Iodine Deficiency Disorders (IDDs). The Government of India launched the National Goitre Control Programme (NCGP) in 1962 with focus on provision of iodated to identify endemic areas. In 1984, the Government decided to iodize the entire edible salt in the country by 1992 in a phased manner. The
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annual production of iodated salt is about 46 Lakh Tons. The NCGP was redesignated as National Iodine Deficiency Disease Control Programme (NIDDCP) in 1992 to impress upon the importance of spectrum of the IDDs.
2.11 NATIONAL MENTAL HEALTH PROGRAMME The National Mental Health Programme was started in 1982 for providing community based mental health care using existing public health infrastructure. The WHO report on Global burden of Diseases has projected mental illness to be the fourth major cause of morbidity. The District Mental Health Programme is a centrally sponsored scheme launched in 1996 and involves extending Psychiatric services at the community level.
2.12 NATIONAL SURVEILLANCE PROGRAMME FOR COMMUNICABLE DISEASES The Government launched National Surveillance Programme for Communicable Diseases (NSPCD) as a pilot project in 1997-98 with the overall goal of improving health status of the people. NSPCD is being operated with the objectives of strengthening the surveillance system of communicable diseases and developing capabilities at State and district level to detect outbreaks early and to avert morbidities and mortalities. It will also help to identify the potential pathogens responsible for Bio-terrorism. The programme envisages capacity building at district, regional and State levels by strengthening and utilizing existing manpower and infrastructure facilities through training and modernization of infrastructure.
2.13 GUINEA WORM ERADICTION PROGRAMME In 1983-84, the national Institute of Communicable Diseases (NICD) was made the nodal agency by the Government for Planning, coordinating, guiding and evaluations of GWEP. World Health Organization (WHO) certified India as Guinea worm disease free country in February 2000. However, WHO recommended routine surveillance and IEC to be continued till Global eradication of the disease.
2.14 YAWS ERADICTION PROGRAMME Yaws eradication programme was launched as a centrally sponsored scheme in 1996-97. The National Institute of Communicable Diseases has been identified as the nodal agency for planning, monitoring and evaluating the programme. The programme is implemented by the endemic State Health Directorates through the existing Health care system.
2.15 NATIONAL CANCER CONTROL PROGRAMME As cancer has a high rate of mortality unless detected and treated early, the emphasis is on prevention, early detection of cases and augmentation of treatment facilities. The National Cancer Control Programme (NCCP) has been in operation from 1975 which was modified in 1984-85. The following schemes are in operation: • Development of Regional Cancer Control Centre (RCC). • Development of Oncology Wing in Medical Colleges.
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• Setting up of Cobalt Therapy Units. • District Cancer Control Programme. • Health Education and Early Detection Activities. The scheme under NCCP is under revision based on the evaluation of the programme.
2.16 MEDICAL RELIEF AND SUPPLIES The following Medical Relief & Supplies have been installed as an important component of Health Care Delivery System.
Hospitals and Dispensaries The State Governments maintain and administer the Primary Health care centers, the first referral hospitals besides the tertiary teaching hospitals. These heath care centers also have their own Dispensaries. State capitals of some of the important States have central Government owned and controlled health care facilities. The Ministry of Labour, Government of India has installed hospitals in Industrial areas to cater to treatment to Employees covered by the Employees State Insurance Act, 1948. Most of the Central Public Sector Undertaking (CPSU) is equipped with dispensaries. Basic Industry and Heavy Engineering Industries in the CPSUs are generally located in the backward areas. These are equipped with Hospitals with minimum facility of a referral hospital. Indian Railways has hospitals in various locations in the country. CPSUs like SAIL, BHEL etc are having their own hospitals. These hospitals form a part of the project cost. The Armed forces maintain a large number of hospitals scattered over the country. Some of the State Police department maintains their own hospitals.
Rural Health Infrastructure In rural areas, services are provided through a network of integrated health and family welfare delivery system. As on March 31, 2004 an extensive network of 3,043 community health centers, 22,842 Primary Health Care Centres and 1,37,311 Sub-Centres were in existence to provide primary health care at the grass root level. One sub-centre is manned by one female and a male multi-purpose worker. One sub-centre covers a population of 5,000 in plain areas and 3,000 in hilly, tribal and backward/difficult terrain areas. One lady health visitor supervises six sub-centers. One primary health center covers a population of 30,000 in plain areas and 20,000 in tribal and difficult terrain areas. One community health centre covers a population of 80,000 to 1,20,000. It has 30 indoor beds, well equipped laboratory and X-ray facility.
Central Government Health Scheme The Central Government Scheme (CGHS) was started in 1954 with the objective of providing comprehensive medical facilities to Central Government employees, pensioners and their families. The scheme also provides services to the members/ex-members of Parliament, Judges of Supreme Court and High courts (Sitting and Retired), freedom fighters, Employees of Autonomous bodies/Semi-Government Organizations, Accredited Journalists and Ex-Governors and ex-Vice Presidents of India. There are 244 allopathic dispensaries for 10.41 lakh card holders. This translates into 44.57 lakh CGHS beneficiaries. The CGHS facilities to the beneficiaries have also been provided under the Indian system of medicine
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and Homoeopathy through CGHS dispensaries/units. There are 19 polyclinics, 65 laboratories and 17 dental units functioning under the CGHS.
Emergency Medical Relief India with a wide range of topography and climatic conditions has witnessed various types of natural disasters. It is a major disaster prone country in the Asia-Pacific region. The Directorate General of Health Services, Ministry of Health and family Welfare, played a supportive role in terms of supplementing the physical and logistics support to the States to counter the effects of disasters on health sector. Emergency Medical Division of the Directorate coordinates health relief activities. Disaster management plans for draught and flood were circulated among all the States to keep them at the highest level of preparedness.
Drugs The Drugs and Cosmetics Act, 1940 regulates import, manufacture, sale and distribution of Drugs and Cosmetics in the country. Under the act import, manufacture and sale of substandard, spurious, adulterated or misbranded drugs are prohibited. The Government is empowered to check the quality of imported drugs, lay down regulatory measures and standards of drugs and grant approval for import or manufacture of new drugs. The control over the quality of drugs which are manufactured, sold and distributed in the country is exercised by the concerned State Government and the zonal/sub-zonal offices of the Central Drugs Standard Control Organization (CDSCO) in the respective State.
Prevention of Food Adulteration Programme The Ministry Of Health and Family Welfare is responsible for ensuring safe food to the consumer. Keeping this in view, a legislation called Prevention of Food Adulteration (PFA) Act, 1954 was enacted. The objective envisaged in this legislation is to ensure availability of pure and wholesome food to the consumers and also to prevent fraud and deception. The Act has been amended thrice, in 1964, 1976 and in 1986 with the objective of plugging the loop holes and making the law more stringent. The Government of India primarily plays the role of an adviser in its implementation besides carrying out various statutory functions/duties assigned to it under the provisions of the Act. Enforcement of the food laws rests primarily with the State. In most of the States, implementation of food laws in Corporation/Municipal areas rests with the local bodies that employ their own food inspectors for the purposes. Licensing of food industries/ establishments is left to them. There are 72 laboratories in the country at district/regional or State level in addition to four central food laboratories. Almost every State has got one or more laboratories depending upon its need. About 12 of these laboratories are under the administrative control of the local bodies whereas the remaining laboratories are under the administrative control of the State Government.
2.17 WORLD BANK ASSISTED CAPACITY BUILDING PROJECT ON FOOD SAFETY As trade in food commodities expands globally, food safety can no longer be considered only a mere domestic issue. The agreements under the WTO require development of modern food control and safety programmes by national Governments. The issue is not only related to end product but the process control adopted is also required to be examined and approved.
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The followings are the components of the project: • Enhancing the capacities of laboratories at the State and central levels through strengthening of infrastructures and up gradation of skills of personnel through training. • Introduction of GMP and HACCP in the medium and small food processing operations and upgrading facilities in the laboratories for testing including testing for micro-biological contamination. • Creation of awareness for necessity of food safety among unorganized food processors including street vendors by designing and imparting training. • Development of a system of continuous survey of households to collect primary field data necessary for reinforcement of the policy and the programme. • Installation of a Management Information System (MIS) and electronic linkages amongst central and States establishments for improved monitoring and increased capacity utilization of the existing facilities.
Vaccine Production The Vaccine production has a long history in the country. It started in the public sector, Haffkine Institute in 1899, Central Research Institute, Kasauli in 1905, Pasteur Institute of India, Coonoor in 1907. These three Institutes used to produce vaccine against Cholera, Plague and Rabies. The Vaccine production programme got a boost after introduction of the expanded programme on immunization in the year 1978. The production of all the vaccines except Oral Polio Vaccine (OPV) is sufficient to meet the requirement of immunization programme in the country. The OPV is now imported in bulk, which is blended and supplied to the programme. Vaccines are also manufactured for prevention of various types of diseases like rabies, typhoid, yellow fever, Japanese encephalitis, mumps, rubella and hepatitis. The National Control Laboratory (Central Drug Testing Laboratory, Kasauli) is accredited by WHO for testing and pre-release certification of Vaccine. To assess and monitor the status and quality of Vaccine production, a Vaccine Production Board was constituted in 1976. This board was re-constituted in the year 2000. Quality of Vaccine is maintained strictly in accordance with Drugs and Cosmetics Act, 1945.
Nutrition The nutrition cell in the DGHS provides technical advice on all matters related to policy making, programme implementation, monitoring and evaluation, training content of different levels of medical and para-medical workers. It takes up technical scrutiny of standards and labels for food, proposals, project evaluation, review of research projects etc.
2.18 AYURVEDA, YOGA AND NUTUROPATHY, UNANI, SIDDHA AND HOMOEOPATHY (AYUSH) The department of Indian System of Medicine and Homoeopathy (ISM&H) was established in the year 1995 as a part of the Ministry of Health and Family Welfare. This Department was re-named as AYUSH in November 2003.
HEALTH CARE MANAGEMENT
37
The Indian system of medicine such as Ayurveda, Siddha, Unani and drugless therapies like Yoga, Naturopathy have been widely practiced in India for centuries. Homoeopathy though originated in Germany, has been widely accepted and practiced in India. AYUSH is having a Drug control cell, a medicinal plant cell and a patent cell. The department is having three subordinate offices, namely, Pharmacopoeia Laboratory for Indian Medicine, Homoeopathic Pharmacopoeia Laboratory and CGHS Ayurveda Hospital at New Delhi. Fourteen autonomous bodies and a Public Sector Undertaking report to AYUSH. The National Medicinal Plant Board is also functioning under the aegis of the Department.
2.19 INSTITUTIONALISATION OF HEALTH DELIVERY SYSTEM The health care services were given a professional orientation with the followings:
Medical Council of India The Medical Council of India (MCI) was established as a statutory body under the provisions of the Indian Medical Act, 1933. This was repealed and the Indian Medical Council Act, 1956 was promulgated. The Act was amended in 1958. In the year 1993, the Act underwent a major amendment making it mandatory to obtain approval of the Ministry of Health and Family Welfare for opening of new medical colleges/increasing in number of seats/starting of new courses in the existing medical colleges, in order to regulate the standard and quality of medical education in India. The Act was again amended in 2001 which empowered the MCI to conduct screening tests for Indian nationals holding foreign medical qualifications to test their skill before granting them registration to practice medicine in India. Through the same amendment of the Act, it has been made mandatory for Indian students desirous of taking admission in an under graduate medical course at an institute abroad to obtain an eligibility certificate from the MCI stating that he/she conforms to the norms laid down by MCI for this purpose. The main function of the council are maintenance of uniform standard of medical education both at the under graduate and post graduate levels; maintenance of Indian medical register; reciprocity with foreign countries in the matter of mutual recognition of medical qualifications; continuing medical education and granting of provisional/permanent registration to Doctors with recognized medical qualifications, registration of additional qualifications and issue of good standing certificate to Doctors going to commonwealth countries. At present there are 229 medical colleges in the country, of which 165 colleges have been recognized by the MCI. The Government of India has permitted 64 new medical colleges to conduct MBBS course. The admission capacity in these colleges is 25,500 students per year.
Central Health Education Bureau The government as per the recommendation of the Bhore committee and on the decision of the Planning Commission established Central Health Education Bureau (CHEB) in the year 1956 as a nodal agency under the Directorate of Health Services. It looks after the health promotion and health education activity in the country. Similar organizations were also set up at the State level as the State Health Education Bureau.
National Academy of Medical Sciences The National Council of Medical Sciences (NAMS), New Delhi was established in 1961 with the objective of promoting the growth of Medical Sciences. It recognizes the talent
38
PUBLIC SYSTEMS MANAGEMENT
throughout the country in the form of election of Fellows and Members of the Academy. To keep Medical Professionals abreast of fewer/current medical problems of the country and to update their knowledge for better delivery of medical education, patient care and health care at large, a programme of continuing medical education (CME) is being implemented by the academy since 1982. As on August 31, 2004 the NAMS has on its rolls 8-honorary Fellows, 713-Fellows and 3,157 Members.
Pharmacy Council of India The Pharmacy council of India was constituted under the Pharmacy Act, 1948. It is responsible for regulation and maintenance of uniform standard of training of pharmacists. It also prescribes syllabi and regulations for diploma course in pharmacy and registration of pharmacists. At present, there are 358 approved institutions imparting diploma in pharmacy to 21,200 students per year and 212 approved institutions offering degree in pharmacy to 11,670 students per year. About 5.59 lakh pharmacists are registered with various State Pharmacy Councils.
Indian Nursing Council Indian Nursing Council is a statutory body constituted under the Indian Nursing Council Act, 1947. The council is responsible for regulation and maintenance of uniform standards of training for nurses, midwives and health visitors. The council prescribes the syllabi and regulations for various nursing courses. At present 774 general nursing and midwifery schools, 250 auxiliary nurse midwifery schools, 268 colleges of nursing for conducting graduation courses and 42 colleges for conducting post graduate courses in nursing are functioning in the country.
Dental Council of India The Dental Council of India is a statutory body established under the Dentists Act, 1948 with the prime objective of regulating dental education, profession and its ethics in the country. It periodically carries out inspections of dental institutions to ascertain the adequacy of teaching facilities. As on date, 185 dental colleges are functioning in the country with an annual intake capacity of about 13,240 students in the BDS courses during the academic session 2004-05. The total number of registered dentists as on December 31, 2005 is 55,058.
Research Council for Ayush There are four apex research councils as below: • Central council for Research in Ayurveda and Siddha (CCRAS) • Central council for Research in Unani Medicines (CCRUM) • Central council for Research in Homoeopathy (CCRH) • Central council for Research in Yoga and Naturopathy (CCRYN) These councils are engaged in conducting clinical research in health care, drug research, survey and cultivation of medicinal plants, pharmacognosy, photo-chemistry, pharmacology, toxicology, drugs standardization, literary research for revival of the ancient classic literature and family welfare research. The objective of CCRYN is also to conduct scientific research in the field of yoga and naturopathy.
HEALTH CARE MANAGEMENT
39
National Institutes for Ayush There are seven apex national level educational institutions one for each system as model institutes to promote excellence in Indian System of Medicine and Homoeopathy Education. These institutions are as follows: • National Institute of Ayurveda, Jaipur, Rajasthan. • National Institute of Siddha, Chennai • National institute of Unani Medicines, Bangalore, Karnataka • Morarji Desai National Institute of Yoga, New Delhi • National Institute of Naturopathy, Pune, Maharashtra • National Institute of Homoeopathy, Kolkata. • The Institute of Post graduate training and Research in Ayurveda, Jamnagar, and Gujarat. All India Institute of Ayurveda has been planned to be setup at New Delhi to impart PG education and conduct research in Ayurveda and will have a 250 bed referral hospital. The health care infrastructure under AYUSH available in India consists of 3,845 hospitals with 65,159 bed capacity and 23,630 dispensaries. There are 439 colleges for AYUSH in the country out of which 96 colleges have Post Graduate Departments for imparting PG teaching. There are 6.95 lakhs registered practioners of Indian Systems of Medicine and Homoeopathy in the country.
Family Welfare The census of India, 2001 indicates the population of India on March1, 2001 as 1,027 millions—531 million males and 496 million females. Viewed globally, India constitutes 16.87% of the world population, in 2.4% of global land area. Table 2.6 below shows the census of India in the last four decades. TABLE : 2.6 Growth of Population in India Between 1971 & 2001 Census Year
Decadal Growth in%
Average Exponential Growth in%
1971
24.80
2.20
1981
24.66
2.22
1991
23.86
2.14
2001
21.34
1.93
This shows perceptible decline in growth rate of population in the recent past. As per Census, 2001 Report, the Growth in Indices of GDP and food production has been more than the growth in population.
Community Needs Assessment Approach From April 1, 1996 the Family Welfare Programme is being implemented all over India on the basis of target-free approach. This community needs assessment approach envisages replacement of the system of setting targets from the top by a system of decentralized participatory approach at the grassroots level. This approach involves close association of
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PUBLIC SYSTEMS MANAGEMENT
the community and its leading lights and opinion leaders such as Village Pradhans, Mahila Swasthya Sanghs, Primary School Teachers, etc to facilitate deciding the needs of the Family Welfare Services of the next year.
Health Insurance Health Insurance is popular under National Health Insurance Scheme of various Governments, particularly USA, UK, Australia, New Zealand, etc. In these countries every earning member has to contribute specified percentage of his/her income, every month towards the Insurance Scheme and in turn he/she is assured of full reimbursement of medical expenses. It is believed that in USA and in other developed countries, all citizens enjoy comprehensive medical attention but in India it is difficult to get medical care. This is not true. In India a citizen can approach any Government Hospital/Primary Health Care Center/Civil Dispensary, anywhere, as a matter of right. On the other hand an American citizen is often denied treatment even if same is available, unless he/she is insured or he/ she can afford to settle the bills. In India, a section of the employees in the organized sector falling within the purview of the Employees State Insurance (ESI) Act, 1948 gets guaranteed medical care against payment from monthly salaries/wages. The ESI Corporation takes care of the compensation payable under the Workman’s Compensation Act and also provides medical treatment through ESI hospitals. In addition to above, the following Health Insurance schemes are available in India: 1. Group Medical Benefit Insurance Scheme: The scheme is available on voluntary basis to any employer for reimbursement of hospitalization expenses as well as domiciliary medical expenses. As the claim experience under the scheme has been found unfavourable by the insurance companies, they are not freely canvassing and soliciting this business. 2. Hospitalization Scheme: In the year 1983, the scheme of hospitalization expenses insurance was started for every individual upto the age of 65 years. Recently, general insurance industry has formulated a comprehensive scheme to take care of even domiciliary expenses, under the name Mediclaim. The Government allows the premium paid against such insurance from the taxable income of individual. 3. Personal Accident Insurance: Insurance companies are also granting personal accident insurance and sickness insurance which is combination of weekly benefits, temporary disablement benefits, etc. 4. Workmen’s Insurance: Insurance companies are also including medical benefit under their Workman’s Compensation Insurance Scheme. This insurance is to reimburse the compensation payable by those employers who do not fall under the purview of ESI Act. 5. Foreign Trips: General Insurance Industry has started a scheme to take care of medical expenses when Indian citizens go abroad. Insurance covers upto US $1,00,000 is granted at a nominal premium. Claims are paid in foreign currency directly to the hospital/ nursing home through an Agency operating Worldwide. 6. Health Insurance for Poor: A joint Committee of Health and Family Welfare and the Ministry of Finance is being setup to examine the various possibilities of extending Health Insurance covers to poor families.
HEALTH CARE MANAGEMENT
41
Immunisation Programme The district household survey conducted in 2002-03 reveals that 211 districts out of 258 districts surveyed had full immunization levels below 75%. The Department of Family Welfare has prepared a strategic framework for the multiyear plan (MYP) on immunization, which aims to increase accessibility, availability and coverage of quality and reliable immunization services, besides increasing demands for such services. New initiatives like auto disable (AD) syringe, mobility support to districts for immunization, improving mobilization of children through convergence with Anganwadi Worker, and organizing sessions in urban slums and underserved areas through outsourcing the activities, are also being introduced.
Strengthening Primary Healthcare Despite an impressive rural primary healthcare infrastructure, it is a fact that public healthcare infrastructure is presently catering to only 20% of all healthcare needs of the population. The department of Family Welfare is planning to improve access to primary healthcare in rural under-served areas and urban slums, both through revamping of public healthcare infrastructure and activation of public—private partnerships during Phase-2 of the Reproductive and Child Health (RCH) programme due to be launched in April, 2005. The RCH-2 aims at assessing success of various interventions by way of performance outcomes for vulnerable population groups, for which specific performance indicators are being developed.
Initiatives for Improved Healthcare to the Poor Attempts are being made to improve levels of institutional delivery through the proposed Janine Suresh Yolanda. The access to Family Planning services is being improved through the public—private partnership initiative in the EAG States whereby accredited private/ NGO health facilities would provide quality family planning services at subsidized rates, and free services to BPL clients. Private-public partnership would also include initiatives such as engagement of contractual medical and paramedical staff like ANMs, Anesthetists, Lady Medical Officers, Laboratory Technicians, etc. contracting out of clinical and nonclinical services in the public health facilities, especially among the under-utilized infrastructure, social marketing of Contraceptives, greater involvement of NGOs for training and delivery of services etc.
Reproductive and Child Health Programme The Reproductive and Child Health Programme (RCH) launched in 1977 is currently operational in the entire country. The programme follows a differential strategy (with districts as the base) with inputs linked to the needs of the area as well as the capacity for implementation. It is the flagship programme of the Family Welfare, which combines the three objectives involving reproductive health, child survival, and fertility regulations with a policy and programme orientation markedly different from previous programmes. The programme is mainly offered through Primary Health Infrastructure. The overall goals of the programmes are to (a) reduce maternal and infant mortality and morbidity, and (b) assure reproductive health and choice. These contribute to stabilization of population. The programme is supported by the World Bank, European Commissions, UNICEF and other bilateral donors.
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PUBLIC SYSTEMS MANAGEMENT
The main objective of this programme is to bring about a change in the following three critical health indicators: • Total Fertility Rates (TFR) • Infant Mortality Rate (IMR) • Maternal Fertility Rate (MMR) These goals are consistent with the National Population Policy, 2000 and the Tenth Five Year Plan.
Universal Immunisation Programme The Universal Immunization Programme (UIP) was launched in 1985 to reduce infant, child and maternal morbidity and mortality by protecting against six vaccine preventable diseases viz, Tuberculosis, Diphtheria, Pertussis, Tetanus, Polio and Measles. An IDA assisted three-year project to improve routine immunization programme was launched on January31, 2001. The main components of the programme are as follows: • Polio Eradication Activities • Strengthening of routine immunization services. • Development of medium term framework for the programme.
Pulse Polio Programme The National Technical Advisory Group on Immunization (NTAGI) was constituted in August, 2001 to prepare a strategic framework on immunization. Based on the recommendation of NTAGI, multi year strategic plan document has been prepared. Under this programme all children of 0-5 years of age are given two doses of Oral Polio Vaccine (OPV) at an interval of six weeks.
Hepatitis-B Project The Government has decided to introduce Hepatitis-B Vaccine for infants under the universal immunization (UIP) on a pilot basis. This pilot project is being implemented in slum areas of 15 metropolitan cities during 2002-03 and 33 districts during 2003-04.
Project Strategy • The project would be implemented in slum areas of 15 metropolitan cities (which are high risk for Hepatitis-B) and 33 districts that have been evaluated to have high coverage (more than 80%) with currently used Vaccines. • The pilot project would be conducted over a period of two years. The HepatitisB Vaccine will be administered along with three doses of primary DPT vaccination. • At the end of two years, the experience in the first phase of introduction would be the basis of a long term policy for expanding introduction of Hepatitis into the Universal Immunization programme in our country. • After this initial project, the Government will consider to expand introduction of the Hepatitis-B Vaccine in additional cities and districts.
HEALTH CARE MANAGEMENT
43
2.20 INTEGRATED MANAGEMENT OF NEONATAL AND CHILDHOOD ILLNESSES In the year 2000, the Government set up an adaptation committee for the Integrated Management of Childhood Illness (IMCI) programme which is put forward by WHO. This was done because it was felt that gains in reduction of infant mortality rate (IMR) were limited more to reduction in deaths in the age group of 1-12 months, while the neonatal mortality rate virtually remained stagnant.
Training under RCH Availability of qualitative services to the community depends largely upon the efficiency with which health functionaries discharge their responsibilities, which, in turn mainly depend upon their education and training. Training division envisages improving the skills of various categories of health functionaries working in rural set up, through pre-service and in-service training to provide quality care to the community. Major Training Activities can be listed as follows: • • • • • •
Centrally sponsored schemes under domestic budget. Basic training of Auxiliary Nurse Midwife/Lady Health Visitor. Basic training of multi-purpose health worker. Maintenance and strengthening of Health and Family Welfare running centers. Strengthening of basic training schools. Training programmes under external aided fund in areas of Reproductive child health and Professional development courses. The training programmes under Reproductive Child Health (RCH) are carried out in the following two institutions: • Gandhigram Institute of Rural Health and Family Welfare Trust, Tamil Nadu • Rural Health Training Centres, Najafgarh, New Delhi.
Maternal Health Programme In the last decades, the life expectancy of population in India has shown remarkable improvement from 41 at birth in 1961 to the present day of 65 years. The major causes of these deaths have been identified as hemorrhage (both ante and post-partum), toxemia (hypertension during pregnancy), anemia, obstructed labour, infections after delivery, and unsafe abortion. The maternal Health Programme which is component of the Reproductive and Child Health Programme aims at reducing maternal mortality to less than 100 by the year 2010 through a number of interventions. There are essential obstetric care which intends to provide basic maternity care to all pregnant women by ensuring early registration of pregnant women, at least three anti-natal checks-up for taking preventive and promotive steps and to detect complications early for prompt action and at least three post-natal check-ups to monitor the post-natal recovery.
Family Planning Methods Figure 2.3 shows Acceptors of Family Welfare Methods in India during the period from 1993-94 to 2003-04. During the period 2003-04 the total number of family planning acceptors
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at all India level is higher by 5.2% than that during the corresponding period of 2002-03. The performance of 2003-04 shows the followings: • Sterilization
:
48.74 Lakhs
• IUD Insertions
:
60.79 Lakhs
• Condom Users
:
178.31 Lakhs
• Oral Pill Users
:
87.54 Lakhs
ACCEPTORS OF FAM ILY W ELFA RE M ETHO DS IN LAKH 2 65 .85
2 60 .1
2 56
2 55 .7
2 47 .6
2 43 .92 2 22 .74
2 31 .9
2 18 .59
2 24 .64
68.1 62.4
61.7
60.8
3 .75 .3 8
Total 356.19
Total 369.4
Total 363
Tota l 36 0.9
Tota l 34 5.79
To ta l 3 35 .9 9
Total 3 20.14
Total 33 4 .64
Total 32 3 .89
Total 25 2.07
1 76 .36
62 60.8
60.3
61.08
60.79
56.8
42.94
42.9 32.77
43.8 38.78
42.39
42.07
44.4
46.7
47.3
47.31
48.74
1 99 3-9 4 1 99 4-9 5 1 99 5-9 6 1 99 6-9 7 1 99 7-9 8 1 99 8-9 9 1 99 9-2 00 0 2 00 0-0 1 2 00 1-0 2 2 00 2-0 3 2 00 3-0 4 (P ro visio na l)
Fig. 2.3
Contraceptives The National Family Welfare Programme provides the contraceptive services for spacing births, viz, Condoms, Oral Contraceptive Pills, Intra-uterine Devices (IUD) and emergency
HEALTH CARE MANAGEMENT
45
contraceptives. Condoms and oral Contraceptive pills are provided through free distribution scheme. Under social marketing programme, Contraceptives both Condoms and oral contraceptive pills are sold at subsidized rates through a network of public and private organization called Social Marketing Organization. Emergency Contraceptive Pills have been introduced for the first time under Family Welfare Programme in 2002-03.The emergency contraceptive is the method that can be used to prevent unwanted pregnancy after an unprotected act of sexual inter course or a contraceptive failure.
No-Scalpel Vasectomy The programme proposes to encourage men to take more responsibilities for their sexual behaviour, increase men’s access to reproductive health information and services, help men to communicate with their partners and make contraceptive choices together. The programme will continue to popularize vasectomy service, which began with No Scalpel Vasectomy (NSV) in the year 1998. Ensuring the availability of NSV technique at the peripheral level will help increase the acceptance of male sterilization in the country.
Medical Termination of Pregnancy Unsafe abortion is one of the major causes of maternal mortality. According to SRS (RGI, 1998) 8.9% of maternal deaths are due to unsafe abortion. Medical Termination of Pregnancy Act, 1971 was enacted with the objective to reduce maternal morbidity and mortality due to unsafe abortions. Under this Act termination of pregnancy can be done upto 20 weeks, if pregnancy is likely to result in birth of congenitally malformed child or continuance of pregnancy is likely to harm the mother in the existing circumstances and in case of rape and contraceptive failure.
Prohibition of Pre-Conception and Pre-Natal Sex Determination In order to check female foeticide, Regulation and Prevention of Misuse Act, 1994 was enacted and the pre-natal diagnostic techniques were brought into operation from January 1, 1996. This act prohibits determination and disclosure of the sex of foetus. The Act also prohibits any advertisements relating to pre-natal determination of sex and prescribed punishment for its contravention. Punishments are also prescribed for contravention of its provisions. The person who contravenes the provisions of this Act is punishable with imprisonment upto 5 years and fine upto Rs. one lakh apart from cancellation of his/her registration and license.
46
PUBLIC SYSTEMS MANAGEMENT
! HOSPITAL MANAGEMENT
3.0
INTRODUCTION
Hospital is a place for the definition and treatment of human ills and restoration of health and well being of those temporarily deprived of these. A large number of professionally and technically competent persons use their knowledge and skill with the help of sophisticated machines and instruments to produce quality care for patients. The excellence of this product, therefore, depends upon how well the human and material resources are applied to promote patients care. In a dynamic society, development and promotion of social, political, cultural and educational systems have made the people conscious of their rights and they demand that modern and reliable medical and health care are made available for them in least cost and in the vicinity of living place. These perceptions have made hospital a complex organisation. Managements of such complex organisation require appropriate blending of technical and administrative competence. Each hospital is a distinct entity and as such each has to be tailored to the specific norms to be accomplished, the specific tasks to be performed, the volume of services to be rendered and the type of community to be served. At present there is no comprehensive legislation to guide the organisation and management of hospitals. There is a need for hospital legislation to ensure maintenance of standards, to define rights and duties of the hospital staff and to ensure efficient functioning of hospitals.
3.1
HOSPITAL PLANNING
With rapid socio-economic development, people are becoming health conscious. Continuous innovation in technology in the area of health care accompanied by gradual increase in cost of all inputs demands enlightened administrative leadership to promote understanding, efficiency and economy in planning and operation of hospital services. It is essential to ensure full capacity utilization of the installed facilities in a hospital such that reliable treatment could be given to all patients at appropriate price. In planning and operation of a hospital, the following are required to be considered. 1. Hospital—Medical college relationship. 2. Hospital organization and management. 3. The medical staff. 46
HOSPITAL MANAGEMENT
47
4. Medical Records. 5. Medical case—Quality and evaluation. 6. Public Relations and marketing management. 7. Legal aspects of hospital management. 8. Hospital Planning and construction. 9. Personal Management and Human Resources Development. 10. Nursing Services. 11. Financial Management. 12. Laboratory, X-ray and Dietary services. 13. Pharmacy services. 14. Out-patient services. 15. Sanitation and house keeping. 16. Laundry services. 17. Hospital maintenance. 18. Materials management. 19. Library and Documentation. The objective of a hospital should be “To cure sometimes, to alleviate often, to comfort always”. Business efficiency of a hospital always must be subordinate to the basic objective to the Institution. Basic functions of hospital include the following: 1. Medical care of sick and injured person. 2. Prevention—Primary and secondary. 3. Education—Professional and Public. 4. Research.
3.2
HOSPITAL INFRASTRUCTURE
The size of a hospital depends upon the need of the community and the existing health care facilities in the area. The size of a hospital is normally determined from the points of view of economics of scales and reliability of the products being serviced. Generally a hospital with 500/700 beds meets the socio-economic parameters under Indian condition. The amount and size of land depends upon the size of the hospital, availability of suitable land and prices of land. The merits of traditional well spread out hospital buildings each of 2/3 storied type versus the multi-storied structure for a hospital building needs to be analyzed before selection of the type of hospital building. The multi-storied structure for a hospital is expensive and it needs sophisticated elevators and their proper maintenance. But it is more economical for daily operation. Subsequently, the multi-story concept of hospital building is preferred. It is essential to provide residential facilities for the nurses and the resident staff within the hospital premises. In designing the lay out of the hospital building(s) and the residential accommodation, care is required to be taken to ensure that the plinth area of construction does not exceed more than 25 percent of the total hospital land area.
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The hospital should be designed and constructed to have specific number of beds for each clinical department. Table 3.1 below gives a guide for allocation of Beds to each clinical department of a hospital. Table 3.1 : Allocation of Beds to Each Clinical Department Clinical Department General Medicine
% of No. of Beds 24
Pediatrics
9
Psychiatry
2
Isolation
2
Dermatology
5
Orthopedic
7
General Surgery
24
Eye
6
ENT
4
Dental
2
Obstetrics and Gynecology Total
15 100
The estimated covered area per bed could be worked out from Table 3.2. Table 3.2 : Allocation of Estimated Space per Bed in a General Hospital Space Required For Services
Area in ft2
Nursing
150
Verandah
40
Surgery
25
Outlet
10
Administration
25
Pathology
6
Radiology
8
X-ray therapy
10
Out-patient services
160
Pharmacy
6
Nursery
8
Dietary
20
House keeping laundry
8
HOSPITAL MANAGEMENT
49
Employees Facilities
6
Central stores
20
Circulation
130
Total area in Square per Bed
640
It follows from above that a 500-bed hospital will require a minimum of 320,000 square feet (500 × 640) covered space. In a Ground plus ten multi-storied building around 32,000 square feet plinth area of the building would be necessary. This will require 128,000 square feet land area. This translates to around 180 Kathas of land or 9 Acres of vacant land.
3.3
SIZE OF NURSING UNIT
A nursing unit of 25 to 30 beds can be effectively looked after by a nursing sister. The number of beds in each sub-unit should be between 4 and 6. A nursing unit should have space/rooms for the following: • Bathroom • Pantry • Treatment • Isolation • Nurses duty and stores The following additional rooms are also necessary. 1. Nurses’ Duty Rooms: This is to be built to ensure that the nursing sister can easily observe the patients while preparing medicines, attending telephone calls or writing report in the room. 2. Store for the Sisters: This is for record keeping of history sheets of patients, medicine cupboards, poison locker cupboards, syringes, thermometers, stock books etc. 3. Treatment Room 4. Seminar Room 5. Bath Room: One bath room for every 6/7 patients. 6. Visitors’ Common Room: To be located away from the wards in a central place. 7. Pantry: Food received from the central kitchen are properly dressed in individual food tray for serving in the wards or common dining room. 8. Common Dining Room: To be located near the ward and pantry for a ambulatory patients. 9. Sluice Room: This is required for storage of bedpans, urine bottles, soiled linen etc. The hospital facilities among others should include the following in particular. • Adequate supply of hot water for laundry, kitchen and for bathing. This is best done by installation of solar thermal water heaters on the roof top of the hospital building. • Emergency Electric supply for operation theatre (O.T) : This is normally carried out by installing a no-break diesel Generator set. However, solar photo-voltaic power
50
PUBLIC SYSTEMS MANAGEMENT
plant of adequate capacity and class could be installed to operate in conjunction with main electric supply and ordinary D.G. Set to generate hybrid power for 24 hour continuous service. • Air conditioning of the O.T. • Laboratory. • X-Ray. • Record keeping room. • Modern communication facilities. • Gas and suction in the O.T. and wards. The ward is most important element for hospital planning. There are three types of ward units as below: (i) Traditional type, with verandahs on two/three sides. (ii) One verandah type. (iii) Central corridor type. The central corridor type is more economical. The verandahs types have advantages like protection from sun and weather, sitting out space for and patients more bed space. Hospital planning is a matter of necessity because it will ultimately press upon operating cost. The hospital planning will indicate the type and number of persons required for operation and the type of logistics required for daily operation.
3.4
RECORD KEEPING IN HOSPITAL
Record keeping management in a hospital includes the functions of creating, administering, storing, submitting and destroying of records. Medical record is a clinical, scientific, administrative and legal document recorded for patient care. The record generally consists of recorded sufficient data, written in sequence of events to justify the diagnosis and warrants the treatment and the end results. The medical records are important for a patient for his/her treatment at a later date (may be after 10 years). The medical records could be demanded by the court of law for decision making and judgment. The records keeping department may produce statistics for important decision making by the management for improving quality of services and/or for economizing on wastages.
3.5
CONTENTS OF MEDICAL RECORDS
The medical record is a clear, concise and accurate history of the patients’ life and illness, written from the health and medical point of view and shall include the following general information. 1. Personal Data: Name, address, age, sex, date of admission, in-patient number, name of the nursing unit and the bed number. 2. Nurses Section: The observations of trained nurses and details of treatment administered is noted. The information includes body temperature, pulse rate, respiration, blood pressure etc. 3. Medical Section: It contains statements on the studies, observations, conclusions and activities of the attending doctors and/or the resident doctor. The medical section of the record consists of the medical history of the patient.
HOSPITAL MANAGEMENT
51
The medical records could be classified into four broad groups as follows: (i) Vital records which are protected and preserved for a long time. (ii) Important records are those, which are not used currently, but they give useful information for future use. (iii) Useful records are those presently in use. (iv) Transit records are those which are useful for short duration till the subject is active.
3.6
MEDICAL RECORD KEEPING
There are two basic instruments through which records are created and maintained. These tools are FORMS and FILES. Forms are designed and printed according to the requirement of the hospital. Filing is the process of classifying, arranging and storing records systematically. According to George R. Terry, Filing is the placing of documents and papers in acceptable containers according to some pre-determined arrangement so that any of these when required, may be located quickly and conveniently. The files can be arranged in Alphabetical order, numerical order, geographic order, chronological order or subject wise. Files are located by file indexing. There are atleast four types of file indexing viz. vertical card indexing, visible card indexing, visible book indexing and loose leaf book indexing. There may be centralized and/or decentralized filing system in a hospital depending upon requirement.
3.7
APPLICATION OF MEDICAL RECORDS
Medical records constitute statistics. Statistical records help decision making in improving upon quality of services. It also helps the patient to understand his own nature and system for future care. Consumerism in India demands protection of the Hospitals/Doctors/Nurses from possible litigation. The hospital records are authentic document and are acceptable for the court of law. These documents could be of help to the hospitals/Doctors/Nurses against the charges of culpable negligence and mishap resulted from such negligence as contained in section Nos. 81, 87, 88, 89 and 92 of the Indian Penal code. These documents could also be of immense help to protect the service providers from possible damage from Consumer Protection Act, 1986.
ANALYSIS OF MEDICAL RECORDS Death Rates Hospital deaths include deaths of patients’ admitted to the hospital. Deaths are generally classified into two categories viz. gross Deaths and net deaths. Gross death refers to all the deaths of admitted patients while net deaths exclude patients dying within 48 hours after admission. Net deaths in a hospital is a reflection of the working of the hospital.
Net Death Rate =
Number of Net Deaths During a Period of Time × 100 Number of Patients Discharged During the Period
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Net death rate above 6 percent during any period of time calls for detailed analysis of the functioning of various departments of the hospital for identifying the cause(s) of adverse variance in net-death rate. This analysis enables the management to initiate corrective measure.
Average Length of Stay The length of stay of a patient in a hospital is an important indices. The objective of this index is to identify unnecessary length of stay and discourage same, such that, more patients could be admitted for treatment. Thus this index is important to met with society’s demand for treatment of more persons. Reduction of this index is likely to increase revenue. For the purpose of calculation the day of admission of the patient is always taken into consideration and the date/day of discharge is always ignored irrespective of time of admission and time of discharge.
Average Lengths of Stay =
FG Total Number of Stay of a DischargedIJ H Patient During a period of Time K (Total Discharges During that Period of Time)
× 100
An analysis of average length of stay of patients on the basis of each department is likely to high light the reliability and effect of treatment.
Bed Turnover Rate It indicates the number of patients serviced per bed per year.
(Total Number of Patients Discharged in a Year) × 100 (Total Number of Authorised Beds) The bed turnover rate is also dependant upon the time inferred between one discharge and successive admission. Bed Turnover Rate =
This time inferred is called T-inferred. When T-inferred is zero, the Bed turnover rate is high. Thus the bed turnover rate has a relation with average length of stay and Tinferred. Continuous lower bed turnover rate demands analysis and possible reduction in total number of beds for economy.
Bed Occupancey Rate This is given by
Bed Occupancy Rate =
(Average Daily Census During a Period of Time) × 100 (Number of Authorized Beds)
This may be worked out for the entire hospital and also for different departments. Normally a bed occupancy rate of 85 to 90 percent is considered as optimum. Occupancy rate of about 90 percent may dilute the quality and reliability of services.
3.8
QUALITY OF MEDICAL RECORDS
Quality of medical records depends upon the design of registry and its place in the office layout. The forms for data collection require continuous review and up gradation to meet the needs. Handling and processing of records are needed to be continuously monitored for proper filing and storage of records. A random checking can be done with the help of the following ratios:
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(Number of References Not Found) × 100 (Number of References Found) (Number of References Not Found) Activity Ratio = × 100 (Number of Documents Filed) If the accuracy ratio is less than one percent, it is thought to be excellent. If it is more than 3 percent it is poor. If the activity ratio is less than 10 percent, it shows that there are large inactive materials. If this ratio is more than 20 percent, it reveals that the records are in bad shape. Accuracy Ratio =
3.9
MATERIALS MANAGEMENT IN HOSPITALS Materials management in hospital encompasses the following functions: (i) Purchasing Management (ii) Stores Management (iii) Inventory Management
The materials and stores of a Hospital could be broadly classified as below for the purpose of organizing and installation of a materials management department. • High valued medical equipment which are considered as capital equipment. • Medical instruments which needed periodic replacement. • Drugs. • Consumables like linen, soaps, detergents, alcohol. X-ray films, chemicals for laboratories, disinfectant etc. • Food and beverages. • Materials for maintenance of essential services namely electric bulbs, tubes, chokes, fuses, switches, starters, pumps, motors, refrigerators, air conditioners, DG sets, elevators etc. • Fuels like diesel, petroleum, gases etc. • Furniture and fittings. • Miscellaneous materials. For introduction of a scientific material management in hospitals the above materials and stores could be broadly grouped under the following two groups. (i) Indent items (ii) Stock items Indent items are those materials, which are not consumed on a regular basis. These items constitute capital equipment, which are purchased strictly according to the requirement of the Project. These are normally indented by the users department. Stock items are those stores which are consumed on a regular basis. Purchase of indent items is normally not dependent upon the number of patients treated, but the volume of stock items depend upon the number of patients treated. Based on accounting principle Indent items constitute fixed Assets, which depreciates with time. The stock items are cost to the hospital during the particular accounting year and such costs are
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debited to the Profit & Loss Account. Thus the indent items constitute capacity building of a hospital. Such capacity attracts patients (customer) for treatment. The stock items constitute consumables. The cost of consumables is dependant upon number of patients treated.
Indent Items The indent items of a hospital depend upon the type and capacity of the organisation. These could be grouped under the following broad heads: • Facility creation equipment • Bio-medical and diagnostic equipment Facility creation equipment is capital items and constitutes fixed Asset of the hospital. These include the land, buildings, electrical sub-station, water supply equipment including electrical motor driven pumps, emergency Diesel Generator no-break sets, solar thermal equipment. Solar PV equipment, lifts and elevators, kitchen equipment, laundry equipment, beds, furniture and fittings, air conditioning plants and air conditioning equipment, refrigerators etc. Purchase of this equipment should be based on collaborative study by the medical director, the maintenance engineers and the architect. These should be selected on the basis of technical specification, capital cost, running cost, total life time cost of the equipment, availability of spares and care of maintenance. In ordering for such equipment the terms of payment, lead time for delivery, guarantee etc are to be examined. In ordering of such capital equipment for creation of facility in a hospital adequate attention is required to be paid towards availability of spare parts in future for easy maintenance of such costly equipment. Again standardization of such equipment for various units of the hospital and/ or various hospitals under the same Company/Trust/Management would reduce inventory holding cost while increasing quality and reliability of operation of such equipment. Bio-medical and diagnostic equipment include the instruments and machines required for diagnosis and for operative procedures. Each department of a hospital, viz. Pathology, Biochemistry, Microbiology, X-Ray and Fluoroscopy, ECG, EEG, EMG, specialized doctors in Eye, ENT, Gynecology, Skin, Dentistry, Urology or Psychiatry; each requires separate types of apparatus for their specialized needs. Latest bio-medical diagnostic and operative equipment are electro-mechanized servomotor operated machines, which operate on the principal of closeloop control system. The machines are equipped with sensors of adequate capacity and class and the machines are mostly computer operated numerically controlled. This is done using the modern state of the art microprocessor based process control instrumentation and process computers. These machines are mostly of foreign origin and are having high rate of technological obsolescence. The reliability of diagnosis and operation of a patient depends upon the accuracy and speed of response of bio-medical equipment. Subsequently maintenance and calibration of such equipment plays an important role in success rate of diagnosis and operation. The above technical and scientific criterion demands judicious steps in purchase of high cost imported bio-medical equipment. Accordingly, the following points are required to be considered in selection, purchase, installation, operation and maintenance of bio-medical equipment for a hospital.
Selection of a Equipment The apparatus, equipment, machines and instruments for diagnosis and operation are mostly selected by physicians and surgeons mainly on technical ground, based on
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manufacturers’ literature, presentation and demonstration by manufacturers marketing agents in India. In selection of such equipment apart from operational needs, the population of such machines in the world as well as in India is required to be ascertained, field reports mainly from Indian hospitals are required to be collected and analyzed for purchase of field tested machines under Indian condition. Easy availability of spares and services at short notice and in Indian currency is essential. Availability of trained manpower for operation and maintenance has also to be looked into. In some cases, same mechine is manufactured by different manufacturers in the same country or in different countries. The performance and filed reports of such equipment are also required to be collected and analyzed for technical selection of ideal imported equipment to suit Indian conditions. The suppliers should be prepared to upgrade the machine/modernize the equipment as and when technological obsolescence starts during the economic life of the equipment. The supplier should quote and supply the main equipment along with recommended spares for 2/3 years trouble free operation and should also quote for training of hospital’s maintenance engineer at the manufacturers’ plant abroad. Purchase of imported equipment requires Actual Users import license. The purchase process includes opening of a Letter of Credit in favour of the seller/manufacturer, manufacturing time, shipping time, clearance at Indian Ports after payment of customs duty, transportation of the imported materials to the place of installation, installation of the equipment and commissioning of the same. The time of shipment from abroad should be so programmed that the equipment on arrival at site could be immediately installed and commissioned to avail of sufficient operational time within the guarantee period. Stock items are those consumables, perishable goods and drug, which are used for normal operation of the hospital. These are stored by the central stores department and the store in-charge issues orders on the purchase department at periodic interval depending upon consumption pattern of each store to avoid possible stock out situation, while minimizing wastages of all types. Purchase of any stock item in large volume will increase storage cost and inventory holding cost. In addition there is possibility of wastages/losses in case of perishable goods or drug having expiry period. On the other hand low level of stock of consumables will increase purchase cost and may lead to complete stoppage of hospital operation arising from stock out condition of one item. Taking into consideration the above, a purchase principle and purchase procedure could be prepared. Normally a purchase manual is prepared and all purchases are made strictly in accordance with such manual. The manual will suggest suitable purchase committees for purchase of stock items depending upon value of order. The committee shall consist of users, an officer from Finance department, and an officer from the purchase department. Such collective decision will be transparent and will be beneficial for the organisation. The purchase procedure shall include possibility of the hospital to enter into rate contract/running contract with manufactures for supply of stores at a predetermined price over an extended period of time. This will maintain continuous fresh supply of such stock items without increasing the stock level. Multiple sources for same item is a matter of necessity to avoid possible stock out condition arising out of sudden stoppage of supplies from one source. Variety reduction of stores (stock items) is essential for economy and ease of operation. In case of procurement of drug, one drug is manufactured and sold by different companies in different brand names. It is essential to standardize such drugs and codified for economy, and easy availability to patients.
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Service agreement/maintenance agreement with original equipment supplier is a matter of necessity for smooth running of a hospital. The essential service providing equipment and plants viz. DG Sets, solar thermal plants, solar PV plants, Refrigerators, Air condition machines and plants, electric sub-stations, lift and elevators, water treatment plants, laundry equipment, kitchen equipment and other biomedical and diagnosis equipment are required to be maintained and serviced periodically to ensure their operational efficiency and reliability. The maintenance department of the hospital in association with the purchase department will enter into maintenance and service contract with original equipment manufacturer (OEM) for purposes on a periodic basis.
3.10 STORES MANAGEMENT Stores management includes receipt of materials, acceptance of received stores, storage of materials, issue of materials for usages and keeping an Account for such activities. When any ordered material is received by the stores officer, he offers same to the users for his inspection and certification. Rejected material are returned to suppliers, whereas the accepted materials are received at the stores and suitably stored. The stores Accounting consists of maintaining of stores ledger and bin-cards. Engineering stores may be issued on the basis of first in first out concept. (FIFO). However, drugs are required to be issued for consumption well within the expiry period. Thus acceptance, storage and issue of Drugs should be done strictly keeping in mind the expiry date to avoid possible wastages. Drug shall be stored in cool dark place and should not be exposed to damp, heat and lights. Vaccine and some drugs are required to be stored in refrigerator for maintenance of their quality and effect. This demands uninterrupted continuous electric supply in the refrigerator at the stores. Other consumables namely the surgical instruments, syringes, needles, linens, soaps, detergents etc could be stored and issued based on FIFO method. The stores should be provided with smooth material handling system for easy movement of all items. Normally Receipt and issue of materials shall take place only once in a day during pre-determined times. Arrangement should be made for stock checking and counting of all stores at least twice in a year during a pre-determined day.
3.11 INVENTORY MANAGEMENT Inventory in a hospital constitutes large volume of working capital. Increase in working capital reflects upon financial performance of a hospital. The stock turn over ratio is given by:
Stock Turnover Ratio =
FG Value of all Current Stock DuringIJ H a Particular Period of Time K × FG Number of Days IJ FG Total Billing During the IJ H During the PeriodK H Particular period of TimeK
Normally this ratio shall be worked out once in every three months. If the trend shows that the ratio is increasing, it would be necessary for the management to initiate necessary step to control such figure.
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For introduction of scientific inventory control management, it is necessary to work out the Economic Order Quantity (EOQ) of each item. This calls for prices of such item, lead time for delivery, safety stock and buffer stock which are necessary to be maintained for avoiding possible stock out situation and the consumption pattern of the item. Based on this information EOQ of each items could be worked out and the respective stores might be ordered for economy in materials management. EOQ is given by:
EOQ = where
2RC2 DC1
C2 = Ordering cost per order C1 = Carrying cost in percent of average inventory D = Unit price of the item R = Annual requirement in number/volume/weight
Such economic order quantity of items whose annual consumption is high could be ordered frequently when the stock reaches a re-order level.
Inventory Control The central store in a hospital maintains stock of large number of items. Inventory control of such large number of items calls for analysis of inventory of each item for identification and isolation of problem area(s) for corrective action. Table 3.3 below shows the various types of inventory analysis methods. Depending upon the objective of control, one or more methods of analysis could be used. Table 3.3 : Important Inventory Control Technique Title of the Technique
Basis of Analysis
Area of Application
ABC—Analysis
Value of Consumption
Consumption Control
XYZ—Analysis
Age of Inventory
Identification of old non-moving inventory
HML (High—Medium—Low)
Unit price of any item
For controlling of purchase
VED (Vital-Essential-Desirable)
Criticality of components
For determination of stock level of spare parts
FSN (Fast Moving-Slow Moving-Non-Moving)
Consumption pattern of components
For controlling of obsolescence
SDE (Scarce-Difficult-Easy to Obtain)
Problems in sourcing of item
Lead time/holding strategies for seasonal items analysis and purchasing strategies.
GOLF (Government-OrdinaryLocal-Foreign)
Source of materials
Procurement strategies
SOS (Seasonal-Off-Seasonal)
Nature of supplies
For inventory management of a hospital ABC analysis for consumption control and VED analysis for stocking of spare parts of bio-medical and diagnostic instruments are used.
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ABC–Analysis ABC Analysis is done to exercise control on value of consumption of stores. It is seen that around 10 percent in number of items in inventory contribute 70-80 percent of the value. This is termed as A type of item. B type of items constitute 20 percent in number of items whose value would be 20-25 percent of the total value of inventory. The C type of materials constitute balance 70 percent in number of items whose aggregate value will be 5-10 percent of the total value of the inventory holding. A manager is required to concentrate his attention on A category material constituting 10 percent in number of items of inventory values 70-80 percent of the total inventory and exercise control for its wastage reduction and consumption control.
VED–Analysis VED Analysis is used for inventory control of spare parts for machines and equipment. The electronic cards, sensors etc used in sophisticated bio-medical and diagnostic equipment are of foreign origin and are costly. They have long delivery time and their rate of technological obsolescence is high. Similarly spare parts of solar PV Power plants, emergency Diesel Generator sets, main distribution transformer and the switchgear in the electric sub-station are costly and are having a long delivery time. These spare parts could be grouped under the category of vital, essential and desirable mainly based on technical judgment. The vital spares are required to be stored for their immediate availability. Such analysis will help to reduce value of inventory level.
3.12 LEASING OF HOSPITAL EQUIPMENT Sophisticated bio-medical diagnostic and surgical equipment with latest State of the Art technology are expensive. Most the private hospitals in India cannot afford to buy the same. To make such machines popular, the manufacturers often enter into an agreement with the hospitals to offer services of such machine at the hospital against a suitably designed lease agreement between the hospital and the manufacturers. In most of the cases, the manufacturers install the machine at the hospital premises against an agreed one time lump sum payment, and an agreed monthly lease rent. A properly drafted lease agreement will ensure minimum break down time of the machine. In such situation, the annual lease rental is debited to the profit and loss account. Such system of hospital capacity creation is becoming very popular.
3.13 MAINTENANCE MANAGEMENT IN HOSPITAL Quality delivery of Health care depends to a large extent on proper management of maintenance of the hospital building, furniture, fixtures and fittings including bio-medical equipments of all descriptions, instruments, linen and a part of house keeping. Maintenance of building including civil structures, sewage and sanitation facilities, water supply system, electrical distribution system and gas supply is a matter of necessity for keeping minimum hygiene inside the hospital premises. Removal and disposal of garbage and hospital wastes is also essential element for keeping minimum standard of hygiene in a hospital. Regular maintenance of bio-medical and diagnostic equipment maintains quality, reliability and productivity of these machines. Management and care of instruments and linen in a hospital is the basic and fundamental need for the modern surgical, diagnostic and investigative care to the ailing humanity. The deployment of X-ray, pathology, ECG, EEG etc
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almost wholly depends upon the reliability and accuracy of machines and apparatus for their functioning. A surgeon, howsoever expert he may be, cannot perform an operation, unless provided with reliable and sterile instruments and timely supply of reliable and quality linen. Continuous and rapid medical developments are creating demand for further complex medical equipment for diagnosis, therapy, monitoring, visualization, prosthesis, life support systems etc. These equipments are mostly technology driven and require training for its operation and maintenance. This demands specialized knowledge and training in maintenance, service and repair of such sophisticated equipment. Subsequently the need for Bio-medical Engineering (BME) support is increasing. Commitment to a maintenance and repair policy begins right from the moment of purchase of an equipment and includes its proper selection and evaluation, proper installation, calibration, implementation of safety codes and standards, procurement of spares, preparation of maintenance procedures, in-house staff training etc. It is to be noted that a well thought out planned preventive maintenance programme will enhance equipment life, its performance and marginally reduce revenue loss and expenses.
3.14 MAINTENANCE MANAGEMENT Maintenance management, as a support function to the service operations, is very important. It has a tremendous impact on the service condition of the plant and machinery in the service industry. The objective of maintenance is to facilitate the optimal use of capital equipment through actions such as repair, service and modification of components and machinery so that these will continue to operate at a specified availability for as long as it is beneficial to do so. The definition of availability is given by:
Availability (Over Specified Period of Time) when
UV = W t
trunning × 100 running + tdown
trunning = Total time of operation in the normal operating state tdown = Total time for which the equipment is out of operation
Increased availability of equipment is necessary for offering treatment to more patients at affordable price. The availability of equipment could be increased by various means as given below: 1. Diagnosing the failures in advance and taking immediate remedial measure. 2. Reducing major breakdown or crisis situation with the help of planned preventive maintenance programme. 3. Designing and installing the equipment in such a way that the failure of the same will be low over the equipment’s life. This translates into increasing the reliability of the equipment. 4. Adoption of proper replacement policy of the equipment and their component parts such that the availability and reliability of the system is enhanced at optimal cost. 5. Preparation and introduction of a scientific maintenance manual for providing standard time and standard procedure for maintenance. 6. Preparation and implementation of a scheme for providing incentive and motivation to maintenance personal.
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3.15 IMPORTANCE OF STATISTICS OF FAILURE Most situations in the area of maintenance involve probabilities. An understanding of the statistics of failure may provide useful information for making maintenance decision prior to failure of equipment. Generally, the following statistics of failures are collected. Time to failure (t) means how long the equipment worked before it failed. Relative frequency of failure corresponding to time of failure (t) means the percentage of instances the component failed in time ‘t’. Obviously, one cannot collect a continuum of such data, but only in ranges as shown below in Table 3.4 Table 3.4 : Representative Data of Failure of Equipment Range of Days Functioned before failure
No. of times such a range of life was observed
Relative Frequency in % of total
Relative Frequency density in fraction per day
000-099
5
5
0.0005
100-199
15
15
0.0015
200-299
20
20
0.0020
300-399
30
30
0.0030
400-499
20
20
0.0020
500-599
10
10
0.0010
Total
100
100
—
The data as above could be used in constructing a histogram. If the data could be collected in smaller ranges, it can be approximated to construct a continuous probability distribution. In maintenance, we come across with these types of probability distributions for the times-to-failure as given below: • Hyper-Exponential distribution • Negative Exponential distribution • Normal distribution Figure 3.1 shows Hyper—Exponential distribution where there is steep fall in probability density function as time to failure increases. In other words, the chances of failure are high in the initial periods and very much less in the later periods. The phenomenon of failure, where the probability of failure is constant and independent of running time is given by the expression. f (t) = ke–kt where
f (t) = Probability density t = Time to failure k = constant
This is a negative exponential distribution as shown in Fig. 3.2. In such a case, the cause of failure is external to the system. It is neither due to wear out, nor due to designdefect.
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Fig. 3.1 Hyper-exponential Distribution
Fig. 3.2 Negative-exponential Distribution
Fig. 3.3 Normal Distribution
Fig. 3.4 Bath-tub Curve
Fig. 3.3 above shows the normal distribution. It has two peculiar properties namely its mode is same as its mean and it is symmetrical around its mean. This shows that majority of failures occur around the mean-time to failure, and the failures shows symmetrical relative frequencies around the mean. The above three figures of age specific failure rate may be combined to give a whole life figure as at Fig. 3.4 above. This is the famous Bath-Tub curve of maintenance. The extent of these modes of behavior differs from case to case. In some cases, the infarct mortality pattern may be more; in some others the wear out behavior may be prominent. It is also possible that all these modes may not exist.
Reliability Engineering The subject of reliability engineering is becoming important because the complexity of equipments and plants is growing fast. Reliability is defined as the probability of a plant to give satisfactory performance in a particular period of time under specified operating conditions. If the reliabilities of the systems and the system components are known and calculated ahead of time, then work load for maintenance can be fairly estimated and allocated with respect to time and with respect to different equipment. Reliability estimates will provide guidance in stocking spare parts and stand by equipment. Reliability of equipment depends upon the design of the equipment and also upon the quality of Preventive Maintenance carried out.
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3.16 CLASSIFICATION OF MAINTENANCE Maintenance could be broadly classified into two categories as below: • Preventive Maintenance. • Break-down Maintenance. Planned maintenance is called preventive maintenance. It includes the following work: • Usual care of the equipment like lubricating, cleaning, adjusting or re-setting the equipment or parts when either it is idle or running. • Periodic inspection or overall and scheduled replacement of parts. • Contingent work done at regular intervals when the equipment is down • Condition monitoring where high cost critical equipment are monitored continuously at frequent intervals to observe the values of various parameters reflecting the condition of the equipment and the component within. The parameters being monitored may be temperature, vibration, noise, lubricant, corrosion, leaks etc. The preventive maintenance management gives the following benefits. • Reduction in downtime and consequent reduction in loss of operating time. • Reduction in number of major repairs and consequent reduction in maintenance cost. • Improvement in quality of services. • Reduction in inventory of spare parts. • Reduction in number of accident from the equipment. • Reduction in crisis management in maintenance.
Replacement Policies Mathematical models have been developed for preventive replacement of parts and equipment. It has been observed that many a time cost savings are generated by a group replacement of the parts, rather than replacing parts only when they fail or about to fail.
3.17 SPARE PARTS MANAGEMNET The spare parts could be broadly classified under four categories for stocking policy as below: (i) Maintenance or Breakdown spares. (ii) Insurance spares. (iii) Capital spares. (iv) Rotable spares. Breakdown spares are required in large quantities at more or less frequent intervals as and when the breakdown occurs. The rates of consumption or usage of spares can be derieved from historical data regarding failure of different components in the equipment/ machine. The Insurance spares, as the name indicates provide an insurance against the relatively remotely possible breakdown or failure of a component. The reliability of such spare has
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been observed to be as high as 95 to 99 percent over the life span of the equipment/machine. At the time of purchase of the machine, a decision regarding purchase of Insurance spare parts is taken. The decision is either to buy the spare or not to buy spares. A spare is to be procured if the expected value of the down time cost either exceeds or equals to the purchase value of the spare. If the cost of down time × Probability of failure during life time of the equipment is more than/equal to cost of spare, then the spare is required to be purchased. The probability of failure = (1-Reliability). The reliability figures are obtained from the machine manufacturers. Capital spares are high-reliability spares, but not as high as insurance spares. The reliability is not as low as that of maintenance spares. These spares are bought along with capital equipment. Rotable spare parts are reusable after reconditioning.
3.18 HOSPITAL MAINTENANCE Hospital maintenance could be broadly classified into following three categories depending upon their specialty of application. • General maintenance for hospital Infrastructure. • Maintenance of bio-medical equipment. • Care of Instrument and Linen. General maintenance of hospital Infrastructure includes routine civil maintenance of buildings and fittings including painting and cleaning. The routine maintenance includes preventive maintenance of all plants and accessories for their smooth operation. These types of maintenance do not require specialized skill or specialized manpower. Maintenance of bio-medical equipment calls for specialized skilled man power like biomedical engineer for ensuring safety to patients from electrical shocks. The maintenance department should have with them Megger, Transistor, Tester, multi-meter, Avometer, RLC bridge, double beam oscilloscope, VTCVM, soldering iron and general engineering tools as required. Care for surgical instruments is essential such that surgeon can perform his craft. The care of instruments begins at the operation theatre (OT) itself. In order to prevent drying or build up of tissue and blood on the instruments, they shall be cleaned by the surgeon or his assistant, soon after use, but before leaving the O.T in any case. After thorough cleaning in OT, the instruments are transported to central service for further cleaning and sterilization. To overcome the need for having expensive items of equipment dispersed through out the hospitals, it is advisable to setting up of a central sterile supply department (CSSD) for arranging sterilization centrally. A centralized bed infection unit is required to be set up in the hospital to undertake disinfections of bedding including mattresses, blankets, pillows and other similar articles. Maintenance programme for sterilization is an essential specialized routine work. The sterilization process involves production of steam at relatively medium pressure and temperature and includes maintenance and calibration of thermocouple and potentiometer.
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Maintenance and upkeep of incinerator, waste disposal equipment, laundry etc requires planned programme.
3.19 MANAGEMENT OF HOSPITAL WASTE The hospital wastes could be broadly classified into following heads for installation of a management for their disposal strictly in terms of the relevant laws in the country. • Sewage disposal. • Disposal of kitchen wastes. • Disposal of water from the laundry. • Medical waste disposal. The sewage, kitchen wastes and used water from kitchen mainly constitutes biodegradable wastes. These causes spread of diseases carried by flies. These are also sources of water pollution and spread water borne diseases like gastrointestinal disorders. These biodegradable wastes are required to be properly treated and then disposed. The need for conservation of water demands re-circulation of wastewater. This requires water purification plant of adequate capacity and class suitable for production of potable water for human consumption. The bio-degradable wastes as above are treated either by the process of anaerobic decomposition or by activated sludge process. Treatment by the process of Anaerobic decomposition generates methane (CH4) rich gases which are inflammable and could be profitably used for supplementing the energy needs at the hospital premises. The activated sludge process needs aeration. Aeration of adequate capacity calls for motor driven fans. The anaerobic process of decomposing produces slurry with rich nitrogen content, which can be used in the hospital and/or nearby open cultivation lands to enrich soil. The sludges produced from activated sludge process of digestion of biodegradable wastes could be dried in the form of cake and then disposed of as organic manure. The Government has emphasized upon a policy to conserve sweet water. Subsequently arrangements are being made for enactment of laws for re-circulation of water. This requires a water treatment plant. In its simplest form such water treatment facilities include separation of suspended particle from the used water by the process of sedimentation. Thereafter, the water is further treated in a clarifocculator where Aluminum sulphate solution is added to the flowing water and any other suspended impurities are separated in the form of sludge. This sludge is collected, dried and disposed as organic manure. The water from the clarifoculator is now allowed to pass through a pressure filter (sand-gravel filter) and thence chlorinated to produce potable water for human consumption. For better aesthetics, the chlorinated water is made to pass through an activated carbon filter (Hard coke filter) to get polished water. However, hospital wastes and its disposal are different.
3.20 INFECTIOUS WASTE MANAGEMENT Infectious waste is defined as waste capable of producing an infectious disease. It is agreed that microbiological, blood (and blood products), isolation, pathological, and sharps waste materials are considered to be infectious. Again the wastes from aseptic surgery, dialysis, and laboratory are infectious. The infectious water could be treated in two ways, namely steam sterilization and incineration. These methods are only effective and environmentally acceptable if (1) waste
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load variables are considered and (2) recommended operating conditions are specifically followed. The factors which influence treatment efficacy includes the type and quantity of waste, its density, chemical characteristics, water content, packaging and local configuration. By integrating the advantages of steam sterilization and incineration with specific waste component, a comprehensive and specific programme can be established, by defining programme component and their inter-relationship with each other. These components are segregation, containment, and treatment/disposal.
Segregation The waste components are required to be segregated into pre-designated categories. Infectious waste first should be separated from non-infectious wastes to reduce the extra handling costs associated with infectious waste treatment. The next step is to categorize the infectious wastes and segregate them in accordance with category. The waste shall be directly discarded into approved waste containers differentiated by colour coding (e.g. red for waste to be steam sterilized, green for incineration). Examination of various components reveals that these materials fall into one or two categories. The first category includes body tissues, parts and body fluids (blood, blood products, aspirated body fluids). These are recommended to be treated in an Incinerator. The second category consists of articles, which are potentially harbouring pathogenic microorganism, e.g. disposable garments, sheets, gloves, syringes, laboratory plastic wares, dialysis tubing and surgical sponges. These waste materials may contain more than 30 percent plastic by weight. They shall be decontaminated by steam sterilization.
Containment The primary objective is to minimize exposure to infectious waste materials. For steam sterilization proper packaging is critical. For incineration the only requirement is that the container shall be combustible. For steam sterilization, use of low-density polyethylene (LDPE) bags is recommended. The LDPE bag will partially melt at temperatures above 85oC thus allows air to evacuate and steam to penetrate into the waste load.
Incineration Incineration is a process by which combustible solid waste materials are converted into non-combustible residual ash and relatively innocuous gases, primarily carbon monoxide (CO) and carbon dioxide (CO2). Two types of incinerators are normally used. Incinerators, which operate at temperature approaching 760°C are used for anatomical and fluid infectious waste components. These wastes have high water content and density, which makes decontamination through incineration a more time efficient process. This type of incinerator is unsuitable for destruction of infectious wastes that have a high plastic content. Infectious wastes with high plastic content requires multi-chambered incinerator capable of achieving temperature in excess of 1000°C.
Steam Sterilisation Saturated steam at a particular pressure and temperature is required for steam sterilization. Steam at a pressure of 18 psi and temperature of 120°C to 30 psi and temperature of 130°C is required for this purpose. Monitoring the steam sterilization process is essential to ensure the effectiveness of decontamination.
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Operating at 130°C, the total cycle time from initial chamber pressurization through a five minute drying cycle is thirty five minutes. Upon completion of the cycle, the container is removed on to the hydraulic lift, lowered and rolled into a dumping cart. Steam may be generated in a oil fired package boiler installed as a part of sterilization plant.
3.21 COMPUTERS IN HOSPITAL ADMINISTRATION Computer use in medical science is no longer limited to laboratory equipment, but extends to record keeping, medical research analysis, medical teaching, decision making and treatment planning. In medical file, computerization can be applied in served areas. In this book, we shall be discussing the role and application of computers in hospital management. Computers have been used with success in maintenance of medical records, medical research and analysis.
Computerizing Registration and Medical Record Keeping Record keeping is a necessity for all Indian hospitals. This is required by the law of the land. Record keeping will include details of out patients, who have been attended and treated as well as in patients who have been treated and released and/or expired. Case study of a first referral hospital with 300 beds shows that at an average of 2/3 lakhs, persons attend the out patient department per year. It was also observed that at least 65 percent of these out patient were treated at least for two times earlier in the hospital. Maintenance and location of records of 2/3 lakh patients is difficult if not impossible. It was also shown that about 17 thousand patients were admitted and treated in a 300 bed referral hospital in a year. Maintaining and retrieval of medical records of such huge number of patients is difficult. These problems could be solved by computerization of the registration and record system. The system is quick and efficient, will reduce waiting times and improve irretrievability. A model for a large hospital consists of a mainframe computer with terminals available at all registration counters and other work place may be considered. Each patient, who comes for consultation is given a unique registration number. Even if a patient is seen in more than one departmental clinic, the same number shall suffice and multiplicity of clinic numbers may be avoided. Details of age, address, sex, marital status and other administrative data are recorded. The complete computerized patient registration record is available to each clinic dealing with particular patient from a single database. This is ideally suited for hospitals with well-developed specialty system. A master index of all patients is crated in the central Registration Department (CRD). Whenever a patient reports to the out patient clinic for follow up consultation or in Emergency wing, the master index is searched and the medical records retrieved.
Computer for Medical Research In medical research computers have two types of applications (i) Computerized testing equipment, which needs special purpose process computers (ii) data collection, storage, retrieval, statistical analysis and research planning. In medicine, the common use of clinicians and epidemiologists, relates to disease oriented data. Programming depends upon understanding of the problem of the methodology of analysis.
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Computerizing Medical Library In a library, computer help is required for literature searching as well as for keeping a track on the movement of books and journals. Computerizing medical library also helps in networking with other medical libraries for reference and for accelerating research based teaching.
3.22 MEDICAL INFORAMTICS & TELEMEDICINE Medical Informatics is the intersection of Information Technology and the different disciplines of medicine and health care. Medical Information can be better defined as we develop and assess methods and systems for acquisition, processing and interpretation of patients data with the help of knowledge that is obtained in scientific development using computers and software technology. In fact computers are the vehicles used to achieve these goals in clinical medicine and in medical informatics. We deal with entire domain of medicine and health care from the computer base patient records to image processing and from primary care practices to hospitals and regions of health care. Thus once the system has been developed and made operational for one medical specialty, they can be used or transferred to other specialty and the same tool can be used. The development and procedures thus acquired in the form of theoretical and practical application for information processing can be communicated through the Internet and this then becomes telemedicine technology. The Food and Drug Administration (FDA) of USA defined telemedicine as “The Delivery and provision of health care and consultative services to individual patient and the transmission of information related to care over distances using telecommunication technologies” and this incorporates: 1. Direct clinical, preventive, diagnostic and therapeutic services. 2. Consultation and follow up services. 3. Remote monitoring of patients. 4. Rehabilitative services. 5. Doctors and patients education. Telemedicine is a new terminology where powerful communication system for transmission of medical information in the form of images, patient data record and voice of the specialists over shorter and long distances are used. In India Telemedicine can be put to use for utilization of the vast resources of our medical specialists available in metropolitan and large cities and in some of the Institutions of national and international standing. In remote areas it can bring high quality medical care where almost none is available at present. It can provide a lifeline to the medical expertise and can provide urgently needed health care in primary and community health as well as “secondary” health care hospitals in the country. The most important aspect of telemedicine is the digital convergence of medical records, charts, X-rays, histo-pathology slides and medical procedures conducted on the patients. This is known as Electronic Patient Records (EPR) in telemedicine practice. The most promising and established telemedicine application in the developed countries is also practiced as online and off line telemedicine technology with special emphasis on teleradiology, tele-pathology, tele-dermatology, tele-cardiology and, recently, tele-psychiatry.
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Telemedicine will allow all Indians to consult a specialist physician of his/her choice at affordable cost.
3.23 MARKETING MANAGEMENT AND PUBLIC RELATIONS IN HOSPITAL A hospital has four major publics as follows: 1. The patients can be further sub-divided as individual, corporate sector and foreign national. The individual Indian patients could be the poor, the middle class and the rich. 2. The Government. 3. The donors (particularly when voluntary hospitals are concerned). 4. The Doctors, Nurses, para-medical Administrative staff members. The present thinking on management of hospitals emphasizes the need for effective Public Relations coupled with the need for systematic marketing of services, the hospital can offer to its various publics. To enable the hospital to plan such effort, it is necessary to obtain a feedback on the present perception of the services that the hospital provides. This could be obtained from opinion survey covering out-patients and in-patients. Such opinion survey is likely to give an idea of rating of the hospital and rating of each type of services. Such data could be judiciously utilized in framing marketing policy and improving quality of services from the hospital.
3.24 MARKETING OF HOSPITAL PRODUCTS Installation of a marketing department in a hospital will result in creation of new products, creation of new customers, increased productivity and quality of services and increased profitability. The marketing department will conduct a market research to study customer behaviour, taste and demands, market prices of such services, competitors’ activities and availability of health care services. Based on such data a marketing policy could be prepared for increased sales turnover with maximum customer satisfaction. The marketing policy will broadly encompass the following: • Product Policy. • Pricing Policy. • Marketing Policy.
Product Policy In conventional practice hospitalisation cost, include bed rentals, operation charges, laboratory charges and medicine charges. These prices when charged in isolation do not satisfy the perception of a patient. Further value addition against each of these charges is negligible. Again this system of billing the patient separately for each services often leads to unbalanced capacity utilization of existing facilities in a health care unit. A hospital should be available for treatment of the types of diseases for which it is designed for persons of all ages, all religions and all income brackets. This criterion demands design of appropriate products using the same facilities for all types of customers for further satisfaction. As an example cataract removal eye surgery may be many types but it is performed in the same operation theatre. The intra ocular lens (IOL) cataract surgery is less costly whereas FACO
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cataract surgery is expensive, but they are performed in the same O.T using same doctor and same O.T staff members. Depending upon the type of treatment a hospital is designed to provide, the marketing department may design several value added products for the treatment of same type of diseases with services pooled from various departments in the hospital. Such service packages are leveled as a product and a price is fixed for the same. Similar product could be designed for diagnostic centers and laboratory services and a price tag may be given for each of such product. This will give a perception to the customers as to what should be treated and at what price. As the marketing department deals with services, some of the products mainly emanated from diagnostic centers and laboratory services could be spaced beyond normal time to prepare a supplementary product with a lower price tag. As for example chest X-ray as a product is offered at a price of say Rs.150 per person, if it is carried out during normal operating hour of 9.00 am to 4.00 pm. However, the same product could be offered at a reduced price of Rs.100 per person if it is carried out at odd hours between 8.30 pm and 11.00 pm. These types of product design increase capacity utilization of the existing facilities in a hospital besides giving opportunities to persons in all income brackets to avail of facilities installed for health care. Similarly products could be designed for treatment of same types of diseases for persons undergoing cash less treatment under mediclaim. Value added products for treatment of same type of diseases have been designed and offered to patients from corporate sectors with added comfort during pre-operative and post-operative periods. Thus using the same facilities, different products could be designed by varying the weightage of services from various departments for enrichment of customer’s satisfaction level. Thus product policy plays a vital role in capacity utilization and profit maximization of a hospital while improving customers’ satisfaction.
Pricing Policy Pricing of products and individual services is an important function for sustenance of a commercially viable organization in an open market economy. Pricing should be done to cover all the expenses at a declaimed level of capacity utilization of the hospital. Pricing will also depends upon competitors price and quality for the same product/service in the same town, same district, same state and same country. A price differential between the price of a product/service in an organized hospital from a non-organized nursing home in the same locality will speak for a superior quality of services from the organized hospital. To ensure that the prices being offered is not less than the total cost/marginal cost of services, costing shall be done for all products considering a capacity utilization at various levels starting from 40 percent and ending at 80 percent in steps of 10 percent/5 percent to continuously monitor business and if necessary offer bulk discount to clients in corporate sector/insurance companies to maximize volume of sales. At the initial stage of a hospital this policy will increase popularity of the hospital while increasing profitability.
Marketing Policy Marketing policy aims at sustainable growth of market. Marketing of hospital services is done from the hospital to the clients without involving dealers and distributors. However,
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the physicians or surgeons play a significant role in increasing sales of hospital products. The customers generally take admission for treatment mainly on the recommendation of the attending physician/surgeon. This criterion shows the advertisement media for sales promotion of hospital products. At the initial stage of starting of the hospital, periodic advertisement in local newspapers and local newspapers of adjoining states and countries as well as in electronic mass media will create public awareness about existence and superiority of the hospital. The frequency of such advertisement may be tappperd from six months onwards and minimized after one year. On the other hand increase in personal calls and contacts with physicians and surgeons will surely increase popularity of the hospital, which will increase clientele. Market segmentation is another tool for increasing customer base of a hospital. Market could be segmented based on income bracket and type of customers. This generates a market segment on type of customer as below: • Corporate customer. • Foreign customer. • Customer with medical insurance coverage. All these customers are quality sensitive, time sensitive and comfort sensitive. These products shall, therefore, be packaged suitably to satisfy their demands. A sizeable quantity of customer comes from general masses. They constitute single largest volume of sales of the health care unit. Most of them are not insured and will be required to finance health care from their own pocket. Some person may even be required to resort to bank borrowings for their treatment. Subsequently these patients are highly choosy, price sensitive and quality sensitive too. They normally get admitted into the hospital based on recommendations of their attending physicians/surgeons. For such market segment, a product suitably packaged and priced to give quality treatment will be needed. The marketing department may also co-ordinate between the clients and the commercial banks for arranging of bank loans for treatment. Such services will attract more clients. Debtors’ collection is the responsibility of marketing function. Success of debtors’ collection depends upon the degree of monitoring of debtors and personal relation with the customers. This depends upon personal visits to clients and public relations.
3.25 FINANCIAL MANAGEMENT AND COST CONTAINMENT IN HOPSITAL A hospital is required to be operated professionally as a commercial venture such that it could earn profit. This profit shall be ploughed back for continuous upgradation and modernization of the health care unit. Profitability of a hospital depends upon margin on sales of services, cost reduction and cost control of various elements constituting a service and capacity utilization of existing assets. Increased margin on sales for hospital services in a populous developing economy would not normally be accepted by any Government. This is particularly true when the Government is committed to provide health to all citizens at an affordable price. Thus profitability of a hospital could be improved with cost reduction, cost control and/or increased capacity utilization of the hospital. Increased capacity utilization of a health care unit refers to increased Asset turnover ratio. This calls for instillation of proper Financial Management in the hospital.
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A hospital might be registered under companies Act, 1956. This requires maintenance of proper Books of Account and preparation of Audited Annual Report to meet with the requirement of the Act. Again a hospital may be operating under a Public Trust as per the Indian Trust Act, 1882. This demands preparation of separate type of Accounts. Thus installation of Financial management in a hospital requires organisation. The Financial management of a hospital encompasses the following functions: • Mapping up of funds. • Cost Accounting. • Financial Accounting. • Auditing. • Management Information systems. Mopping up of funds includes funds required for Asset acquisition and funds required as working capital. The funds required for acquisition of hospital properties could be obtained as long-term loan from Banks, Financial Institutions, equity capitals from shareholders and/ or contributions from the Trusts as well as surpluses from the operations. The working capital is received from commercial banks against hypothecation of current Assets constituting debtors and stock besides sales proceeds. The average customer profile and payment terms of hospital in India generally have the following composition as given in Table 3.5. Table 3.5 : Average Customer Mix and Payment Terms in Hospital Type of Customer
% Total Occupancy
General Payment Terms
Corporate Sector
20
30/60 days credit
Foreign Patients
13
Advance payment or stage payment in full before discharge
General Indian Public
60
Advance payment & stage payment in full before discharge
Poor Indian Patient
7
Free
It is seen from above that at an average 73 percent of the total sales is received as advance, against stage payment during continuance of the treatment and full payment before discharge of the patient. Most of the hospitals in India buy products and/or services against credit. Thus most of the working capital could be self-financed by the customers. Thus a well managed hospital is cash-rich organisation.
3.26 FUNDING OF A HOSPITAL PROJECT A hospital project requires large sum of money for acquiring of fixed Assets. The fixed Assets consist of land, buildings, furniture and fittings, bio-medical and dispensing equipment besides capital equipment for sterilization, kitchen, electrical distribution systems, Air conditioning and ventilating plants and equipment, DG sets, heating equipment. Laboratory equipment etc. Besides above the initial project finance includes Project intangibles namely
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preliminary expenses, margin for working capital, expenses for borrowing of funds, expenses for issue of shares, debentures etc. and bank interest during construction period of the hospital/health care unit. The economics and fund requirement for building of a hospital depends upon the following factors in particular.
Role of the Government The Government of India is committed to give health to all Indian citizens at affordable price. Subsequently the Government as regulator and promoter of health care services has a major role to play in promoting and regulating hospitals in the private sector. Individual entrepreneurs who are in search of profitable health care project ventures locate their project opportunities within the overall framework for development laid out by the Government. Most of the State Governments in India encourages growth of general hospitals and specialty treatment hospitals in their state provided an agreed proportion of the proposed capacity in the hospital is reserved for treatment of poor people at an agreed concessional rate. Some of the state Government prefers installation of an outpatient department and a family welfare organization in a hospital for service to the general masses at subsidized price. The state Government, on the other hand, offers land at agreed location at highly subsidized price.
Fiscal Policy Fiscal policy is an important instrument to overcome recession, to induce and regulate investment and it controls inflation in the economy. In India, fiscal policy of the Government is announced through budgets. Examples of incentives that result due to fiscal policy are as under: • Depreciation. • Tax holiday. • Investment allowance. • Amortization of Preliminary Expenses.
Monetary Policy Monetary policy is concerned with changing the supply of money stock and the rate of interest. Examples of incentives that result due to monetary policy are as under: • Interest rate concession. • Repayment moratorium. • Participation in Risk Capital. • Reduced Security margin. • Refinancing facilities.
Commercial Policies The Central Government announces major policies for investment in health care sectors. Examples of incentives that result due to commercial policy are as under:
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• Subsidized rate of import duty on imported health care equipment. • Octroi exemptions. • Subsidized rate for electric power consumed by Health care unit. • Capital investment subsidy. • Sales Tax incentives for hospital in backward area.
3.27 HOSPITAL PROJECT PREPARATION After identification of the type of health care project, the following analysis is required to be carried out to ensure techno-commercial success of the project. • Support studies. • Feasibility study. • Preparation of detailed Project Report.
Support Study The support study shall be conducted in the following areas. • Market study. • Input study. • Project location study. • Size of the Health care unit. • Equipment selection study. Market study include health consciousness of the people around the health care unit, availability of disposable fund, taste of people, how the people at present cater to their medical needs and the prices they were spending for such treatment/medical care. The input study and project location study includes study on availability of competent technical manpower, availability of stores and equipment required for daily operation and logistic support for reaching the health care unit in least cost and in least time. The size of Health care unit refers to number of beds, number and type of departments, type of treatment etc. The equipment selection study is undertaken when the sources of supply of equipment costs vary widely. The capital costs of equipment, the operational costs, the after sales service, the operational efficiency of the equipment are some of the factors, which are studied under this head.
Feasibility Study Before making a final decision for taking up of a health care project, the technical, economic, commercial and financial justification of the chosen project is required to be ascertained in concrete terms. When feasibility study is found viable then preparation of detailed Project Report (DPR) is undertaken. The main idea of preparation of the DPR is to formally communicate the project promoter’s decision of venturing a new Health care Project to the Financial Institutions, Banks and other lenders. The main sub-divisions of a DPR are the following:
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1. General Information about the Health care Project. 2. Background and Experience of the Promoters of the proposed health care project. 3. Details and working results of Health care units already owned/promoted by the promoters. 4. Details of the proposed Health care unit. •
Capacity of the unit in terms of number of beds, number of departments etc.
•
Treatment Process.
•
Collaboration/Tie up with any other organisation.
•
Management team for the Project.
•
Details of land, building, plants and equipment.
•
Details of infrastructure facilities such as power, water, transport facilities etc.
•
Details of input.
•
Hospital waste disposal scheme.
5. Schedule of implementation of the Project. 6. Project cost. 7. Means of financing. 8. Working capital requirement. 9. Marketing and selling arrangements. 10. Profitability and cash flow estimates. 11. Mode of repayment of term loans. 12. Government approvals, local body consents and other statutory permissions. 13. Details of collateral security that can be offered to the Financial Institutions/Banks.
3.28 HOSPITAL PROJECT APPARAISAL Economic viability and financial viability are essential for sustainable growth of the organisation. Viability of the proposed project could be understood from the following processes. 1. A decision is required to be taken if the proposed Health care project is required to be implemented in one go or it has to be implemented in phases. 2. Based on above, proposed quarterly fund flow statement is prepared for 8/10 years. 3. Thereafter, the capital structure of the Project would be required to be suggested. The proposed capital structure will determine debt-equity ratio and the amount of long term debt capital which will be necessary for the proposed project. The projected fund flow statement will indicate the time when such debt capital will be required and the amount of debt capital, which will be needed at that material point of time. 4. The financial appraisal of the proposed project now could be carried out as below:
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Non DCF Criteria
Payback Period
DCF Criteria
Accounting Rate of Return
Net Present Value
Internal Rate of Return
Benefit Cost Ratio
Payback period indicates the time, when the investment is retrieved back. It measures the time of Project’s capital cost recovery, not profitability. Accounting rate of return takes into account the entire life of the project and is given by: Accounting Rate of Return =
Profit After Tax Book Value of Investment
Net Present Value (NPV) is one of the discounted cash flow techniques and it recognizes the time value of money.
NPV of Cash Flow =
FG Present Value of All Future Cash IJ − FG Present Value of IJ H Inflows Over the Life of the ProjectK H Cash Outflow K
The Present Value of future cash flows is arrived at by discounting the future cash inflows at an interest rate equal to the cost of capital.
NPV =
F CF GH (1 + r)
+
1
1
I JK
CF2 CFn − CF0 + ... + 2 (1 + r) (1 + r)n
when CF1, CF2 … are future cash inflows occurring at the end of first year, second year, etc. n = Life of the Project in years r = Discounting rate (Cost of capital) CFo = Present value of cash outflow. When NPV > 0, the project is financially viable. The internal rate of return (IRR) is the rate of discount, which would equate the present value of cash outflows, to the present value of cash inflows. Then mathematically, NPV =
∑
n
CFt − CF0 + r )t
t=1 (1
The Benefit-Cost Ratio is given by
Present Value of Cash Inflows Present Value of Cash Outflows If BCR > 1, then the project has financial viability. BCR =
3.29 HOPSPITAL PROJECT RISK ANALYSIS After appraisal of the project, the risks are required to be analyzed before processing with implementation of the project. The techniques of risk analysis for the proposed project are given below:
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Techniques of Risk Analysis
Analysis of Stand Alone Risk
Analysis of Contextual Risk
Sensitivity Analysis
Scenario Analysis
Corporate Risk Analysis
Break-Even Analysis
Hiller Method
Simulation Analysis
Decision Tree Analysis
Market Risk Analysis
3.30 WORKING CAPITAL MANAGEMENT IN HEALTH CARE SERVICES Working capital is defined as excess of Current Assets over current liabilities. Therefore, Again,
Working Capital Current Assets
= Current Assets – Current Liabilities = Inventory + Debtors + Bills receivables + Cash at bank/hand. = Stock of Stores + Work-in-Progress + Debtors + Bills receivables + Cash
Current liabilities
= Sundry Creditors + Bills payable.
In an operational hospital the work-in-progress (WIP) is negligibly small. Therefore, Inventory
= Stock of Stores
As said earlier, excepting some of the vital spare parts of capital equipment, most of the other stocks have a high stock turn over ratio. With appropriate materials management, the stock of materials are kept at minimum such that possibility of wastage of stock arising out of expiry date of drugs could be minimized. It is shown earlier that large portion of hospital bills are received in advance and during continuance of treatment but definitely before discharge of the patient. Subsequently, about 20 percent sales made to corporate sector stands as debtors. As the number of corporate sector clients is limited, collection and control of debts normally does not pose problem. Some of the hospitals in private sector give cash less services to patients. In such cases, the patient who is having valid health insurance (Mediclaim) gets treatment from designated hospital without effecting any payment towards the treatment and services received by them. At the end of the treatment, the patients sign on a challan of the concerned hospital confirming that they had received services to their satisfaction. Based on such challan, the hospital authorities raise their bills on the Insurance Company for payment. This type of sale is increasing rapidly. This calls for immediate billing and daily co-ordination with the concerned insurance company for reduction of debtors. The current liabilities include sundry creditors, salaries and wages, rent, rates and taxes, electricity and water charges, motor vehicle expenses etc. The hospital being a cash
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rich organisation, the payment to creditors is in time. Subsequently the purchase department can buy most of the stores at competitive prices and with 60/90 days credit period. The salaries, wages, rent, electricity bills, etc are payable after obtaining of services. Thus a hospital sales its services in cash and purchases its inputs in credit. Thus a hospital is a cash rich organisation. This demands an appropriate credit management policy for increasing credit base and obtaining the best competitive prices. As said earlier, societies need cash for offering hospital services to the poor people free of cost. The patients receiving free treatment are given by:
UV W
Percent of Patient Number of Patients Given Free Treatment = × 100 Received Free Care Number of Patients Treated
UV W
Percent of Patient Rupee Total of Free Treatment Given = × 100 Income Given Free Rupee Total of Patient Income Such ratios for each month for the entire hospital and also for various departments of the hospital will show the social cost being borne by the hospital/departments.
3.31 PROFIT CENTRE AND COST CENTRE In a health care unit some of the department like the out patient department, wards, operation theatres, diagnostic departments, pathological laboratories, X-ray units etc are revenue generating unit and thus they can be organized to run as a profit center. However, there are departments like kitchen, sterilization department, materials management, personnel and HRD department, Security department etc. Who do not directly generate revenue. On the other hand, these departments incur cost and are known as cost centers. For efficient operation of a hospital suitable programme should be prepared for cost reduction and cost control of cost centers and revenue maximization of Profit centers. Some management experts suggest total abolition of the concept of cost center and operate the hospital on the concept of divisionalization based on Management by objective (MBO). MBO builds competition among departments in the same hospital. This increases productivity and quality of hospital services. This adds to increased capacity utilization of existing assets and improves profitability. This concept requires preparation of budget and budgetary control of operation. Budget is a comprehensive plan of operations expressed in monetary and quantitative terms for a specified period of time. Once the budget is approved this becomes the bench marking for the concerned department/hospital. The actual operating results are compared with budgeted targets and the variances are computed for analysis and generating corrective actions.
3.32 COST REDCUTION AND COST CONTROL Waste reduction in a health care unit is a matter of national importance. Reduction in wastages in areas like kitchen, water, electricity, medicines and surgical fittings generates surplus, which could be used for the treatment of poor patients. Cost control could be exercised by introducing the concept of standard costing. Standard cost is an estimated cost, prepared in advance of production or supply, co-relating a technical
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specification of materials and labour to the price and wage rates estimated for a selected period of time, with the addition of an appointment of overhead expenses estimated for the same period within a prescribed set of working conditions. Standard costing is the preparation of standard costs and their use to clarify the financial results of an operation. The principal purpose of standard costing is control of cost and not merely its ascertainment. The standard cost of each materials/activities so ascertained is compared with the actual costs incurred. The difference between these two costs is variance. This is analyzed to identify controllable variances and uncontrollable variances. Corrective actions are designed and initiated to reduce controllable variance. The uncontrollable variances are referred to higher management for decision making. The standard costing methods would identify material price variance, material Quality (yield) variance, labour yield variance, labour rate variance and bio-medical equipment availability variance which contribute to operational costs. In hospitals, standard costing shall be conveniently introduced in laundry, kitchen, electricity and water consumption, gasoline consumption and other service departments.
3.33 PERSONAL MANAGEMENT, ADMINISTRATION AND HRD IN HOSPITAL A crucial factor in improving the coverage and quality of services is the availability of adequate number of personnel with task oriented training. It is the men duly qualified and trained than any other factor which determines the quality and quantity of performance and output. Human Resources are critical for success of any socio-economic activity. Dr. C.D. Deshmukh in his article “Management and Administration—New Trends” published by Department of Personnel and Training, Government of India said “Good administration furnishes the infrastructure of services which sense the order, stability and social development, carefully recruited and periodically trained or re-trained top personnel is needed for both spheres of operation”. Personnel Management in the beginning of last century was based on simple—carrot and stick approach. During the last quarter century, organizations have become complex requiring special skills and techniques to produce maximum output. The personnel management of a hospital encompasses the following functions: • Manpower Policy. • Salary and Wages administration. • Security services. • Industrial Relations. • Human Resources Development.
Manpower Policy Manpower Policy is concerned with development, maintenance and utilization of actual or potential members of the labour force including those who are fully and productively employed as well as those who experience difficulty in getting work. The development of manpower is the process of man’s acquiring the knowledge, skills and capacities for work. The utilization of manpower is the process of matching men and work in accordance with their level of development. In any process of value addition, we get a picture as follows:
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Input Resource
79
Conversion Plants and Machinery
Output
Input Resources = Input material resources + Input Human Resources. Therefore:
Input Material Resources Input Human Resources
Conversion Plants and Machinery
Output
We define managerial efficiency (ηm) as
ηm =
Output × 100 Input Resources =
Output × 100 Input Material Resources + Input Human Resources
Input material resources are inelastic but input human resources are highly elastic. Therefore, it is an innovative pragmatic policy to finance development of human resources, which is highly elastic to improve managerial efficiency. Manpower planning is the essential component of manpower policy.
Manpower Planning Manpower planning is concerned with organizing, in systematic fashion, the goals, objectives, priorities and activities of manpower development in order to ensure that the right number of staff with appropriate skills is provided at right time to meet the requirement of work to be done. There should be only one yardstick to include the effectiveness of manpower planning, namely, continuous improvement of the status and the quality of life of the population with least friction to those who supply the services and the most satisfying to those who receive it. All these are to be achieved with minimum cost and maximum efficiency. Manpower planning constitutes the following management functions: • Manpower Inventory. • Manpower Audit. • Manpower forecasting. • Manpower Balancing. • Recruitment, Selection and Training. • Induction of manpower.
Manpower Inventory A large health care organization running for a considerable period of time may be having large number of employees with variety of designations and in different pay scales which were created to suite the operating environment as prevailed at that material point of time. These employees may be of either sex and in different age group. An inventory of all such persons existing in the pay roll of the health care unit as on a particular date is required to be prepared. The details would include name, sex, age
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address, designation, educational and technical qualifications, details of training undertaken, level of skill etc. This inventory of manpower will denote the human capacity of the organization.
Manpower Audit Based on Manpower inventory, as above, manpower audit is required to be carried out to further analyze the existing manpower inventory. The audit may be carried out age-wise, sex-wise, skill-wise or trade-wise to assess the existing skill level of manpower and rate of depletion. The audit will show availability of GDMO and specialist doctors, their date of retirement and sex. Similarly an audit for understanding the human capacity of nurses will identify the availability of trained nurses and their rate of depletion. These personal data would be necessary for designing training and placement of these personnel for their effective utilization.
Manpower Forecasting Manpower forecasting depends upon long-range plan of the business process. Manpower consists people with knowledge, skills and attitudes acquired through education and formal training. In India, it takes around 7 years after the college education to prepare an under graduate physician. The estimated cost of training an under-graduate doctor is about Rs.150,000. A large number of trained doctors and nurses are migrating to rich countries. It is estimated, that about the year 1991 there were at least 140,000 physicians and 135,000 trained nurses are working outside their country of birth, citizenship or training. The most affected countries in this raged are India and Philippines, each with over 10,000 physicians abroad. Again a doctor with specialization in one area cannot be re-trained in another area of specialization. All these factors would be required to be considered in preparation of manpower forecast for the health care unit.
Manpower Balancing The manpower inventory and the manpower audit will indicate existing level of human capacity in the organisation. The manpower forecast is indicative of human capacity needs for the future. The problem lies with immediately manning the organisation with desired type and number of manpower for its continuance as provider of quality health delivery services and prepares a programme for meeting the demand for manpower in future years. The difference between present manpower needs in each level of skill and trade and the existing manpower inventory will indicate shortages and surplus manpower in each trade and skill. Such shortages/surplus of manpower in each skill/ trade may be further analyzed to identify the age, sex, qualification and skill in each area of surplus employees. These data will indicate if such surplus employees could be re-trained for transfer to shortage areas for better utilization of the human capacity. The trainable surplus persons might be transferred to shortage areas after he/she has successfully completed such conversion training. In case of para-medical employees and/ or in case of administrative employees below 50 years of age, such training for conversion from surplus area to shortage area can be designed and later on the employee is transferred to the shortage area, but for technical employees like doctors, nurses etc such skill balancing exercise is not possible.
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Recruitment, Selection and Training For immediate skill balancing of manpower, new persons are required to be selected and recruited and re-trainable existing employees should be suitably trained and posted in new assignment. This requires preparation of job profile and then preparation of employees’ profile. Thereafter, suitable training module could be designed for re-training of existing employees for skill balancing. Those persons who would be found untrainable, they are unbalanced untrainable surplus manpower. They may separated and offered suitable safety net.
3.34 PERFORMANCE APPRAISAL A dynamic process of change and innovation is required to be brought about in the entire approach to health manpower development. The purpose is increased productivity and quality of services. Training is an essential component of human resources development. The areas and need for training of a person emanates from analysis of his/her personal/ organizational performance. The performance of an organization over a period of time could be observed from the audited annual report of a company. The historical performance of a person could be obtained from Performance Appraisal Reports. The performance appraisal report for a person in an organization for a certain period of time is indicative of various traits of the person being appraised. A well-designed performance appraisal report will identify the strength areas and weakness areas of the person being assessed. The training schemes are designed to convert the weakness areas into strength area, such that overall productivity of the person being appraised could be improved and the human capacity increases.
Dawn of A New Era Human Resource Development gained major thrust in 1970s and served as an umbrella to cover three commonly used terms: • Training—Improving Performance on the present job • Education—Preparing individuals for future identified jobs within the organization • Development—Helping individuals grow to meet the future. The usage of HRD gained momentum when a separate Ministry to deal with HRD was created. By 1975, HRD was being used with both macro and micro connotations. At the micro level, it denotes value adding, training, education and development of the employees by the organization. Thus, HRD could be understood as an integrated use of manpower planning, selection, training and development (eventually leading to the development of the organization) through employee’s career development with better education and training. This will improve an individual, a group and the team within the organization and, in turn, achieve organization excellence. The important directions for industry are towards greater quality orientation, cost reduction, product and process development and brand marketing. To achieve these results, there has to be full participation of the complete work force, emphasis on upgrading their skills and enhancing their pride in work. Management will become accountable as the
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market responds to their performance. The work force must develop more pride in their work and a realization that poor work will lead to dire consequences to the utility organization and to the workers also.
Work Ethic and Work Culture One of the disturbing aspects of our post-independence development has been the rapid erosion of a “Value-based” work culture. In general, organizations owned and controlled hospitals score poorly on systems development, orientation and maintenance, which requires continuous attention and correction. Part of this could be due to lack of resources. System orientation is at the core of modern industrial practice, e.g. ISO 9000, TQM and customer satisfaction is generally institutionalized in the modern day organisation.
Work Force Quality A low level of schooling amongst employees in most state run hospitals has lead to a low quality of the work force and a relative inability to adapt quickly to new work methods and technologies. This limits job mobility within the organization and between organizations, and also the opportunity for augmenting skills and adjustments through training.
3.35 TRAINING “If you are planning for a year, sow seeds; If you are planning for 10 years, plant trees; If you are planning for 100 years, train men”. – A Chinese Saying In the present millennium, phenomenal chances are expected to usher in an era of competition, improved efficiency, value-added services, consumer sovereignty and good corporate governance. The success of an organization, therefore, depends on speed, flexibility, innovation and quick response to environmental changes. This would be possible and achievable when the organizational members acquire and upgrade their competence and intrinsic energy to grow, through proper education, training and self-development and meet the challenges of the changing scenario.
Human Traits Organizational excellence emanates from Effectiveness, Efficiency and Productivity. Effectiveness is an output-oriented measure, Efficiency is an input-oriented measure but productivity takes care of both. More than 40 years ago, a Japanese Engineer - Ishi Kawa suggested a set of algebraic equations as a tool for measure of human capacity vis-à-vis organisation capacity as below: Knowledge × Skill
=
Competence
Attitude × Environment
=
Motivation
Competence × Motivation
=
Individual Performance
(Individual Performance) × (Organizational Resources)
=
Organizational Performance
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Behavioural Pattern
Difficulty
It is, therefore, essential to design training in areas of knowledge, skill and attitude. The diagram below would indicate the time dimensions of each type of training.
Group Behaviour Individual Behaviour Skill Knowledge Time
Attitude training takes time. Skill is application of knowledge. Thus, knowledge training would be first required for skill development. Education is an essential component of knowledge training.
3.36 ORGANISATION STRUCTRUE OF A PRIVATE HOSPITAL A patient who takes admission in a hospital is customer. He is required to be given treatment and after he is cured or in the path of recovery, he is discharged. Thus he pays for services rendered to him, which includes consumables, rent for the infrastructure used and service charges. Subsequently the services given and the materials consumed shall be well documented and a transparency is maintained for the satisfaction of both the parties. The information includes the time and date of diagnosis, details of the diagnosis, particulars of treatment, particulars of medicine administered, details of surgery performed, particulars of any portion of the body separated and/or removed etc. A Hospital should be equipped to offer the following sevices: Technical Services
General Services
Diagnostics
Diet
Pathological
House keeping
Laboratory
Counseling, Light Entertainment (Music, TV, Books)
Pharmacist
Security
Surgery Dispensing Nursing The above services shall be available for comfort of the patient and the same shall comply with the requirements of Consumer Protection Act, 1986. Again disposal of organic medical waste calls for special arrangements. Thus management of hospital demands a special organization structure and this shall be manned with competent persons for efficient performance. The organization structure of a 400-bed hospital in a private sector is given below.
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Board of Directors
Manager— Medical Record and MIS
Manager— Customer Service
DGM— Marketing & PR
DGM— Finance
GM— Services
Chief Security Officer
DGM— MM
DGM— P&A
Chief Matron
CO— Secretary
Medical Superintendent
Surgeon Superintendent
Medical Superintendent— Diagnostic
Medical Director
The three medical superintendents will work as profit centre heads. The medical Director will coordinate among the departments and will be responsible for the growth, diversification, development and management of the Board. The GM (Services) is the most important function. This organization structure will be as follows: GM (Services)
DGM (Maintenance & New Construction)
Manager (Food & Beverages)
Manager (Transport & Communication)
Manager (M) (Building, Plant, Machines & Construction)
Manager (Laundry Services & House Keeping)
Manager (M) (Laboratory Equipment & OT Equipment)
Manager (Facilities & Disposal)
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The DGM (MM) will be responsible for purchase and inventory control. The purchase function will include: (a) Purchase for new construction (b) Purchase for spares and plant and machinery. (c) Purchase of medical consumables, which are mostly stock items. (d) Purchase of food articles, fuels, consumables for laundry etc. This department would also necessarily require storing these items and exercise inventory control. In maintaining of inventory control the norms to be followed are as below: Type of Store
Norms to be followed
Spares for Plant & Machinery
VED
Equipment Fuse, indicating lamps
ABC
Indicating Meters, Gauges Medicines, injectables, etc
FIFO
Syringes, perishable food items Non-perishable food items
ABC
The organization structure of DGM (MM) is as follows: DGM (MM)
Manager (Purchase & Contracts)
Officer (New Construction, Medical Consumables)
AM (Plant, Machinery, Medical Equipment)
Inventory Control Officer & Cash Purchase
AM (Medicines, Food Items)
AM (Engg. Stores)
Manager (Stores)
AM (Food)
AM (Medical Consumables)
The Personnel & Administration Department would be required to look after the following functions: • Personnel Matters • Administration • HRD These functions relate to employees like physicians, surgeons, doctors, nurses, management staffs, workers. The organization structure would include these functions as follows:
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DGM (P&A)
Manager (P&A)
Manager (HRD)
Manager (IR)
Personal Records
Recruitment
Workers’ Grievance Redressal
Attendance Control
Selection
Personnel Redressal of Workers
ESI & PF Matters
Training
Welfare
Manager (Medical Records and MIS) He is required to maintain the full medical record of a patient after treatment and after he or she was discharged. The medical record would be required to be fully computerized and preserved for a minimum period of 10 years. This department is also required to prepare and build a MIS system for day-to-day operation. The purpose is to improve quantity of services, reduce cost and increase patient’s confidence and satisfaction. Capacity utilization of existing facilities is a matter of necessity. The MSI shall be built around such objectives for decision making. The Manager (Customer Service) would be looking into the admission office and release office of patients. This organization will be the interface between patients, parties and the hospital authorities. Subsequently, arrangement will be done for direct communication link between this department and all other departments giving direct services to the patient. The organization structure of the DGM (Marketing & PR) will be as below: DGM (Marketing & PR)
Manager (Press & Publicity)
AM (Diagnostic & Laboratory)
Manager (Marketing)
AM (Corporate Sales)
AM (Exports)
AM (Surgery)
The organization structure of DGM (Finance) shall be as follows: DGM (Finance)
AM (Banking & Cash Office)
AM (Billing & Debtor Control)
AM (Stores Account)
AM (Salary & Wages)
AM (Cost & Pricing)
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In addition the DGM (Fin) will look after Project Financing, preparation of budget and financial statement. In Government hospitals it is necessary to maintain an out patient department in addition to medicine stores for supplying of medicines. Admission for treatment in such hospitals is done as under: • From lower referral hospitals. • From out patient department • From outside.
3.37 ORGANIZATION STRUCTURE OF A GOVERNEMNT HOSPITAL The organization structure of a non-teaching hospital is as below:
Admission Office
Homeopathy Doctor
Accounts Department
Pathology and Radiology
Chief Security Officer
Specialist Doctors
Health Officers and Health Workers
General Administration
Food and Diet
Ward Masters
Chief Matron
Medical Stores
Out Patient Department
Medical Superintendent
A recent survey conducted by the World Bank in all government hospitals has established the following: 1. The doctors and nurses were not adequately trained for giving quality services with increased capacity utilization of existing facilities. 2. The house keeping in all hospitals are below national standard. 3. There was no specific arrangement for disposal of medical waste. 4. Accordingly a clinical training was designed and conducted among specialist doctors and GDMOS besides nurses. This training improved the quantity and quality of services. Disposal of medical waste is a matter of necessity for hygiene and for avoidance of spread of infectious diseases. Generally organic medical waste is separated from inorganic waste needles etc. The organic waste is destroyed in an incinerator before the ashes are disposed. The inorganic waste is remained to be kept separately for their destruction in bulk.
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3.38 QUALITY CONTROL IN HEALTH CARE IN A HOSPITAL In present day open market economy, all goods and services are required to be supplied at lowest price and conforming to international quality and standard. It is therefore, necessary for a service organization like hospital and health care unit to devise methods to reduce cost of services while continuously improving upon the standard and quality of services for its continuance and growth in a competitive economy. Cost of service is a function of labour cost and capacity utilization of the existing health care facilities. Labour cost is dependant upon labour productivity. Overall productivity of an organisation is having a relation with the quality of services produced. The term “Quality” implies “Fitness for the purpose” of a service or a product. In recent days the meaning of the term “Fitness for use” is becoming wider involving increased level of expectations of the customer/consumer. It involves design of a product/package, standard of service and control, reliability of the product services and after care. Quality control has an impact on economics of a business undertaking. Careful analysis of consumer need helps to establish the desired level of quality of products and services, which would motivate purchase by the consumers and thus increase salability. The term quality could be understood from the following diagram. Quality
Quality of Design Quality Control
Quality of Conformance
Quality of Performance Reliability & Product Assurance
Thus quality broadly includes the following three distinct areas: 1. Quality of Design 2. Quality of Conformance 3. Quality of Performance Quality of design in a hospital refers to the technical specification of the product/ package, which may differ for same functional application. Quality of design broadly includes the elements like pre operative care, details of medical examination and tests to be performed, particulars of surgery to be performed, post operative care, particulars of medicines and injectables to be used during continuance of treatment and number of days the patient will be required to stay in the hospital. The particulars of bed viz. cabin or dormitory etc are also required to be mentioned. Quality of conformance is required to adhere to such specified quality of design within prescribed limit of tolerance. Quality considerations do not stop here, as the main objective of consumer satisfaction of services given is found satisfactory in daily working life. Unreliable performance of any product/surgery in daily life is one of the factors, which reduced market share of a product/service. Thus the third element viz. Quality of performance assumes significant importance in total Quality of a service/product. While all endeavour should be made in actual service to conform to quality of design, in real life situation it can be observed that all service chains exhibit certain degree of variability. But the question arises as to the degree of variability that shall be allowed and the process
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of determination of this variation. The variability may originate from external sources or internal causes. This leads to the process of control, which implies the study of quality characteristics through which a process is judged for conformance or acceptability. This concept can be made use of under the following three steps: 1. Evaluation of Existing standard 2. Maintenance of standard 3. Improvement of standard This calls for development and installation of a standard for control on quality of goods and services, evaluation of the installed standard, maintenance and continuous upgradation and improvement of the same. The standard sounds better loyalty to the consumers which ultimately increases market share of a product and helps in establishing of a brand in the market.
3.39 ISO 9000 The ISO 9000 series of standards act as a bench mark against which an organisation can compare its own quality management practices. The main aim of these standards is on documenting the operational process of an organisation and managerial activities used to fulfill customers’ expectations and requirement. The documented procedure acts as the guidelines for implementing the total quality control system. It also keeps the auditors/ assessors to assess the extent to which the documented procedure is adopted while meeting the requirement of the consumer. The activities covered by such documentation include all functional management areas right from purchasing, personnel, security, finance, training, medical treatment, marketing etc. There is a controversy among total Quality Management (TQM), ISO 9000 and quality Management. TQM is a management tool for increase in productivity and quality of goods and services through voluntary participation of all employees at all level. The mission is to improve organizational performance. Accordingly an organisation having ISO-9000 certification might not have introduced TQM. Alternatively an organisation, which is successfully practicing TQM, may not feel necessary to obtain ISO 9000 certification. This identifies the activities of ISO 9000, TQM and Quality Management.
3.40 ENVIRONMENT OF QUALITY CONTROL Quality control cannot be initiated in isolation. It depends upon a number of factors both internal as well as external to the health system as given below. 1. An urge and desire on the part of the personal in the Health organisation to find better methods of Quality health care through analysis of existing practices. 2. Need for requisite skill, attitudes and ability in the person engaged in Quality control. 3. Need for vision among medical professionals for injection of quality. 4. Need for initiative and creativity among medical fraternity gained through critical examination. 5. Need for high quality research both in the area of medical science and Human behaviours towards their health. 6. Need for commitment and empathy. 7. Outstanding leadership and strength of character
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Health care quality encompasses many attributes as indicated below: • Effectiveness and Efficiency: Effectiveness is an expression of the degree of attainment of the pre-determined objectives and targets of a programme, institutions or activity seeking to reduce a health problem or improve an unsatisfactory health situation. • Efficiency is an expression of the relationship between the results obtained from a health programme and efforts expended in terms of human, financial and other resources, health processes, technology and time. • Equity: this considers the coverage of population groups and geographical areas, distribution of resources and facilities and effectiveness in services in different areas. • Patients/People’s satisfaction in the Quality of Health care: Health Administration is manned by people and meant for people. People’s interest and satisfaction must be ensured through quality health care. • Need of Positive Role of Functionaries of Health: • Need for change in Attitudes of Health Functionaries: there is need for making administration citizen friendly and accountable ensuring transparency and right to information. • Setting up of work improvement Team: introduction of quality grade concept is likely to improve work culture. • Need for congenial Environment to provide decent health services.
Need for Medical Audit The purpose of medical audit is to evaluate the factors impinging on patient care. Medical Audit committee cannot function in a hospital because of following: 1. Poor Recording of care history 2. Sketchy documentation 3. Operation notes not properly recorded 4. Lack of inter-departmental co-ordination 5. Incomplete care notes 6. Absence of follow-up by senior faculty members.
" TRANSPORT MANAGEMENT ROADS, ROAD TRANSPORT AND RAILWAYS 4.0 INTRODUCTION After the fall of Roman Empire, the roads, which the Romans had built across Europe, were allowed to fall into disrepair. By the eighteenth century, there was a great need to improve roads as more and more people and goods moved about the country. Turnpike Trusts were formed to improve roads and engineers like Metcalf, McAdam and Telford introduced new method of road laying. The new, surfaced roads brought about the great coaching era. This reached its peak in 1820s when fast, passenger carrying stagecoaches served most of the country’s main roads. The stage coach era was brought to an end by the growth of Railways and road transport was reduced to local traffic. Then, at the end of nineteenth century, a new form of Road Transport appeared. In 1885, two German Engineers Karl Benz and Gottlieb Doimler used internal combustion engines with petrol as fuel. In 1913, Henry Ford introduced in the USA a successful method of mass production of Automobile. Since that time, trucks have carried more and more goods, buses and coaches have replaced many railway services, and everywhere fast, cheap automobiles crowd the roads. The first railway line — the Stockton and Darlington colliery line — was opened in 1825. George Stephenson built the 10 mile line and the first engine — Locomotion. He built the first passenger line and the engines for it too. This line was the Liverpool and Manchester Railway (1830), and the first locomotive to run on it was the famous ROCKET. As early as in 1850s it was possible to travel by train through several European countries. After the American Civil War, work started from both sides of the continent on the “Great American Railway” from the Pacific to the Atlantic coasts. In 1869 the two sections met. Today, the United States has a greater track mileage than any other country - almost a quarter of a million miles. The Railway age was made possible by the steam Locomotive. Today this is changed in most of the countries by Electric or Diesel locomotives which are cheaper and cleaner to run.
4.1 TRANSPORT SYSTEMS Transport system could be broadly categorized into five broad heads as follows: • Unmanned Mechanical Transport 91
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• Underground Transport • Surface Transport • Water Transport • Air Transport Figure 4.1 shows typical Transport System. Transport Systems
Mechanized Transport
Underground Transport
Metro Railway
Pipe Lines
Conveyors
Surface Transport
Rail Transport
Tramways
Escalators
Aerial Ropeways
Air Transport
Road Transport
Airlines
National
International
Water Transport
Air Taxi
Inland Vessel
Ocean Going Vessel
Figure 4.1 Single line diagram of Typical Transport System
Underground Metro Railway and Air Transport are mainly used for transportation of passenger, although Air Transports are also used for carriage of mails and urgent cargo. Most of the Metropolis in the world is busy and has high population density. Subsequently the road transport has to ply within traffic congestion. Such road transport in busy metropolis produces air pollution, which is not permissible under the present Environmental Protection Acts. Therefore, for clean drive in schedule time most of the busy towns in the world have introduced underground metro-railway. Such mode of rapid mass transport has become popular throughout the world. Water Transport both for inland vessels and ocean going vessels are mostly used for carriage of cargo. Subsequently most international flights are used for carriage of passenger only. Domestic Airlines are mostly in use for carriage of passengers only, although some of the hilly states use domestic Airlines as cargo carriers. In a populous country like India, Railway Transport plays a leading role in socioeconomic development of the country. It is the only transport used for movement of bulk materials. The Railway carries a large fraction of total goods. Unmanned mechanized transport constitutes pipelines, ropeways and conveyors. Pipelines are essential for mass transportation of crude oil and natural gases. Economics of distribution requires location of oil refineries in consumption center, whereas the crude oil and natural gases are mined either offshore or on-shore in remote areas. Carriage of such mined resources to the consumption center is economically done through large diameter heavy duty high pressure under ground pipe lines; booster pumping stations are used at different locations to maintain pressure for easy flow. Crude oil imported from abroad is carried in large bulk carriers. On reaching the Indian Port, these ships discharge the crude
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oil to a pipeline. India is entering into a contract with the Government of Iran for buying of natural gas, which will come through a cross country underground pipeline via Pakistan. Overhead ropeways are profitably used for carriage of coal from coal mines and coal washeries to nearby thermal power plants and steel plants. It is generally seen that coal based thermal power plants and steel plants are located within 20/30 kilometers of coal mines/coal washeries. Loading of coal at the coal pithead and unloading of coal near the point of consumption is costly and time consuming if railways and/or road transport are used. In such cases, motor driven conveyors and motor driven aerial ropeways are used for continuous flow of coal at lowest cost. In large manufacturing plant, material handling constitutes a large activity. All such plants operate 24 hours per day and 365 days per year. Continuous material flow in such plants is maintained with motorized conveyors, motorized escalators and aerial ropeways. Thus unmanned mechanized transportation systems are mostly used for material handling. Large Railway stations, departmental stores, large office complex and international air terminals have also installed motorized escalators and conveyors for easy movement of passengers with personal luggage.
4.2
TRANSPORT ECONOMICS
Transport Economics can be best studied from the study of its demand, supply, consumption and price. The demand for a commodity is its quantity which consumers are able and willing to buy at various prices during a given period of time. So, for a commodity to have demand the consumer must possess willingness to buy it, the ability or means to buy it, and it must be related to per unit time i.e. per day, per week, per month or per year. Demand (D) is a function of price (P), income (Y), price of related goods (Pr) and taste (T) and is expressed as D = f (P, Y, Pr, T) When income, prices of related goods and tastes are given then D = f (P). Transport is not a commodity. The demand for transportation arises because of the necessity for transfer of a commodity from one place to another place at a considerable distance. A commodity is produced for consumption and its transportation from one place to another distant place depends upon the desire of the producer or owner. Movement of such commodity requires transport services of adequate capacity and class. Thus demand for transportation originates from production of commodities. It may, therefore, be termed as “Derived Demand”. This derived demand character of transport services is, therefore, likely to fluctuate with the quantum of production and pattern of distribution of production. If adequate food grain is produced in India in such a manner that all villages and towns in the country get their own produced crop sufficient for their consumption, then transportation for internal distribution of food grain will not be required. In such situation, the surplus food grains from various regions may be transported for export. On the other hand, if production of food grain is unevenly spread over the country, then internal transportation will be necessary for distribution of food evenly amongst masses. This indicates that transport services are desired demand and such demand fluctuates over years and over months.
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Man is required to travel long distances for many reasons. The purpose may be to join a service, to attend an auspicious function, to undertake higher technical education, to undertake a health treatment etc. For traveling purposes he may choose railway and/or aircraft. The passenger trains are having large number of seats. The aircrafts are also having a large number of seats varying between 16 seats to 365 seats per aircraft. Sometimes, some passenger train in a particular route and for a particular destination is going full and getting an accommodation in such particular train becomes difficult. At the same time passenger trains in different directions may be operating with large number of empty seats. In case of aircraft, morning flights from Kolkata to Delhi on Monday during the months of June and August goes with full capacity, whereas the evening flights from Delhi to Kolkata flies with large number of vacant seats. In months of December and January, the morning flights from Kolkata to Delhi go with large number of vacant seats, whereas the return flights from Delhi to Kolkata come fully occupied. All these factors show that desired demand in transport sector is highly fluctuating. The demand fluctuates daily, weekly, monthly and yearly. Subsequently transport services are having peak demand and rock demand depending upon nature of transport and other socio-economic parameters. As said above demand of a commodity is a function of taste of the consumer. The demand for the type of transport is dependant upon type of services. In case of passenger traffic, choice of the type of transport service is dependent upon safety of passenger, reliability of such transport services, time taken by the type of transport service to reach destination, punctuality of the transport service and level of comfort being offered by the chosen transport services. In case of goods transport, the choice of transport services depends upon security of the goods, reliability of the transport services, cost of transportation and time taken for transportation of the goods to destination. Thus demand for a particular type of transport is dependant upon the purpose for which transport services are required and other factors connected with operation of transport. The transport services are required for passenger and for goods traffic. The derived demand may originate from an individual/company/Government. All transport services might have negative impact on social structure and society. This is because transport services are accompanied by accident, road congestion and environmental degradation arising out of air pollution and noise pollution. This is the reason why transport services are subjected to Government Regulation all over the world. Supply of transport services depends upon cost of supply and input-output ratio. Inputoutput analysis is a novel technique invented by Professor Wassily W. Leontief in 1951. It is used to analyze inter-industry relationship in order to understand the inter-dependencies and complexity of economy and thus the conditions for marinating equilibrium between supply and demand. Input-output ratio indicates how much money is required to produce one unit of service. If this ratio is very high then the supply of such services are less flexible. Supply of transportation service is always heterogeneous because it is service industry and, therefore, its capacity is indivisible. An aircraft with a seating capacity of 100 can accommodate 100 passengers in its normal flights. If at any point of time only 60 passengers want to avail of such service in the flight and if the aircraft is allowed to fly with these 60 passengers, then seats for 40 passengers get wasted. These 40 seats could not be separated from the aircraft.
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This shows that transport services are indivisible. Supply of transport services are obtained from Government/corporate sector/private individual depending upon the type of transport, nature of route and the Government Policy. Pricing of transport services can be done under perfect competition and under monopoly. Demand for transport services is not basic demand and hence any amount of subsidy from the concerned Government cannot be supported. However, for development of backward areas and for expansion of economic activities some amount of subsidy may be considered. The pricing policy for transport service could be studied for each type of transport services for the total market. The Road transport consists of large capacity passenger buses and hired taxi services besides tramways, underground railways and circular Railway in cities and towns. The Government, corporate body or private individual may operate the road transport buses. These services are in perfect competition. The services offered by Tramways, Circular Railways and Metro Railways also compete with the surface transport bus services. Hence they are also in perfect competition. Subsequently prices for surface transport in cities and towns are fixed based on perfect competition. Generally the concerned state Government co-ordinates with all the transport service providers and fix up a price. The Railways, except suburban Railways, enjoy monopolistic market. However, the Government of India administers prices for passenger traffic and goods traffic. Before adoption of open market economy in 1991, the state owned Indian Airlines used to enjoy monopoly domestic market in India, although the prices used to be administered by the Government of India. From beginning of this century at least four Airline companies are operating in the domestic market. These companies are in oligopoly market situation selling heterogeneous products. This is an imperfect or differentiated oligopoly. The prices and outputs are determined by oligopolistic firms. The sectorial economic Model of Transport system could be represented as below: Railway Transport Economic Parameters
Passenger
Goods
Metro
Supply
Government
Government
Government
Demand
Government/Private
Government/Private
Private
Market
Monopoly
Monopoly
Perfect competition
Price
Government
Government
Government
Road Transport Economic Parameter
Passenger
Goods
Supply
Government/Private
Private
Demand
Private
Government/Private
Market
Perfect competition
Perfect competition
Price
Government
Open
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Air Transport Economic Parameter
Domestic Market
International Market
Supply
Government/Private
Government /Private
Demand
Government/Private
Government/Private
Market
Oligopoly
Perfect competition
Price
Oligopolistic
Open
Water Transport Economic Parameter
Domestic Market
International Market
Supply
Government/Private
Government /Private
Demand
Government/Private
Government/Private
Market
Perfect competition
Perfect competition
Price
Oligopolistic
Open
Passenger Transport Type of Transport
Supply
Demand
Market
Price
Rail
Government
Government
Government/ Private
Government
Road
Government/ Private
Government/ Private
Perfect competition
Government
Air (Domestic)
Government/ Private
Government/ Private
Oligopolistic
Open
Goods Transport Type of Transport
4.3
Supply
Demand
Market
Price
Rail
Government
Government/ Private
Monopoly
Government
Road
Government/ Private
Government/ Private
Perfect competition
Open
Air (Domestic)
Government/ Private
Government/ Private
Oligopolistic
Open
EFFECT OF CHANGE IN FUEL PRICE ON TRANSPORT ECONOMY
The transport services use coal, electricity and diesel as three alternative fuels. Table 4.1 below shows the energy input structure in Transport sector in India from 1970-71 to 1984-85.
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Table 4.1 Energy Input structure in Transport sector (In percentage) Year
In Transport Sector as Percentage of Total
Transport Sector’s share in total Energy demand
Coal
Oil
Electricity
1970-71
29.77
30.07
2.94
27.50
1973-74
25.89
27.97
3.06
24.46
1979-80
16.48
33.63
2.67
21.52
1984-85
12.33
32.83
2.28
19.43
Source: Energy Pricing in India – Hiern Sarkar and Gopal K. Kadekodi.
It could be observed from above that of total consumed energy demand in 1984-85; about 19.43 percent was originating from Transport sector, whereas its share was 27.5 percent in 1970-71. It could be noticed that coal consumption in transport sector, as a share of total coal consumption, has dripped from 29.77 percent in 1970-71 to 12.33 percent in 1984-85, the share of oil and electricity inputs have remained fairly stable. The growth rates of freight and passenger railway traffic between 1970-71 and 1985-86 were 3.1 percent and 5.2 percent respectively, however, the total fuel consumption in railway grew at a rate of 2 percent. These are indicative of certain gains in fuel efficiency in transport sector in response to several price increase of fuel. Basically, the relative fuel prices, the type of transport made and difference in their optional lead distance and changes in the composition of cargo are responsible for such shifts in fuel use. Within the transport sector, inter-fuel substitution possibilities are relevant only in railway operations. However, substitution of Diesel fuel by CNG in road transport cannot be ruled out. The shifts in fuel mix in case of railway are related to investments in track conversions and expansions involving planning over a long horizon. This is so because of long gestation lays in track construction specifically for electric loco hauling. Table 4.2 below shows the patterns of freight movement handled by different tractions during the period 1970-71 to 1985-86 along with their fuel consumption. This shows clear preference to Diesel tractions over electric or steam tractions. Table 4.2 Fuel use and Productivity in Railway Transport 1970-71
1973-74
1979-80
1985-86
Steam
43.43
35.19
19.86
8.96
Diesel
38.76
45.18
57.12
60.42
Electricity
17.24
19.00
23.02
30.62
Coal
91.08
88.81
82.71
73.16
Diesel
6.18
8.16
12.19
21.50
Electricity
2.74
3.03
5.10
5.34
Percentage of Freight moved by
Fuel mix (%) for Total Railway operations
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Relative Prices of Fuel Inputs Coal/Electricity
100.00
82.92
76.68
73.69
Coal/HSDO
100.00
98.71
119.14
123.75
Electricity/HSDO
100.00
118.18
155.24
167.83
Source: (1) Indian Petroleum and Petrochemical Statistic; (2) All India Electricity Statistics; (3) Indian Railways/Annual Statistical statements
It is seen from Table 4.2 that while the share of Freight (goods) traffic handled by coal fired steam locos drastically came down from 43.43 percent in 1970-71 to 8.96 percent in 1985-86, coal inputs (in oil equivalent units) declined only marginally from 91.08 percent in 1970-71 to 73.16 percent in 1985-86. An econometric model considering relative use of difficult fuels per tonne-km of freight handled with respect to the corresponding relative fuel prices generates the following estimated equations:
FG Coal IJ = 3.7938 − 1.3317 log FG Price of Coal IJ ; DF = 14, R = 0.64 H Electricity K H Price of ElectricityK F Coal IJ = 0.1597 + 0. 5339 log FG Price of Coal IJ ; DF = 14, R = 0. 06 log G H HSDO K H Price of HSDO K F Electricity IJ = 0.2119 + 0. 827 log FG Price of Electricity IJ ; DF = 14, R = 0. 017 log G H HSDO K H Price of HSDO K 2
log
2
2
Here all the fuel inputs are defined per tonne-km of freight moved. The above indicates that that the movement of price structure between coal and electricity have influenced the decision for choice of fuel in Indian Railways, no such specific observation can be made in case of coal and HSDO or Electricity and HSDO. The increase in relative prices of coal to electricity has led to the Indian Railways to switch from coal to electricity in a substantial way with an eccentricity of 1.33.
4.4
LOGISTIC MANAGEMENT
Logistic management constitutes an integral part of Transport management. Commercial viability and profitability of a Transport System in a competitive market is largely dependent upon infrastructure facilities available with the transporter for offering reliable service to the customer. A manufacturer at Mumbai/Kolkata is executing an order for delivery of the ordered finished goods at Tuticorin, Tamilnadu. Let us consider a situation where the following commercial terms were agreed between the purchaser and the supplier: Price Basis:
Free on Rail (FOR)/Free on Truck (FOT) Free on Board (FOB) Tuticorin.
Terms of Payment:
100 Percent Payment against dispatch Documents through Bank.
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This means that the manufacturer (seller) at Mumbai/Kolkata will pack the finished goods and handover same to the transporter consigned to self for destination Tuticorin, Tamilnadu freight paid. The dispatch documents viz. Railway Receipt/Consignment Note/ Bill of Lading will be issued by the concerned transporter to the consignee at Mumbai / Kolkata. The seller will now inform the purchaser at Tuticorin the dispatch particulars for arranging transit Insurance of the consignment and for necessary action by the purchaser. The seller will endorse the original dispatch document in favour of the purchaser and negotiate the same along with Invoice for the supply through his banker to the purchaser via purchaser’s nominated banker. The dispatch document in original will be delivered by sellers’ banker to the purchasers’ banker on collection of payment as per agreed contract. The purchaser will collect the original dispatch document from his banker and produce same to the transporter at Tuticorin for collection of the goods. This implies that the transporter should have his own warehouse at Tuticorin for storage of the goods carried by him from Mumbai/Kolkata till such time the purchaser collect same against production of original dispatch document issued by the transporter at Mumbai/Kolkata. This implies that the Transporters are required to have sufficient warehousing capacity in all destinations. The finished goods before dispatch are required to be packed. The packing is required to be Rail worthy/Road Transport worthy/Sea worthy. This involves additional cost and time. Again the packed finished goods are required to reach Rail Head/Sea Port/ Transporter godown for onward loading to the Rail/Ship/Truck. This requires unloading and loading functions at transporters’ dispatching station warehouse. Similar functions would be necessary at Transporters’ destination station warehouse. All these operations add to costs and time. The aggregate of such costs and time works out substantially which reduces speed of operation and profitability in transportation. Productivity, efficiency and profitability in transport operation could be increased with increase in capacity utilization of the vehicle. Asset turn-over ratio of a transport organization depends upon the following factors: • Speed of operation • Minimum downtime • Minimum detention time arising out of loading and unloading operation Speed of operation depends upon route length, condition of roads and bridges and type of transport used. The down time could be minimized by implementing appropriate maintenance management. Minimum detention time calls for installation of appropriate logistic management. Thus logistic support and its management form an important element of transport management. Logistic Management could be studied under the two broad heads as follows: • Logistic Management for general cargo • Logistics Management for bulk cargo.
4.5
LOGISTIC SUPPORT FOR GENERAL CARGO
The general cargos constitute household materials to industrial cargo, which are neither very large in weight nor over dimensioned and generally include large number of items different from each other in size and weight. This type of cargo is generally found for inland
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PUBLIC SYSTEMS MANAGEMENT
transportation either by Railway or by Road Transport or by both. With the introduction of container as cargo carrier, the costly packing has been dispensed with. If the cargo from a client constitute full container load, then the container is placed at the premises of the customer, who loads all his materials, locks the container with his own lock and key and seals the same. A reasonable time is given to the customer to load his cargo in the container. Delay beyond a reasonable period of time attracts monetary penalty in terms of detention charge. The loaded container may start for destination, if it is to be transported by road transport. Such door-to-door delivery system using container is cheap, reliable, speedy and is mostly in use today. However, if such containerized cargo is required to be transported by Railway or ship, then the sealed locked container will be required to be carried by a Road Transport (Truck) from the customers’ premises to the container loading yard at Railway siding or the container terminal at the sea port. Here the containers are suitably stored with the help off a rubber tyred portainer crane. The storage location of such containers is scientifically planned using suitable computer programme for quick loading in wagon/ship without much handling. For loading of containers on wagon/ship rail mounted transtainer cranes are used for speedy accurate loading. Such method of collection of cargo by container, storage of containers and loading same on the main transport minimizes detention time of the wagon/ship for cargo loading. The wagon/ship on arrival at the destination station is unloaded in a container yard by above methods. These are then loaded on Road transport for door delivery to the respective customer. The transtrainer crane, portainer crane and the containers are manufactured in India. As on date most of the Indian Sea Ports are provided with computerized container terminal for ease of ship loading/unloading. This type of facility does not require large labour force for loading/unloading operation at the dock, and are carried out throughout day and night.
Logistic support for bulk cargo Bulk cargoes are generally transported within the country by Railway wagons. For import and export of bulk cargoes ocean going vessels are used. Bulk cargo for movement within the country includes movement of coal, iron ore, magnesite, food grain, milk, petroleum products, steel materials etc. Import and export of bulk cargo to includes crude oil, CNG, coking coal, inorganic fertilizers, automobiles, iron ore, magnesite etc. Bulk quantity of anthracite coal is transported for coal based thermal power plants. Loading of coal at mine pithead is the responsibility of the coal mining company, who generally uses electric operated coal loaders for loading of wagons. This is basically an electric operated traveling (EOT) crane with certain special attachment to load coal on wagons without calling for large labour force. The Indian Railways have designed special wagon type BOBR and BOBN with bottom discharge mechanism, which could be opened to discharge coal when the wagon is in motion. This allows unloading of coal-loaded wagon on the coal hopper at the power plant. These special purpose wagons continuously move between coalmines and coal based power plants. These special purpose wagons are manufactured in India. Steel plants require coking coal, which are mostly imported. Bulk carriers carrying such coking coal discharges the cargo via the ship unloader at the destination sea port to
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101
the wagons. Generally BOXN and/or BOXC type open wagons are used for such purposes. These coal-loaded wagons are then hauled from the port siding to the concerned steel plant siding for unloading. At the steel plant generally wagon tippler is installed for unloading of coking coal directly on the coal feeder. This process reduces coal loading time and coal unloading time at the port and at the steel plants respectively. This allows more utilization of the wagon. India exports a substantial quantity of iron ore and magnesite. These are loaded on open type BOXN/BOXC wagons at the mine with the help of stacker and recliner. The loaded wagons on reaching the destination sea port load the bulk carriers with such mined ore through a ship loader. The wagon tippler installed at the port allows the loaded BOXN/ BOXC type open wagon to discharge the ore on the hopper which in turn transfer such cargo to the ship loader for directly loading the bulk carrier. It could be observed from above that reasonably good mechanization has been done for handling of bulk solid cargo without involving much manpower. This process of mechanization allows improved capcity utilization of the existing wagons, locomotives and ships. Finished steel from steel plants are dispatched in bulk quantity through BRN type flat wagons and/or BOXN/BOXC type open wagons. The steel plant loads wagon using magnet type EOT cranes. Each wagon is weighed in electronic type weigh bridge with print outs when loaded and when empty. Crude oil is imported into India with high capacity bulk carriers, which cannot come to Indian seaport because of shallow water. The crude oil is discharged at high sea into pipeline by the help of large capacity electric pump. The crude oil thus received is dispatched to the respective oil refineries through large underground pipeline network. Booster pump stations installed in strategic locations on the pipeline maintain desired level of pressure in the pipeline for free flow of the crude oil. Refined mineral oil from oil refinery in the form of petroleum, diesel and kerosene is dispatched to consumption center through Railway and also through Road transport. For bulk dispatch of refined mineral oil Railway wagons type BTPGL/BTPN/TPRC are used. These are tank wagons of adequate capacity and class for safe carriage of inflammable liquid. These are provided with drainpipe with suitable lock. At destination, these locks are opened to discharge the liquid. With the opening of Indian economy, Automobiles are imported into this country in bulk. These are loaded in specially designed ship called Roll on Roll of (RORO) ship. Here the cars are straight driven into the ship and are stacked. When the ship reaches the destination ports, the cars are driven out. In earlier days, loading and unloading of transport used to be carried out manually involving large manpower. Such process was slow and unreliable. Subsequently the detention time of the transport used to be large. This reduced capacity utilization of transport facilities. Subsequently more investment was necessary in acquiring of transport fleet for the business. This made the transport business capital intensive. With modernization of material handling facilities at loading terminal and unloading terminals, the loading and unloading of transport could be done with reasonable speed. This reduced detention period of transport, which in turn increased capacity utilization of existing assets.
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Material Accounting forms an integral part of transport management. For bulk movement of cargo, all solid materials are weighed. It is better to install electronic weighbridge with printer to give correct weighment. Bulk solid cargoes like coal, inorganic fertilizers, iron ore etc are also weighed in weighbridges. There are two types of weighbridges, viz. weighbridge for weighment of static load and weighbridge for weighing of moving load. These may be attached with suitable electronic recorders to continuously record weighment. Bulk liquid cargo like crude oil is measured in terms of cubic meter by installing a flow meter at the pipeline. Both integrating type and recording type flow meters are used. Petroleum products transported by road transport and/or wagons are normally measured by dip-stick method. This is unscientific. It should normally be measured by flow meter as above. It is observed from above that transportation business follows logistics support and logistics management. All the weighing equipment as above is needed to be calibrated at intervals as called for by the relevant Weights & Measures Act of the Government. It is customary for all transporters and particularly the road transport organizations to get approval of the commercial bankers for enabling them to accept cargoes, whose delivery documents were required to be negotiated through Banks. Such approval requires minimum logistic support in terms of availability of adequate warehousing facilities with material handling arrangement and weighbridges etc.
4.6
ROADS
Road is one of the essential infrastructure for socio-economic integration. Road network helps in mobility of goods and services. Transport movement on Roads is used for transferring of food grains from surplus areas to shortage areas. This enables the producers of goods and services to get their remunerative prices. Roads of appropriate capacity and class promote industrialization. The road network consists of roads, bridges, culverts etc. India’s population as on March 1, 2001 stood at 1,028 millions (531.1 million males and 496.4 million females). 743 millions people constituting 72.2 percent of the total population lives in rural areas. A large number of rural people are still below poverty line. Anti-poverty programmes are a dominant feature of government initiatives in rural areas. Recent review of such programmes has established that rural poverty has reduced from 56.44 percent of the country’s population in 1973-74 to 37.27 percent in 1993-94 and again to 27.09 percent in 1999-2000. Improvement in living conditions of the vast masses in rural sector of the country requires availability of fast communication facilities at affordable price such that the vibrant economy of the metropolis could be integrated with hinterlands. Railways and Roads are the dominant means of transport carrying more than 95 percent of the total traffic generated in the country. Road connectivity among villages, industrial centers and metropolitan towns is essential such that the agricultural produces could be made available to the consumption center at least cost and time. This will enable the peasants to get better price for their produces. The transport sector in India has expanded manifolds in the first five decades of planned development, both in terms of spread and capacity. Annual growth rate of Roads from 199798 till 2003-04 is given in Table 4.3 below.
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Table 4.3 Annual Growth Rate of Roads in Percent from Previous Financial Year All figures in Percentage Financial Years
199798
199899
19992000
200001
200102
200203
200304
200405
Upgradation of highways
–34.9
47.6
68.6
32.9
1.1
53.5
–5.9
6718 Km
Rehabilitation/ construction of bridges
–62.5
137.5
82.5
28.8
–8.2
16.3
–14.0
123 Nos
Source: Planning Commission, Government of India, 2003-04.
India has one of the largest road networks in the world, aggregating to about 3.32 million kilometers at present. The country’s road network consist of the classes as given in Table 4.4 Table 4.4 Type of Road
Route length in thousand KM
National Highways
65.6
State Highways
1292.4
Major/other district Roads, Village/rural Roads
3125.0
Total
3320.0
Border Roads
38.8
Source : State statistical bureau, China statistical year books, Zbongguo Tongji Zhaiyao.
Against 195 thousand Kilometers of highways in India, China was having 1278 thousand kilometers of highways as on 1998. This is 655 percent more than our present route length of highways aggregating to 195 thousand kilometers with 17 percent more population (China’s population in 1995 was 1,200,241 thousands) than India’s population. This explains why the Chinese economy has been growing so rapidly. Comparative economic indicators for 1998 show the following as in Table 4.5 Table 4.5 Country
China
India
Russia
Brazil
GDP in US$ Billion
961
474
277
780
GDP per head in US$
773
488
1888
4870
Source: EIU, Country data.
Analysis of Traffic movement showed that 65,569 Km length of National Highways, which is less than 2 percent of total road lengths in the country carries over 40 percent of total traffic across the length and breadth of the country. Past statistics show that the number of vehicles has been growing at a rapid rate of 12 percent per annum over the last few years and traffic on roads is growing at the rate of 7-10 percent per annum. The share of road in total traffic has been growing from 12 percent of freight traffic and 31.6 percent of passenger traffic in 1950-51 to a projected 65 percent of freight traffic and 85 percent of passenger traffic at the end of tenth plan period i.e. upto March 31, 2007.
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The above data and the comparative economic indicators among India and other less developed nations (LDCs) established that rapid expansion and strengthening of the road network, is imperative, both to provide for present and future traffic and for improved accessibility to the hinterland. The roads in the country have been broadly classified under three functional groups as given in Table 4.6. Table 4.6 Classification of Roads into Functional groups Functional Groups
4.7
Type of Roads
Responsibility for Building & Maintenance
Primary System
National Highways & Expressways
Government of India
Secondary System
State Highways & major district Roads
State Governments
Tertiary system
Rural Roads
State Governments/ Panchayats
ROAD EXPANSION AND STRENGTHENING PROGRAMME
Development of modern Roads is time consuming and expensive. Till recently Government was the only builder of roads and bridges. Accelerated growth of road development demanded by the economy requires large sum of money and well trained technologists with modern concept backed by an organization. The Government of India introduced Tax Saving Infrastructure Bonds to mop up funds for financing infrastructure projects including construction of roads and bridges. The Government also invited reputed corporate sector companies to come forward and develop such projects on BOT basis. For speedy uninterrupted development of road development projects credit and loan assistance was received from multilateral agencies like the World Bank, Asian Development Bank (ADB) and the Japan Bank for International Co-operation (JBIC) against specific projects. National Highways Authority of India (NHAI) was incorporated to implement mega road projects. The NHAI has formed Special Purpose Vehicles (SPV) for funding road projects. PSV’s are separate legal entities formed under the Companies Act, 1956. It involves little cash support from NHAI in the form of equity/debt. The amount spent on development of roads/ highways/bridges is required to be recovered in prescribed concession period by way of collection of toll fee by the SPV. The Ninth Plan (1997-2002) laid emphasis on coordinated and balanced development of road network in the country. During this time, the government has embarked upon a massive National Highways Development Programme (NHDP). During the Tenth Plan (20022007) period, Road development has been considered as an integral part of total transport system of the country with emphasis on strengthening and modernizing existing Roads.
4.8
NATIONAL HIGHWAYS
For giving boost to the planned economic development of the country, the Government of India embarked upon National Highways Development Project (NHDP). This is the largest Highway Project ever taken in the country. Under this project being implemented by NHAI, about 14,279 KM length of National Highways is proposed to be upgraded to four or six line
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in two phases at a total estimated cost of Rs.64,639 crores. NHDP has the following two components: (a) Golden Quadrilateral (GQ) comprising, national Highways connecting four metro cities viz. Delhi, Mumbai, Chennai and Kolkata. Total length of GQ is 5,846 KM. The GQ is scheduled to be completed by December 2005 except Allahabad by pass, which will be completed by December 2006. (b) North South and East West corridors comprising National Highways connecting Srinagar to Kanyakumari including Kochi-Salem and Silchar to Porbabandar. Total length is about 7,300 KM. The North South and East West corridors are targeted to be completed by December 2007. The NHAI is also implementing four laning of 361 Km for connectivity to ten (10) major ports of the country. The work related to development of connectivity of Kandla port at Gujarat has been completed. The work related to development of connectivity to the following sea ports are in progress. • Mormugao Port Trust, Goa • Jawaharlal Nehru Port Trust, New Mumbai • Visakhapatnam Port Trust, Andhra Pradesh • Haldia Port, West Bengal • Tuticorin Port, Tamilnadu • Paradeep Port Trust, Orissa • Cochin Port Trust, Kerala • New Mangalore Port, Karnataka, • Madras Port Trust, Tamilnadu • Ennore Port, Tamilnadu Apart from capacity augmentation by four/six laning of National Highways under NHDP, the Government of India has also undertaken programme for improvement in riding quality of National Highways since 1999. The programme includes works like widening and strengthening, periodic renewal, construction of bypasses and rehabilitation/construction of bridges etc not covered under NHDP. As said earlier free availability of low cost capital and private participation in Road construction projects are key factors for accelerated road development. Table 4.7 below will indicate brief particulars of Road Projects constructed with funding from multilateral agencies. Table 4.7 Road Projects Constructed with Financial Support of Multilateral Agencies Brief Particulars of Project
States Involved
Six Projects for National Highway Development
Punjab, Haryana, Orissa, West Bengal, Madhya Pradesh and Maharashtra
Name of the Loan World Bank Credit/Loan Assistance
Amount of Loan in million US$
Completion Schedule
306
Completed in June 2001
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Five Projects for National Highway Development
—
JBIC
36,915 Million Yen
Five Projects for National Highways Development
Haryana, Rajasthan, West Bengal, Jharkhand and Andhra Pradesh
ADB
245
Completed in June 2005
Surat Manor Toll Way Project
Gujarat and Maharashtra
ADB
180
December 2006
Western Transport Corridor Development Project
Karnataka
ADB
240 2006
December
World Bank III Projects
Development of NH-2 in Uttar Pradesh, Bihar and Jharkhand
World Bank Credit
516
December 2007
Grand Trunk Road Improvement Project
—
World Bank Credit
589
December 2007
Allahabad Bypass Project
Uttar Pradesh
World Bank Credit
240
December 2006
ADB
320
December 2006
Four laning of NHDP in stretches of East-West corridor
—
Completed
Source: India 2005, Ministry of Information & Broadcasting, Government of India.
The Government of India has allowed several tax concessions, duty free import of Road Building Machineries and offered Road Construction Projects to private entrepreneurs on annuity mode. This has attracted private participation and private capital has come in road building projects. Already 37 projects valued at Rs. 4,974 crores have been planned on Build, Operate and Transfer (BOT) basis for private participation. Eight Projects valued at Rs. 2,354 croers have already been awarded on Annuity mode and are in progress. The Prime Minister of India announced on the Independence Day in 2003 that additional 10,000 KM of National Highways will link all state capitals, which are away from NHDP by four laning highways. These additional stretches have been identified on the following basis: (a) Corridors having High Density of Traffic (HDC) (b) Connectivity of state capitals with NHDP. (c) Connectivity of centers of Tourist and economic importance. These Projects are under implementation.
4.9
STATE SECTOR ROADS
State Highways, District Roads and Rural roads are constructed and maintained by the respective state Governments/Union territories. Rural roads are also being constructed under Pradhan Mantri Gram Sadak Yojana (PMGSY) to link all villages with a population of more than 500 with all weather roads by December 2007.
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Funding of State Roads • Financial Assistance from the Central Road Funds in accordance with Central Road Fund Act, December 2000. • 100 Percent grant from Central Road Fund (CRF) for inter-state connectivity. • 50 Percent grant from CRF for economic importance.
4.10 BORDER ROADS ORGANISATION Border Roads Organization (BRO) was established in May 1960 for development of roads of strategic importance in the northern and northeastern border areas. In addition, the national highways and permanent bridge works, the BRO is also doing commendable work in the field of snow clearance on 64 roads for a length of 2,618 Km in high attitude areas. The BRO has been entrusted with the construction of roads and fencing along with border with Bangladesh. The BRO has executed road projects in Bhutan and in Myanmar. They are also constructing airfields, bridges, hospitals and schools.
4.11 ROAD TRANSPORT Road Transport could be broadly classified into two areas: • Passenger Transport • Goods Transport Passenger Transport may be of many types as below: • Ordinary Bicycle • Two wheelers like motorcycle, scooters • Passenger car In addition for mass transit of passenger commercial vehicles are also used. Goods Transport may be of the following categories. • Multi-utility vehicles • Commercial vehicles Automobile Industry was delicensed in July 1991 with the announcement of the New Industrial Policy. The passenger car was however, delicensed in 1993. At present 100 percent Foreign Direct Investment (FDI) is permissible under automatic route in this sector including passenger car segment. Before 1991, there were few industries in this sector of industry. As on March 31, 2005 the manufacturers in Automobile sector have increased rapidly as shown below in Table 4.8 Table 4.8 Current Status of Indian Automobile Industry & Passenger Car Sector Brief Particulars
Quantity Nos.
Number of Manufacturers of Passenger car and multi-utility vehicles
15 Nos
Number of Manufacturers of Commercial Vehicles
9 Nos
Number of Manufacturers of 2/3 Wheelers
14 Nos
Number of Manufacturers of Tractors
14 Nos
Number of Manufacturers of Automotive Engine
5 Nos
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Investment in Rs. Crores in automobile sector as on 31.3.2005
Rs. 50,000 Crores
Turnover in Automotive Sector in Rs. Crores during the year 2003-04
Rs. 1,00,000 crores
Number of Direct Employment created
4.5 lakhs
Installed capacity of Four wheelers as on 31.3.2005
15,90,000 Nos
Installed capacity of two wheelers and three wheelers as on 31.3.2005
79,50,000 Nos
Source: Ministry of Industry, Government of India
Such huge capacity is likely to generate about one crore indirect employment in automotive sector. As regards the above capacity as at Table 4.6 above, the production of all categories of vehicles during the last six years ending 2004 is given in Table 4.9 below. Table 4.9 Production of Vehicles in India All figures are in Numbers Category
1998-99
1999-2000
2000-01
2001-02
2002-03
2003-04
Passenger Car
3,90,709
5,77,243
5,13,415
5,64,052
6,08,851
8,42,437
Multi-utility Vehicles
1,13,328
1,24,307
1,27,519
1,05,667
1,14,479
1,46,103
Commercial Vehicles
1,35,891
1,73,521
1,56,706
1,62,508
2,03,697
2,75,224
33,74,508
37,78,011
37,58,518
42,71,327
2,09,033
2,05,543
2,03,234
2,12,748
42,23,469
48,58,625
47,59,392
56,16,302
—
15.00
(–) 2.00
11.70
Two Wheelers Three Wheelers Total Growth (%)
50,76,221 56,24,950 2,76,719
3,40,729
62,79,967 72,29,443 18.60
15.12
Source: Ministry of Industry, Government of India
This massive growth rate in production of vehicles is indicative of expansion of economic activities in the country. Increase in production and sale of vehicles was backed by liberal loan facilities extended by commercial banks. This increased buying capacity of Indian citizens, which was essential for increasing economic activities and increasing rate of capital formation in the country.
4.12 RESOURCES GENERATION For giving a boost to the economy, the Government started massive road construction programme from the Ninth Plan (1997-2002) period. This is a capital-intensive project. This has generated two-digit growth rate in automobile manufacturing sector. The Government revenue is generated from such activities comprising of excise duty on finished automobile, excise duty from automobile component manufacturers, excise duty from manufacturers of alloy steels, structural steels, and paints which are considered as principal raw materials for automotive industry, sales tax or value added tax (VAT) from such commercial activities, income tax from individual and companies engaged in production, sales and purchase of automobile/automobile components besides annual road taxes and insurances. Future construction of more lengths of roads and bridges and strengthening/maintenance of existing roads could be easily financed from the fund being generated from automotive industries as above. Again such road projects would generate large indirect employment in other sector
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of economy like tourism. Tourism has received the status of industry. It has multiplier effect on economy and it is a foreign exchange earner. The main input to tourism is systematic transport sector and well laid out road network.
4.13 RAILWAYS In 1853, the first steam engine driven railway ran from Mumbai to Thane in India a distance of 34 Km. Over times, the capacity of the steam locomotive was increased to more tractive power. Since 1980s, there was gradual but steady replacement of steam engine by diesel engine, diesel-electric engine or electric engine. Railways provide the principal mode of transportation for freight and passengers. They bring together people from farthest corners of the country and make possible the conduct of business, sight seeing, pilgrimage and education. Indian Railways have been a great integrating force for over 150 years. They have bound the economic life of the country and helped in accelerating the development of Industry, trade and agriculture. The Indian Railways have registered the following growth in Assets as on March 2003: • Number of stations
:
6,906
• Total route length of Railway lines
:
63,122 KM
• Number of Locomotives
:
7,681
• Number of passenger service vehicles
:
39,852
• Number of other coaching vehicles
:
4,904
• Number of wagons
:
2,14,760
The Railways were having three gauges of track. The gauge wise route and track length of the Railway systems as on March 2003 is given in Table 4.10 below: Table 4.10 Gauge wise Route Length of Railway Track as on 31.3.2003 All figures in KM Gauge of Railway Track
Route Length in KM
Running Track in KM
Total Track in KM
Broad Gauge (1,676mm)
45,622
64,461
87,889
Meter Gauge (1000mm)
14,364
14,859
17,848
3,136
3,172
3,484
63,140
82,492
1,09,221
Narrow Gauge (762mm & 610mm) Total
Source: Ministry of Railways, Government of India
For ease of continuous transportation without transhipment, the Railway Board has taken a programme of gauge conversion to bring all railway lines in Broad Gauge. This will reduce requirement of maintenance of separate set of plants and equipment for running railways. Subsequently, there will be reduction in cost of operation of railway system. Till March 31, 2003 the railway electrification programme covered the followings: • 26 Percent of Route Kilometer • 36 Percent of Running Track Kilometer • 36 Percent of Total track Kilometer
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Table 4.11 below shows the progress of Railways in movement of Passengers from the year 1950-51 till 2002-03. Table 4.11 Progress of Railways in Passenger Movement Year
Total Route length in KM
Running Track in KM
Passenger originating in Lakhs
Passenger Growth in Percent
Number of coaching vehicles
Growth of coaching vehicles in Percent
1950-51
53,596
59,315
12,840
-
19,628
-
1960-61
56,247
63,602
15,940
24.14
28,439
44.89
1970-71
59,709
71,669
24,311
52.52
35,145
23.58
1980-81
61,240
75,860
36,125
48.60
38,333
9.07
1990-91
62,367
78,607
38,576
6.78
38,511
0.46
2000-01
63,028
81,865
48,327
25.28
42,657
10.77
2001-02
63,140
82,354
50,927
5.38
44,069
3.31
2002-03
63,122
82,492
49,708
(-) 2.39
44,756
1.56
These are indicative of gradual increase in capacity utilization of coaching vehicles resulting from increase in speed of locomotives and better availability of coaches. Table 4.12 below shows gradual phasing out of steam locomotives and replacement of same by high speed Diesel and/or Electric locomotives. Table 4.12 Progress of Phasing out of steam locomotives between 1950-51 and 2002-03 Year
Number of Locomotives Steam
Diesel
1950-51
8,120
17
1960-61
10,312
1970-71
Growth in Percent Electric
Steam
Diesel
Electric
72
-
-
-
181
131
27
964.71
81.94
9,387
1,169
602
(-) 8.97
545.86
359.54
1980-81
7,469
2,403
1,036
(-) 20.43
105.56
782.09
1990-91
2,915
3,759
1,743
(-) 60.97
56.43
68.24
2000-01
54
4,702
2,810
(-) 98.15
25.09
61.22
2001-02
53
4,815
2,871
(-) 1.85
2.40
2.17
2002-03
52
4,699
2,930
(-) 1.89
(-) 2.41
2.06
The above table shows that steam locomotives were getting replaced in a phased manner from 1970-71. The Railways were replacing steam locomotives with Diesel/Electric locomotives from 1970-71. This phenomenon has replaced coal as fuel to diesel/electric as fuel. This increased speed of rolling stocks, reduced manpower requirement for operation and gradually increased efficiency at all areas of operation. Most of these diesel locomotives were manufactured by the Railway’s own Diesel Locomotive Works (DLW) at Varanasi. The electric locomotives are mainly produced at Railway’s Chittranjan Locomotive Works (CLW) at Asansol, West Bengal. Besides these manufacturing facilities under control of the railways, a large number of electric locomotives for the railways were manufactured by Bharat Heavy
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Electricals Ltd (BHEL) a Central Public sector company under the Ministry of Industry and delivered to the Indian Railways. Table 4.13 below shows progress of Railway Freight Traffic from the year 1950-51 to 2002-03. Table 4.13 Progress of Railway Freight Traffic from 1950-51 to 2002-03. Year
Total goods originating In Lakh Tonne
Wagons Acquired
Growth in Percent
Number
Growth in Percent
1950-51
930
—
2,05,596
—
1960-61
1,562
67.96
3,07,907
49.76
1970-71
1,965
25.80
3,83,990
24.71
1980-81
2,200
11.96
4,00,946
4.42
1990-91
3,414
55.18
3,46,102
(–) 13.68
2000-01
5,042
47.69
2,22,193
(–) 35.80
2001-02
5,222
3.57
2,16,717
(–) 2.46
2002-03
5,187
0.67
2,14,760
(–) 0.90
It is seen from above that since 1990-91, acquisition of new wagons by the Indian Railways continued to decline, whereas there was phenomenal rate of growth of goods traffic. This indicates increased capacity utilization of existing wagons. This is possible with increased speed of wagon movement, better logistic support and easy availability of wagons to clients. The rolling stock fleet of Indian Railways in service as on March 31, 2003 comprised of 52 steam locomotives, 4699 diesel locomotives and 2930 electric locomotives. At the moment the Railways are in the process of inducting new designs of fuel-efficient locomotives of high horse power, high-speed coaches and modern bogies for freight traffic. Modern signaling like panel inter-locking route-relay inter-locking, centralized traffic control, automatic signaling and multi-aspect colour light signaling, are being progressively introduced.
4.14 OPERATIONS The main objectives of railways planning have been to develop the transport infrastructure to carry the projected quanta of traffic and meet the development needs of the economy. Since inception of planned era in 1950-51, Indian Railways have implemented nine five-year plans and some annual plans in some years. During the plans, emphasis was laid on a comprehensive programme of system modernization. With capacity being stretched to the full, investment in cost-effective technological changes has become inescapable in order to meet the ever-increasing demand for rail transport. Along with major thrust directed towards rehabilitation of Assets, technological changes and upgradation of standards have been initiated in important areas of track, locomotives, passenger coaches, wagon bogie designs, signaling and telecommunications. Indian Railways are now reorganized into 16 zones as given in Table 4.14 below:
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Table 4.14 Zonal Railways & Headquarters Zonal Railways
Head Quarters
Central Railway
Mumbai CST
Eastern Railway
Kolkata
Northern Railway
New Delhi
North-Eastern Railway
Gorakhpur
Northeast Frontier Railway
Maligaon, Guwahati
Southern Railway
Chennai
South Central Railway
Secunderabad
South Eastern Railway
Kolkata
Western Railway
Church Gate, Mumbai
East Central Railway
Hajipur
East Coast Railway
Bhubaneshwar
North Central Railway
Allahabad
North Western Railway
Jaipur
South East Central Railway
Bilaspur
South Western Railway
Hubli
West Central Railway
Jabalpur
Source: Ministry of Railway, Government of India.
Co-operation between Public and Railway Administration is secured through various committees including the following two committees. • Zonal Railway Users’ Consultative Committees • Divisional Railway Users’ Consultative Committees The organization structure of a Zonal Railway is given in Figure 4.2 Railway Board General Manager Additional General Manager
Chief Operating Manager Traffic Freight
Chief Commercial Manager
Chief Mechanical Engineer
Chief Electrical Engineer
Finance & Accounts
Chief Signal & Telecommunication Engineer
Health
Security
Stores
Personnel & Administration
Coaching
Figure 4.2 Organization Structure of a Zonal Railway
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Each Zonal Railway is headed by a General Manager (GM) who is assisted by an Additional General Manger (AGM). The GM is located at the Zonal Head Quarter and reports to the Railway Board for operation and function of the Zone. The GM is responsible for all functions, but he may delegate some functions to the AGM under his supervision and control. The Chief Operating Manager is responsible for movement of traffic, freight and coaching services through out the geographical territory of the Zone. The Mechanical Department, Electrical Department and the Signal & Telecommunication Departments maintain the rolling stocks including locomotives, passenger coaches and wagons besides overhead lines, track, signaling and telecommunication equipment for smooth running of the traffic within the Territory of the zone. These departments also undertake capital repair and construction work under the control of the GM. The commercial department is responsible for revenue generation and revenue collection. The GM/AGM is assisted by Finance & Accounts, Personnel, Stores and Health departments. The Railway Protection Force (RPF) reports to the concerned GM for protection of Railway Property in the concerned Zone. The Indian Railway systems consisting of 16 Zonal Railways, Research, Development & Standards Organization (RDSO), Lucknow and the various Public Sectors under the administrative control of the Ministry of Railway are administered and controlled by the Railway Board situated at New Delhi. The organization structure of the Railway Board is given in Figure 4.3 below. Railway Board Chairman Chairman’s Secretariat
Member, Mechanical
Member, Electrical
Member, Civil
Member, Traffic
Financial Commissioner
Member, Personnel
Director, RDSO
CMDs of PSUs
DG, Health
DG, RPF
Note: This is not a status chart
Figure 4.3
The Railway Board prepares policy for Railway operations, expansion and modernization in consultation with the GM’s of Zonal Railways and prepares plan for execution.
4.15 RESEARCH & DEVELOPMENT The Research, Development & Standards Organization (RDSO) at Lucknow is the R & D wing of the Indian Railways. It functions as consultant to Indian Railways in Technical matters connected with design, modernization, technology absorption, inspection and quality control of all equipment connected with operation of Railways. RDSO also provides consultancy to other organizations connected with railway manufacture and design.
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Railway Finance Since 1924-25 Railway Finances remained separate from general revenues. The railways have their own funds and accounts and the Railway budget is presented separately in the Parliament since independence. However, the railways contribute to the general revenue a dividend on the capital invested. A Parliamentary Convention Committee reviews quantum of contribution periodically.
Rolling Stock Indian Railways have become self sufficient in indigenous production of all types of Rolling stock at their manufacturing plants. The Chittaranjan Locomotive Works (CLW), Chittaranjan located in West Bengal indigenously manufacture Electric locomotives. In the financial year 2001-02, CLW have manufactured and dispatched 82 broad gauge locomotives for Indian Railways. The Diesel Locomotive Works (DLW), Varanasi situated in Uttar Pradesh indigenously manufacture Diesel locomotives. During the financial year 2001-02, DLW manufactured 94 broad gauge Diesel locomotives for the Indian Railways and also exported 8 broad gauge Diesel Locomotives. The Diesel Component Works (DCW), Patiala situated in Punjab manufacturers and repairs components and sub-assemblies for diesel locomotives. This facility has since reached its rated production capacity.
4.16 PASSENGER COACHES The Indian Railways have installed a Wheel & Axle Plant at Bangalore, Karnataka for supply of wheels and Axles for manufacture of coaches and wagons. The Railways have their own production facilities for manufacture of Passenger Coaches in the following two plants. Integral Coach Factory (ICF), Perambur, Tamilnadu. Rail Coach Factory (RCF), Kapurtala, Punjab. In addition the following two Public Sector companies manufacture coaches and Electrical multiple units (EMU) to the design and supervision of RDSO, Lucknow. Jessop & Co. Ltd., Kolkata Bharat Earth Movers Ltd, Bangalore
4.17 WAGONS The goods originating in 1950-51 was 930 lakhs tons, which increased to 5187 lakhs tons in 2002-03. This calls for large number of goods trains. The Indian Railways in consultation with RDSO, Lucknow have developed wagons of various capacities and classes for carriage of various types of essential commodities, bulk cargo, petroleum products etc. The following types of wagons are generally used by the Indian Railways. Most of these wagons are having empty weight (Tare) not exceeding 22 MT and these are generally designed to carry 58 MT. • Flat wagons type BRN is used for carriage of steel, vehicles, containers etc. • Box type open wagon type BOXN/BOXC is used for carriage of Iron ore, fertilizers, coal etc.
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• Covered wagon type BCN/BCNA is used for carriage of food grains, salt, sugar, cement etc. • Special wagons for carriage of anthracite coal, which continuously shuttles between coal mines and thermal power plants. These special wagons type BOBR/BOBN are provided with manually operated bottom discharge mechanism, which could be opened to discharge coal when the wagon is in motion. • Tanker wagons type TPRC, BTPN and BTPGL, which are used for carriage of Petroleum, products. • Specially designed low bed wagons are used for carriage of over dimensioned/over weight cargo for construction projects. At independence the Railway Workshops in various locations in the country used to manufacture wagons. Gradually, Railway Board developed large number of registered wagon builders to manufacture wagons to RDSO design and inspection. At present there are at least eight (8) registered wagon builders as given below • Braithwaite & Co. Ltd., Kolkata • Burn Standard Co. Ltd., Kolkata • Jessop & Co. Ltd., Kolkata • Bharat Wagon & Engineering Co. Ltd., Patna • Texmaco Ltd., Kolkata • Hindustan Development Co. Ltd., Kolkata • Titagarh Steel & Wagon Ltd., Kolkata • Bhartia Electric Steel Co. Ltd., Kolkata The Government of India formed a Joint Sector company “Wagon India Ltd” with head office at New Delhi to ensure availability of maximum number of quality wagons to Railway Board in least cost. The Railway board in association with RDSO, Lucknow has developed manufacturers of components and sub-assemblies for production of locomotives, passenger coaches and wagons.
Passenger Traffic Passenger originating had risen from 1284 million in 1950-51 to 4971 million in 200203 and passenger kilometer had risen from 66.52 billion in 1950-51 to 515 billion in 200203. Despite constraints of resources, the Railways have been able to cope with increasing demand of passenger traffic. Railways are the premier mode of passenger transport both for long distance and suburban traffic.
Freight Traffic Rapid progress in industrial and agricultural sectors has generated a higher level of demand for rail transport, particularly in core sectors like coal, iron ores, petroleum products and essential commodities such as food grains, fertilizers, cement, sugar, salt, edible oil etc. Revenue freight traffic has reached 518.7 million tones in 2002-03. Transport effort measured in terms of net tonne kilometers (NTKm) increased from 38 billion in 1950-51 to 353.19 billion in 2002-03. The following measures were taken for improvement:
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Line capacity augmentation in certain critical sectors and modernization of signaling systems. • Unit train operations for bulk commodities like coal • Increase in roller bearing equipped wagons. • Increase in transiting loads to 4500 tonnes • Operation “UNI-GAUGE” in railways. • Strengthening track structure by using heavier and stronger rails and concrete sleepers. • Production of prototype electric locomotive of capacity 5000 HP for freight operation by CLW.
Public Sector Companies There are nine central public sector companies registered as per Company Act, 1956 under the administrative control of the Ministry of Railways, Government of India. • Rail India Technical & Economic Services Ltd. (RITES) • Indian Railway Construction International Ltd. (IRCON) • Indian Railway Finance Corporation Ltd. (IRFC) • Container Corporation of India Ltd. (CONCOR) • Konkan Railway Corporation Ltd. (KRCL) • Indian Railway Catering & Tourism Corporation Ltd. (IRCTC) • Railtel Corporation of India Ltd. (RAILTEL) • Mumbai Rail Vikas Nigam Ltd. (MRVNL) • Rail Vikas Nigam Ltd. (RVNL) RITES and IRCON have executed a large number of prestigious export projects and have earned international fame. Recently a registered society “Centre for Railway Information system (CRIS)” was set up to design and implement various Railway computerization projects.
4.18 ECONOMICS & COMMERCIAL Indian Railways maintain its own account and works as per their budget. It is working as a profit centre. Subsequently, the zonal railways are also to operate as profit centre. The railway revenue is generated from passenger and goods traffic as indicated in Figure 4.4 below: It has been observed that generally the revenue from passenger traffic is lesser than revenue being earned from goods traffic. In addition, the railway revenue includes receipts from demurrage for detention of wagons and earnings from Real Estates in terms of hotels and restaurants and rentals from shops on railway premises and also from rentals on hoardings and advertisements besides interest and dividend from public sector companies under the Indian Railways. Thus the earnings of railway could be broadly placed under the following categories:
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Railway Revenue Passenger Traffic Freight
Suburban Railways
Freight
Passenger Long Distance Trains Train
Mail/Express
1st AC
2nd AC 3rd AC
Inter City Express
Super Deluxe Site Seeing Express
Super Fast Express
Sleeper
Chair CarUnreserved
Essential Commodities Petroleum General Cargo (Food/Fertilizer) Products (Tank Wagon)
Bulk Cargo (Coal, Iron Ore Steel)
Special Wagons (for Project)
Figure 4.4 Railway Revenues
1. Passenger fares 2. Receipts from goods traffic 3. Receipts from demurrage for detention of wagons 4. Net receipts from hotels, restaurants and catering services 5. Rentals from shops or other establishment on Railway premises 6. Rentals from hoardings, advertisements in Railway coaches and other Railway properties 7. Net receipts from Public Sector Undertakings under Indian Railway. The Indian Railways possesses large real estate spread over the country. The Railways have prepared plan to utilize such unused real estates for revenue generation. The Indian Railway is meeting duel objectives of social justice with commercial operation. The goods traffic being the major revenue earner, the Indian Railway kept the tariff for goods traffic to the bare minimum and survived in competition against private sector road transport companies because of increase in speed of operation by inter-fuel substitution, reduction in operational costs and modernization of Railway systems. The Indian Railway diversified its cargo traffic as below: • Bulk Cargo • General Cargo • QTS • Container service
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Table 4.15 Progress of Railway traffic and tonnage Year
Total goods originating In (Lakh Tonnes)
No of Wagons
Steam
No of Locomotives Diesel Electric
1951
930
205596
8120
17
72
1981
220
400946
7469
2403
1036
1991
6414
346102
2915
3759
1743
2001
5042
222193
54
4702
2810
2003
5187
214760
52
4699
2930
It could be seen that with increase in the goods traffic the number of wagons reduced since 1984-85. This is because of an alternative model adopted by the Indian Railway for modernization programme. The intended increased speed of locomotive resulting from changing of steam engine to diesel and electric engines. This inter fuel substitution was capital intensive initially. It increased speed of cargo and increased capacity utilization of existing fleet of wagons. This increased tonne km capacity of wagons which resulted in reduction in the number of wagons. Such modernization helps the Indian Railway to become most competitive and economic cargo carriage in the country. Commencing financial year 1992-93, there was accelerated growth of bulk cargo. In those days there was galloping inflation in the economy and the cost of capital was almost touching 20 percent. To increase carriage capacity of such bulk cargo with meager railway finance, the Railway Board introduced “OWN YOUR WAGON” scheme, in which Railway was committed to give 16 percent interest per annum on price of wagon. The producers of bulk cargo will finance the wagon. However, if for the failure of the bulk cargo manufacturer, the wagons lie unutilized, then the wagon owner will be required to pay a heavy penalty. This scheme took off but failed as the Railway could not service 16 percent interest per annum and the wagon owners failed to accept penalty on unutilized wagons. During the current financial year 2005-06, the Railway Board embarked upon a bold new initiative towards new era in Public private participation. The scheme consists of Wagon Investment Schemes (WIS) which is as follows:
Wagon Investment Scheme (WIS) Eligibility:
Individuals as producers, corporate entity as producers, Association or group like SAIL are eligible to participate in the scheme for procurement of new wagons
Type of Wagon:
BCN/BCNA and BOXN
Benefits:
• Assured supply of guaranteed number of rakes every month • Rebate in freight for a specific period • Additional rakes without concession/penalty to the investors opting for Engine on Load (EOL) scheme. • Bonus rakes without concession/penalty • No maintenance charges required to be paid
TRANSPORT MANAGEMENT ROADS, ROAD TRANSPORT AND RAILWAYS
Procedure:
119
Procurement to be done directly from builders approved by the Ministry of Railways as per Indian Railway Standard (IRS) Design & Specification & Inspection. Any number of wagons in unit of rake loads can be owned subject to a minimum of one rake at 4 percent additional wagons.
Salient Parameters are as below in Table 4.16 Table 4.16 Salient Commercial Features of WIS Particulars
BCN Rakes
BOXN Rakes
Freight Rebate in Percent
10
10
Period of Rebate in years
15
10
Guaranteed number of rakes per month with freight rebate
4
6
(a) Without EOL
2
2
(b) With EOL
4
4
Bonus: Additional Guaranteed number of rakes per month without freight rebate on penalty
Source: Ministry of Railways, Government of India
The present price of Wagons as above is approximately Rs.25 Lakhs per wagon. This means the producer will be required to finance Rs. 15.08 crores (25 × 58 × 1.04) per rake. The Railway Board also announced liberalized siding rules for investment by the producer company for fast flow of finished goods. The rules are as follows: • Revival of the concept of assistant siding • Capital cost of Traffic facilities to be borne by the Railways, so that the party is required to pay nearly half the cost only. • Electrification on existing diesel siding on electrified section of Railways cost, where heavy detention takes place and subject to specified rakes being handled. • Overhead equipment maintenance at Railways cost. • Procedure liberalized • Reduction in overhead charges. • Sharing the cost of gauge conversion by the Railways. • In all private siding other than EOL, party is required to pay the cost of one commercial staff per staff only. • Cost of all staff at EOL sidings to be borne by the Railways. For freight traffic, the Railways were to encounter the private transport operators in terms of prices and better services. However, for bulk transport and for transportation of general cargoes to long distance, Railways still holds monopoly. Instead of such market condition, the concerned Ministry in the Government administers all the prices. The passenger fare-structure consists of the following: • Fare structure for suburban Railways
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• Fare structure for passenger trains • Fare structure for long distance mail/express The fare structures are not based on cost. Neither the fare structure was worked out based on substitute product like Airlines/Air taxis/passenger bus etc. All passenger fares are administered prices. Subsequently the first class Air conditioned coach fares might be prepared to cross subsidize the ordinary 2nd class fare for the same distance of travel. The Railways are required to expand rapidly in the Indian sub-continent for meeting the accelerated socio-economic demands. At the same time the existing old infrastructure including the track, bridges, culverts, signaling systems would be required to be refurbished and modernized such that speedy reliable services could be given for increased customer satisfaction. With addition of modern Highways and improvement in riding quality of Road, the Railways might face competition from Raid transport operators. With private Airlines operating in India, the Railways are facing competition in higher-class passenger fares in express trains. A sustainable commercial viable operation of Indian Railways calls for rapid expansion and cost reduction/cost control in operation. This requires resources. Resources shall be generated from operation. Commercial operation requires immediate techno-commercial decision making, which is not possible in a Parliamentary form of democracy. Railway Board has taken actions to increase wagon turn round and increased capacity utilization of existing wagons. Measures have been initiated to reduce surplus untrainable employees but no action could be taken to reduce traveling of ticket-less passengers. The claim for loss of goods on railways arising out of wagon breaking and outright theft of railway property could not be reduced. It is mentioned that the ticket-less travelers in suburban Railways were increasing. Again a large number of unauthorized hawkers sell their wares on board the running trains and also on Railway platforms. The Railways could not get any revenue from such unauthorized traders but the costs arising out of such business have to be brome by the Railways. A sizeable portion of Railway lands are occupied by unauthorized persons causing delay in traffic movement. All such social activities have added cost to the Railways.
Privatization of Railways Private organizations allow flexibility in business decisions. The Indian Railways are having large Real estates in terms of land and building, which have not been commercially exploited for resource generation. A large number of well-equipped factory with trained human resources are lying unutilized/underutilized. Such locked-in/idle resources are required to be released for productive use. This is possible only if the Railways are gradually privatized. There may be at least four models for privatization of railways operation. All these models require reform and re-structuring of Railway operations.
Model No.1 • 16 Zonal Railways becomes 16 companies and registered under Companies Act, 1956. • Railway Board becomes a holding company and registered under Companies Act, 1956. • Regulatory Authority
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Model 2 • Each of the Zonal Railway is unbundled to form two companies - one company to deal with the business of Freight handling and passenger handling and the second company to deal with transportation services. • Railway Board becomes a holding company • Regulatory Authority
Model 3 • The entire Railway system is unbundled to form multiple companies - one type of company to deal with passenger traveling, the second type of company to deal with freight services and the third type of company to deal with transportation services. • Railway Board becomes a holding company. • Regulatory Authority.
Model 4 • The entire Railway is unbundled to form one company for transportation services, multiple companies for passenger traffic and multiple companies for freight traffic. • Railway Board becomes a holding company. • Regulatory Authority. The strategy is to separate commercial activities of railways from the operation activities. The operating activities include providing of tracks, stations, signaling and telecommunication facilities and locomotives. The operations include handing of wagonloads and/or passenger coaches. Thus the functions of Transportation Company include handling of wagons and passenger coaches empty/loaded for which a price has to be paid by the companies whose loads were being handled. In addition the transportation company is entitled to charge rentals for use of stations. The other companies would own the wagons and passenger coaches, market their services for carrying of passengers and carrying of cargoes, against agreed payment from their customers. Initially, after unbundling of railways, 100 percent Central Government owned Public Sector Companies (CPSU) would be formed and registered as per Companies Act, 1956. All these new CPSUs should operate as commercially viable units. Gradually the Government may like to disinvest their equity for mopping up funds for investment in social sector. On the other hand these companies might like to ask for more equity-debt capital from the market for their programme of modernization and expansion. Thus over the period, these companies would move towards becoming a corporate sector for the benefit of Indian Public. However, Government control on the companies/company dealing with actual transportation activities is recommended to be retained principally for the reason of safety and security to the masses. The holding company has been recommended to keep distance between the newborn CPSUs and the Government. This will minimize unnecessary bureaucratic interference and political control over the daily operations of these CPSUs. Installation of a Regulatory authority is a necessity to regulate and control these companies, fix prices being charged by these companies such that all Indians could avail of railway services at their affordable price.
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# TRANSPORT MANAGEMENT AIR TRANSPORT AND WATER TRANSPORT 5.0
INTRODUCTION
Inscriptions show that by 3000 BC, the Egyptians were traveling over the sea to Crete in slender, many oared ships with a single square sail to help if wind was in right direction. These ships were called galleys. The oarsmen were usually salves. Later, the Phoenicians, the Greeks and the Romans developed the galley into a powerful fighting ship. A new kind of sail, called the lateen sail, appeared in about AD 1000. This led to the development of the classic full rigged ships, around AD 1400. Ships Santa Maria, Pinta and Nina in which Christopher Columbus sailed to America in 1492 were this type of ship. By the middle 1800s, steam engine ships burning wood and coal were rapidly replacing sailing vessels. The most spectacular iron ship built was I.K. Brunel’s “Great Eastern”, which was 700 feet long with rooms for 4,000 passengers. By 1890, iron was replaced by steel, which is the main material used for ship building today. Steam turbine was first fitted in a launch “Turbinia” in 1894. Since the First World War, oil has replaced coal as fuel for ships. Some of the latest ships have a nuclear reactor to raise steam for the turbine. Much before Wright Brothers’ flight, man had been flying first in balloons and then in Airships. The first hot air manned balloon flight was made in 1783. Count Ferdinand Zeppelin launched his first rigid, hydrogen filled airship in 1900. In 1903, Wilbur and Orville Wright built a flimsy machine of wood, cloth and wire which was powered by a petrol engine. On December 17, Orville made the first ever powered flight on a deserted stretch of sand and Kitty Hawk, in North Carolina, USA. The flight was for 120 feet only. The majority of today’s large aeroplanes, are propelled by jet engines. Aircraft which can travel at speeds greater than the speed of sound are called supersonic. Commercial operation of Aircraft needs modern Airports and Air-traffic control. The Helicopter is the most versatile flying machine. It can fly straight up or down and go forwards, back wards or side ways. It does not require a long run way. It can operate from a flat roof in the city or from a clearing in the jungle with equal ease. Helicopters have a top speed of about 200 miles an hour. This can be profitably used as air taxi in congested towns and also in hilly terrains. 122
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5.1
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WATER TRANSPORT
Water Transport plays an important role in the transport sector of Indian’s economy. Approximately 90 percent of country’s trade volume (77 percent in terms of value) is moved by sea. India has the largest merchants shipping fleet among the developing countries and ranks 17th amongst the countries with the largest cargo carrying fleet with 7.74 million GT. As on July 2004, India had 659 ships with 7.74 million GT and 12.84 million DWT. Table 5.1 below shows development of Indian shipping capacity from 1947 till 2003-04. Table 5.1 Development of India’s Shipping Fleet from 1947 to 2004 Year
No of Vessels for
Capacity of Vessels in Million GRT
Capacity of Vessels in Million DWT
Total Shipping Capacity
Overseas trade
Coastal trade
Overseas trade
Coastal trade
Overseas trade
Coastal trade
Nos
Million GRT
Million DWT
1947
—
—
—
—
—
—
—
0.192
—
2002-03
208
419
5.6
0.57
9.41
0.65
617
6.17
10.06
2003-04
211
441
6.60
0.80
11.39
0.86
652
7.40
12.25
Source: Ministry of Shipping, Government of India.
During the financial year 2001-02, the total quantity of overseas cargo at various Indian Ports was about 274.76 million M.T. During this period only around 17 percent of such overseas cargo was carried by Indian Flag vessels. The share of Indian Flag vessels in carrying coastal cargo during 2001-02 was about 86 percent. It is estimated that the present fleet strength is inadequate to support the trade flow in shipping sector. The projection of coastal trade for shipping sector was fixed as follows:
5.2
Financial Year
Projection of Coastal Trade for Shipping Sector in Million MT
2001-02
356
2005-06
537
2019-20
1273
WATER TRANSPORT FACILITIES The Indian Water Transport infrastructure can be best studied from Figure 5.1 below
Coastal Shipping Coastal shipping is an energy efficient, environmental friendly and economical mode of Transportation in the Indian Transport network and a crucial component for the development of domestic industry and trade. India with her 7,516.6 km long coastline studded with 13 major ports and 184 non-major Ports provides favourable conditions for development of this alternate mode of transport. It is believed that coastal shipping will be competitor to Indian Railways and Road Transport. This line when used in conjunction with the Inland Water Transport will be cheapest, reliable and eco friendly mode of goods transport carrier. For promotion of coastal shipping, all home trade vessels and sailing vessels have been exempted from payment of Lighthouse Dues under the provision of Lighthouse Act, 1927.
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Figure 5.1 Indian Water Transport Infrastructure
Inland Water Transport India has about 14,500 km of navigable waterways comprising of rivers, canals, backwaters, creeks etc. About 18 million tonnes of cargo is being moved annually by Indian Water Transport (IWT), a fuel efficient and environmental friendly mode. Its operations are currently restricted to the following stretches which constitute national water ways: • Ganga-Bhagirath-Hoogly Rivers between Allahabad and Haldia a distance of 1,620 km. • Sadiya-Dhubri stretch of river Brahmaputra a distance of 891 km. • Kottapuram stretch of West coast canal along with Champakara and Udyogmandal canals in Kerala a distance of 205 km. In addition to above national waterways, the IWT also operates in the rivers in Goa and the deltaic regions of the Goadvari-Krishna rivers. Besides, organized operations by mechanized vessels, country boats of various capacities also operate in various rivers and canals. To scientifically plan and develop Inland Water Transport (IWT), the Government of India installed Inland Water Transport Authority of India on October 27, 1986 for development of IWT related infrastructure on National Waterways and regulation of Inland waterways. For rapid promotion of IWT, the Government of India has since announced the following incentive schemes: • Indian Vessel Building Subsidy Scheme: In order to reduce the capital burden on IWT operators and for increased profitability, the Government of India has announced a subsidy of 30 percent of the ex-factory price of an inland vessel built in Indian shipyard to IWT vessel owner for plying in National waterways. This scheme has come with effect from April 2002. • Centrally Sponsored Scheme: Under the revised centrally sponsored scheme, 100 percent grant is now available for the Projects of North-Eastern States including
TRANSPORT MANAGEMENT AIR TRANSPORT AND WATER TRANSPORT
125
Sikkim and 90 percent grant for others states. During 2003-04, central assistance amounting to Rs. 9.85 crores was given to these states. • External Funding: A Technical Assistance (TA) grant of US$ 1.125 million has been approved by the Asian Development Bank (ADB). Under this TA, the ADB appointed a Canadian consultant for updating the studies and preparation of projects for prospective ADB funding. • Central Inland Water Transport Corporation (CIWTC): The CIWTC, a central Government Public Sector company was established with its registered office at Kolkata in May 1967. This undertaking is mainly engaged in transportation of goods by inland water ways in the Ganga-Bhagirathi-Hoogly, Sunderbans and Brahmaputra Rivers. They are operating regular cargo services between Kolkata and Pandu (near Guwahati) between Kolkata and Karimganj (Assam), KolkataBangladesh and between Haldia and Patna. • Protocol on Inland Water Transit and Trade: The Indo-Bangladesh protocol on Inland Water Transit and Trade which come into operation in November 1972 has been renewed from time to time. This protocol facilitates operation of both Indian and Bangladesh vessels on the following inter-country and transit routes: • Kolkata-Pandu • Kolkata-Karimganj • Rajshahi-Dhulian • Pandu-Karimganj
5.3
INDIAN OCEAN GOING VESSELS
India is having quite a number of shipping companies equipped with ocean going vessels. The largest shipping company is the shipping corporation of India Ltd. (SCI), a central Government Public sector undertaking with its registered office at Mumbai. SCI was incorporated on October 2, 1961. The status of the company changed from Private Limited Company to Public Limited Company from September 19, 1992. The share of SCI in total Indian tonnage in terms of GT is about 30 percent and in DWT terms about 40 percent. The SCI’s present fleet stands at 86 ocean going vessels aggregating about 2.7 million GT (4.6 million DWT) comprising of general cargo vessels, cellular container vessels, crude oil tankers (including combination carriers), product tankers, bulk carriers, LPG/Ammonia carriers, acid carriers, passenger vessels and off-shore supply vessels. Liquefied Natural Gas (LNG) has been identified as the future fuel for India’s Power Plants and as feed stock for chemical/Petro-chemical industry. The SCI has identified carriage of LNG as one of the thrust and growth area and has its presence in the Petronet LNG project. In middle of 1970s, the SCI formed a joint venture (JV) Shipping Company called IranoHind shipping company in partnership with Arya shipping company of Iran. For the Petronet LNG Project, two Joint venture companies have been formed at Malta as follows: • India LNG Transport Co NO: 1 Ltd • India LNG Transport Co NO: 2 Ltd.
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These two JV-companies have been formed for construction, ownership and operation of two LNG tankers which are on time charter to Patronet LNG Ltd., for a period of about 24 years. The equity pattern aggregating to an amount of US$ 27.266 million is as follows: Name of the Organization
% Equity Participation
SCI, India
29.08
Mitsui OSK line, Japan
29.08
NYK- Line
17.89
K-.Line Qatar Shipping Company Total
8.95 15.00 100.00
The time charter agreement provides for transfer of know-how to SCI within five years of registration of the tankers after which SCI would manage the operations of the tankers and its share holding will go upto 42.5 percent. The two ships DISHA and RAAHEE are in regular operation between Ras Laffan, Qatar and Dahej Terminal of Petronet LNG Ltd. The SCI also manages and mans 40 vessels aggregating to 0.12 million GT (0.06 DWT) on behalf of Andaman & Nicobar Island Administration, Union Territory of Lakshadeep Administration, ONGC, Geological survey of India and Department of ocean development, Government of India. SCI is pioneer in India with regard to the following services: • STS operations for crude, POL and dry bulk cargoes • Cryogenic operations (LNG/LPG) • Joint ventures and other types of collaborations in shipping • Shipping consultancy services
5.4
AIDS TO NAVIGATION
At independence in 1947, India had only 17 Light houses. The present strength of aids to Navigation consists of the following: • 164 Lighthouses • • • • • •
One Lightship 9 Radio Beacons 6 Loran ‘C’ chain stations 30 Racons 21 Deep sea lighted buoys 22 Installations under differential Global Positioning systems (DGPS)
To cater to the needs of light stations in islands and for maintenance of the buoys, the Directorate General of Light houses and Light ships is maintaining three launches, one mechanized boat and two large ocean going vessels namely MV Sagardeep II and MV Pradeep. For improved efficiency in navigational services in the Gulf of Kachh area a major project titled ‘costal vessel Traffic service has been taken at hand in January 2002 at an estimated cost of Rs. 165 crore.
TRANSPORT MANAGEMENT AIR TRANSPORT AND WATER TRANSPORT
5.5
127
HUMAN RESOURCES DEVELOPMENT
The Director General of Shipping (DG shipping) is responsible for creation of trained manpower required for the merchant navy fleets of the country. This national obligation is being met through the Government training Institutes and other approved training Institutes in the private sector .The importance of organized training was recognized in the year 1927 when the training ship “Dufferin” was established. The four training Institutes, which were established by the Government for development of skilled personnel for maritime industries, are given in Table 5.2 below: Table 5.2 Particulars of Government Institutes for Maritime Industry Name of Institute
Location
Particulars of courses
Affiliating Universities
Training Ship Chanakya
Mumbai
3-Year full time B.Sc degree course in Nautical Sciences
University of Mumbai
Marine Engineering & Research Institute (MERI)
Kolkata
4-Year full time degree course in Marine Engineering
Jadavpur University
Marine Engineering & Research Institute (MERI)
Mumbai
• One year full time University of Mumbai training in Marine Engineering Courses for Graduate Mechanical Engineers • Three year full time B.Sc degree course in Maritime Science
National Inland Navigation Institute (NINI)
Patna
For development of Personnel for management of Inland Water Transport
LBS college of Advanced maritime studies and Research, Mumbai conducts almost 36 post-sea training courses for serving marine officers. In the wake of coming into force of the STCW 95 and Regulations stipulated by the International maritime organization in 1997, the Government of India, as first step towards formation of Maritime University, has formed the Indian Institute of Maritime Studies and registered under the Societies’ Registration Act, 1860. All the four Government training Institutes have been brought under the control of the new Institute. The SCI has established a Maritime Training Institute (MTI) at Powai, Mumbai. It is recognized as a branch of the World Maritime University, Malmo, Sweden for conducting International Maritime Organization (IMO) seminars and short specialized courses in India for the countries of south-east Asia and Pacific region. MTI is also recognized as an UNCTAD training center for shipping management courses. MTI has been awarded the coveted Golden Peacock Award for excellence in training. In addition to above, there are more than 130 training institutes in the private sector approved by the DG, Shipping, imparting pre-sea and post-sea training in various disciplines.
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5.6
PUBLIC SYSTEMS MANAGEMENT
NORTH SOUTH TRANSPORT CORRIDOR
An inter-governmental Agreement on International “North South” Transport corridor amongst the Government of Republic of India, Russian Federation and Islamic Republic of Iran was signed on September 12, 2000 in St. Petersburg. This Agreement will regulate international transport and transit of goods and passengers through the national territories of the parties to this agreement. This would resort in savings on time and costs for the concerned countries. This Agreement will remain valid for 10 years from May 16, 2002
5.7
SEA PORTS
India has about 5,600 km of main coast line serviced by 13 major ports and about 185 other ports. The major ports are under the administrative control of the Government of India. The other ports known as minor/intermediate ports come under the jurisdiction of the respective State Government. These 13 major ports include the followings: • Mumbai Port Trust • • • • • • • • • • • •
Jawaharlal Nehru Port at Nhava Shevha Kandla Port Trust Mormugao Port Trust New Mangalore Port Cochin Port Trust Calcutta Port Trust Haldia Port Paradeep Port Trust Visakhapatnam Port Trust Madras Port Trust Ennore Port Tuticorin Port Trust
All these major ports are equipped with latest material handling equipment. The capacity of Indian ports increased from 20 million tonnes of cargo handling in 1951 to 390 million tonnes as on March 2004. The number of cargo vessels handled at major ports is about 16,000 per annum. The traffic handled by major ports pertains to 39 percent liquid cargo, 40 percent dry Cargo and 21 percent general cargo. Containerization of major ports is increasing rapidly. Consequent upon adoption of open market economy, Port Sector has been opened for private investment. Various areas of Port Functioning such as leasing out existing assets of the port, creation of additional assets, leasing of equipment for port handling and leasing of floating craft from private sector, pilotage and captive facilities for port based industries have been identified for participation/investment by the private sector. Joint venture formations between major ports and foreign ports, between major ports and minor ports without tender and between major port and company(ies) following tender route are permitted by the Government. The measure is aimed at facilitating Port Trusts to attract new technology, introduce better managerial process, expedite implementation schemes, foster strategic alliance with minor ports for creation of optimal port infrastructure
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129
and enhance confidence of private sector in funding ports. During the tenth plan period (2002-07) measures aimed at modernization, rendering cost effective services, enhancement of service quality, commercialization through Corporatisation and increased private sector participation have been proposed for improved productivity in major ports
5.8
SHIP YARDS
Shipyards are necessary for shipbuilding and ship-repair. Such facility creation is capital intensive and takes considerable time. Ship building activities call for elaborate steel fabrication facilities, large modern machine shop, modern material handling equipment, dry dock facility, slipways and fitting out Jetties. Ship building activities are capital intensive. In India most of the ship building yards in organized sector are owned by the Government of India. The Ministry of Defence, Government of India is having the following three CPSUs for building ships of all capacity and class suitable for the needs of the Indian Navy and the Coast Guard organization: • GRSE Ltd., Kolkata • Mazgaon Dock Ltd, Mumbai • Goa Shipyard Ltd., Goa In addition to above, the Indian Navy maintains Naval Dockyards at Mumbai and Vishakapatnam. The Ministry of Shipping, Government of India also has three large shipyards for shipbuilding and ship-repair activities. The following three CPSUs are Joint stock companies registered under the companies Act, 1956 • Cochin Shipyard Ltd., Kerala • Hindustan Shipyard Ltd., Vishakapatnam • Hoogly Dock and Port Engineers Ltd., Kolkata
Cochin Shipyard Ltd CSL is the largest Shipyard in India. Incorporated in March 29, 1972, the yard is designed to construct ship of size upto 1,10,000 DWT and repair ships up to a single ship capacity of 1,25,000 DWT (Panamax type) bulk carriers and four Crude Oil tankers. The yard has so far repaired more than 1,000 ships of various types. This is the only shipyard with ISO-9001 accreditation for ship building, ship repair and Marine Engineering Training.
Hindustan Shipyard Ltd HSL, Vishakapatnam, established in 1941, is the oldest shipyard in the country. It was nationalized in 1962. The Shipyard has capacity to build 3½ Pioneer class vessel each having a capacity of 21,500 DWT and can undertake repair of ships upto a capacity of 70,000 DWT. HSL has an exclusive off-shore platform construction yard capable of constructing two platforms per annum. HCL was awarded ISO-9001 certification by Lloyds Register of Quality Assurance, London for international standard of Quality Assurance.
Hooghly Dock and Port Engineers Ltd HDPEL became a CPSU in 1984. It can build special ships like passenger vessels, supply vessels, dredgers, tugs, floating dry dock, fishing trawlers etc. It can repair 125 ships per annum and is equipped to produce 1100 Tons per annum.
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5.9
PUBLIC SYSTEMS MANAGEMENT
CHARTERING
The Chartering wing (TRANSCHART) of the Ministry of Shipping is responsible for the existing policy of the Government for finalization of all import contracts on FOB/FAS basis in respect of Government owned/controlled cargo on behalf of the central Government Departments/State Government Departments/PSUs. The shipping arrangements under FOB imports are centralized in the Catering Wing of the Ministry of Shipping. The services of the Chartering wing are also available to the private sector.
5.10 CIVIL AVIATION The Government of India, Ministry of Civil Aviation is responsible for the following functions: • Formulation of National Policies and Programmes for development and regulation of Civil Aviation • Devising and implementing schemes for orderly growth of civil Air transport of adequate capacity and class. • Overseeing the provision of airport facilities, air traffic services, aviation safety and security and carriage of passenger and goods by air. • Ensuring safety in air traffic operation Accordingly the civil aviation sector has four main functional divisions as follows: • Regulatory • Infrastructural • Operational • Human Resources Development
5.11 REGULATORY FUNCTIONS The machineries installed for regulating functions of civil aviation include the following organizations: • Directorate General of Civil Aviation (DGCA) • Research & Development Directorate of DGCA • Bureau of Civil Aviation Security (BCAS) The responsibilities and functions of such organizations are indicated below:
Directorate General of Civil Aviation DGCA is responsible for the following functions: • Regulation of Air-transport services to /from and within India in accordance with provisions of the Aircraft Rules, 1937 • Licensing of pilots, air crafts maintenance Engineers and monitoring of flight crew standard • Registration of civil air crafts • Co-ordination of the work relating to International civil aviation organization
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131
• Investigations of minor Air accidents and incidence and rendering technical assistance to the courts/committees of Inquiry appointed by the Government • Supervision of Training activities of Flying/Gliding clubs. • Licensing of aerodromes and air carriers. • Rendering advice to the Government on matters pertaining to air transport including bilateral Air services agreement with foreign countries. • Development of light air craft, gliders and winches • Laying down air worthiness to air craft • Processing amendments to the Aircraft Act, 1934 and the Aircraft Rules 1937 and other acts relating to aviation, with a view to implementing in India the provisions of the Chicago conventions • Type certification of Air craft.
Research and Development R & D Directorate of DGCA is responsible for the following: • Type certification of civil aircraft, engines, propellers and type approval of instruments, avoinics and equipment. • Approval of modification and repair scheme of civil aircraft • Development and testing of indigenous aircraft materials, parts and equipments. • Scientific laboratory investigation of in service failed aircraft/power plant/structural parts and components. • Airworthiness cum operational monitoring of recording of cockpit voice recorders and flight data recorders of Aircraft operated by various operators and providing assistance to inquiry commission on accidents to decode the recorders to establish the cause of the accident. • Quality control monitoring and testing of fuel/oil samples including those from aircraft used by VIP • Economics of Aircraft operation and performance evaluation • Development of data for checking of Airworthiness/design codes etc. • Approval of design organizations, involved in designing air craft/components and their renewals. • Human Resources Development on airworthiness Engineering.
Bureau of Civil Aviation Security The function of this bureau has assumed significant importance with increase in rate of Aircraft hijacking and continuous threats from terrorist organizations to blow out flights along with passengers and crew members. The bureau headed by the commissioner of Security (Civil Aviation), a Police Officer of the rank of Director General of Police (DGP), is the appropriate authority for civil aviation security in India. The functions of the BCAS are as follows:
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PUBLIC SYSTEMS MANAGEMENT
• Allocation of the tasks for implementation of the National Civil Aviation Security programme amongst agencies in the country, airports Administration and other concerned. • Passport control and Security control • Control of Airport entry permits to all persons.
5.12 INFASTRUCTURAL FUNCTIONS This function consists of providing information about weather including weather report and weather forecasts in all regions of the country and all time of the day and providing facilities for maintenance of continuous communication link with Aircraft of all description, its safe take off and landing. The metrological offices, under the Government of India, provide weather report and weather forecast. The Government of India formed the Airport Authority of India Ltd. a Central Public Sector Undertaking With effect from April, 1995 to provide following services for Aviation: • Providing safe, efficient air traffic services, communication and navigational aids at Airports. • Plan, develop, construct and maintain runway, taxiway, apron, terminal building etc. in Airports. • Provide Air-safety services of all descriptions • Arrange for search and rescue facilities in co-ordination with other agencies and other functions as described in the AAI Act. The authority manages 126 airports including 11 international, 86 domestic airports and 29 civil enclaves at defence airfields. It controls and manages the entire Indian space extending beyond territorial limits of the country, as accepted by the International civil aviation organization (ICAO).
5.13 OPERATIONAL FUNCTIONS Till middle of 1980s, the Government of India was having monopoly in civil aviation both in domestic sector and in International flights. Figure 5.2 will show various operating organizations under the ministry of civil aviation.
Note: This is not a status chart Figure 5.2 Airlines under the Control of the Government of India.
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133
Indian Airlines (IA) is the major domestic Airline in the country today. Indian Airlines operates to 58 domestic stations with its wholly owned subsidiary Alliance Air. Indian Airlines also operates to 17 international stations. Air India (AI) owns a fleet of 18 aircrafts and has inducted one B 747-400 and eleven A310-300 Aircrafts on dry lease basis. It operates 189 flights per week serving 41 stations (28 international and 13 domestic). During 2003-04, AI carried approximately 3.8 million passengers on its scheduled flights. Since inception in 1985, Pawan Hans Helicoptors Ltd. (PHHL) has operated number of helicopters by offering wide range of services to its clients through a well balanced fleet of 31 helicopters. PHAL is a leader in India in providing off-shore helicopter services.
5.14 HUMAN RESOURCES DEVELOPMENT Operation and expansion of civil aviation demands Institutes of appropriate capacity and class for training of personnel. Till 1980s, the private Flying clubs in various locations in the country used to be the centers for training of pilots. There were no structured training programmes for manning of infrastructural facilities and civil aviation safety and security. The Government of India promoted the following training centers for development of personnel for development of civil aviation:
Indira Gandhi Rashtriya Uran Academy This is an autonomous body under the ministry of civil aviation established to provide opportunity to trained pilots to achieve higher standards in flying and ground training. Located at Fursatganj, UP IGRUA pioneered the B.Sc. (Aviation) course for the first time in India concurrently running with Commercial Pilots Licence (CPL) course.
Management of Airports The Airport Authority of India Ltd. (AAI) maintains three HRD centers at three different establishments as below: • Civil Aviation training college at Allahabad imparts training on operational areas like Air traffic control, radars, communications etc. • National Institute of Aviation Management and Research (NIAMAR) at Delhi imparts training in management and refresher courses • Fire service training school at Narayanpur, Kolkata and the Fire training center at New Delhi imparts training on fire fighting rescue services.
Training on Aviation Security The BCAS has a training cum Demonstration center, equipped with latest audio-visual training aids at its New Delhi head quarter. This imparts training for aviation security (AVSEC) for the staff of Airport operators, Airline operators, Air taxi operators and Airport security units.
5.15 EXPANSION OF CIVIL AVIATION ACTIVITIES Expansion of Economic activities demands rapid growth of civil aviation. This is possible with active participation of private entrepreneur and commercialization of civil aviation activities. The Government of India as principal facilitator has taken up the following activities:
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PUBLIC SYSTEMS MANAGEMENT
• To end the monopoly of IA and AI and allow participation of private companies to operate on schedule Routes, the Government of India repealed the Air Corporation Act, 1953. The policy on domestic air transport service was approved in April 1997 according to which barriers to entry and exit from this sector have been removed. As on date at least three private Airlines have been permitted to operate in various domestic route including the trunk routes. Permissions have been granted to another two private airlines to operate in domestic routes. M/s. Sahara Airlines and Jet Airways have been permitted to fly in some international routes also. • To help Indian exporter and make their exports competitive, the Government had introduced” OPEN SKY POLICY” in April 1999 for cargo. Under this policy foreign Airlines or association of exporters can bring any freighters to the country for upliftment of cargo. The Government has allowed market forces to determine cargo tariff with IATA rates as the floor rates. • As on May 31, 2004, India has bilateral Air Services Agreement with 100 countries. During the period under reference, private domestic scheduled operators (PDSO) were permitted to commence operations to SAARC countries. • Under the liberalized Transit Charter guidelines, Indian Passport holders are permitted to travel by tourist charters flights under inclusive tourist package (ITP). The ITP charter flights can operate to any airport in India without any limitation on frequency of flights provided customs and immigration facilities are available in such Airports. • The Government of India has approved restructuring of Delhi and Mumbai Airports by adopting the Joint Venture route. Restructuring of Kolkata Airport is on the envil. • A greenfield International Airport at Devanahalli.near Bangalore is being implemented under build-own operate (BOO) basis with public private participation. • A Green field international Airport at Hyderabad was approved by the state Government for construction by a consortium led by GMR Infrastructure Ltd. With Malaysian Airport Holding Berhard (MAHB) as developers at Shamshabad.
5.16 FUTURE OF CIVIL AVIATION IN INDIA Recent statistics have established that number of passengers in domestic flights is registering double digit growth. Seat occupancy rate in International Flights to and from India is growing fast. All these facts confirm that the civil aviation Industry is growing rapidly. Again the Government has given Industry Status to Tourism and prepared a perspective plan upto the year 2020 for phased development of tourism in the country. This is going to have a multiplier effect on civil aviation sector. As on date there are at least four airlines operators including Indian Airlines in the domestic sector. Two additional private airlines have been permitted to fly in domestic routes. The Indian Airlines, a CPSU, have introduced flexi fares to compete in the market. The private Airline operators have come up with different product packages including introduction of frequent flyers cards, concessional Air-tickets, Tour-packages etc. to give value added services to customers at affordable price. Innovative financing for acquisition/ use of Air crafts have been introduced including leased financing of Air-crafts, chartering of Air-crafts etc. to make the Industry more competitive.
$ MANAGEMENT OF POWER SECTOR IN INDIA
6.0
BLUE PRINT FOR POWER SECTOR IN INDIA
Since independence in 1947, electricity-generating capacity has been increased from 1362 MW to 100,000 MW. However, there are widespread shortages of power in almost all parts of the country. The government is now committed to supply electricity to all Indian citizens by 2012 at an affordable price. This included supply of grid quality electric power to about 1800 villages, where grid power cannot reach. Accordingly sector wise generating capacity addition targets have been firmed up as shown in table 6.1 below for aggregate capacity addition of 1,07,000 MW by 2012. Table 6.1 All figures in MW 10th Plan
11th Plan
Total
23000
23500
46500
210
1500
1710
• Department of Atomic Energy
1220
5160
6380
• Ministry of Non Conventional Energy Sources
4055
6625
10680
28485
36785
65270
Total State Sector
8300
10600
18900
Total Private Sector
9400
13500
22900
46000
61000
107000
Central Sector • Ministry of Power • Ministry of Coal
Total Central Sector
Overall Capacity Addition (approx.)
Source: Blue print for power sector development, Ministry of power, Govt. of India.
It could be observed from above that the Govt. will continue to play a major role in augmenting additional generating capacity, although private sector will increase their participation. A Significant feature of this long-range plan is addition of an aggregate generating capacity of 10,680 MW through non-conventional energy resources. This is indicative of possible decentralized operation of power system with RES. 135
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PUBLIC SYSTEMS MANAGEMENT
The major reasons for inadequate, erratic and unreliable power supply were established to the following: (i) Inadequate generation capacity (ii) Lack of optimum utilization of the existing generation capacity. (iii) Inadequate inter-regional transmission links. (iv) Inadequate and ageing sub-transmission and distribution network leading to power cut and load failure/faults. (v) Large scale theft and skewed tariff structures. (vi) Slow pace of rural electrification. (vii) Inefficient use of electricity by the end users. For augmentation of additional capacity, the essential resource planning is being carried out. For optimum capacity utilization of existing generating units, the short term measures being taken include supply of surplus captive power to the grid, improved generation through renovation , modernization, improvement in plant load factor (PLF), capacity creation through energy conservation and demand side management and time zones planning. The energy conservation bill 2000 has been accepted by the Parliament. The planned target for increased capacity of inter-regional links is indicated in table 6.2 below. Table 6.2 Year
Cumulative capacity of inter-regional link in MW
2001
4,800
2003
7,800
2007
14,000
2012
30,000
Source: Blue print for power sector development, Ministry of power, Govt. of India.
It was established that commercially viable and self sustaining state utilities are the key to power sector development. It was observed that as on March 31,2001 the aggregated losses of all state Electricity Boards (SEB) reached Rs. 20,000 crores. Subsequently these SEBs, who are the main power purchasers, could not pay to the power generating companies, the railway and the coal companies. The inability of SEBs to pay has been the basic reason for poor private investment, inspite of liberalization of policies. The SEB’s financial health was necessarily required to be improved. Distribution of electricity was found to be the weakest link in the chain of power supply. Accordingly distribution reform has been identified as the key area in the power sector reform process. To hasten the reform process, the Government has taken steps to introduce draft Electricity Bill in the Parliament. The proposed bill will replace the Indian Electricity Act, 1910, Electricity (supply) Act, 1948 & the Electricity Regulatory commissions Act, 1998. The main features of the proposed Electricity bill are as follows: • Generation free from licensing • Setting up of regulatory commissions is mandatory for Granting of licenses for Transmission & distribution.
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137
• Tariff setting by Regulatory commissions • Promotion of competition and efficiency • Dispute resolutions • Open access in transmission. • Role of central Electricity Authority (CEA) is to be redefined • All supplies are to be metered • Progressive reduction of cross subsidy • Stringent penalties against theft • Re-organization of State Electricity Boards. In the recent past, the Electricity Bill has been approved by the Government. Subsequently most of the SEBs have initiated steps to unbundle their operations to form several independent public sector companies. The unbundling model will initially create independent generating company(s), distribution companies and Transmission Company. This independent state owned companies would be governed by the companies Act, 1956. The prices for sale of bulk power, retail power and wheeling charges for these companies would be finalized by the respective Regulatory commission. As part of development strategy, the Govt. was pursuing the policy of administering prices of all types of conventional commercial energy sources. With adoption of liberalized economic policy in July 1991, the government gradually de-regulated and de-administered the prices of all types of commercial energy resources. As on March 2004, large scale disinvestment of Government equity in public sector companies in the oil, gas and power sector has been taken on hand, prices of liquid hydrocarbon, were allowed to be fixed based on market forces and prices of electricity were allowed to be settled by the Regulatory commission.
6.1 WASTAGES OF ENERGY After the discovery of fossil fuels, people on earth surface realized its importance for improving living condition of human-being. Subsequently technology was developed for mining of such energy resources and conversion of same for human consumption. In this paragraph, a brief over-view has been made to identify various wastages and losses of energy which takes place from the stage of mining of this natural resources to the point of consumption. It could be seen that more conversion and more handling of such mined fuel will add to loss/wastage of energy. Technically such losses and wastages are quantified by the term efficiency. The losses being incurred in transportation of mined fuels from the point of mining to the point of utilization has been briefly discussed. The losses incurred in generation, transmission distribution and utilization processes have been identified and discussed. When potential energy is converted into kinetic energy for human use, a portion of the energy gets wasted and could not be used by human. Such wastages were also observed when one form of energy is converted into a second form of energy. Wastages also takes place during transportation of energy. Such wastages are referred to as “LOSSES” in technical terms. Subsequently, efficiency of conversion and/or transportation could be worked out. In mathematical term
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PUBLIC SYSTEMS MANAGEMENT
Efficiency E =
=
Output Input Output Output + Losses
6.2 EFFICIENCY The factor efficiency is the indicator of superior technology in any process. In working out efficiency of any system, it is therefore necessary to identify the losses and measurement of the same. Identification and quantification of losses in any process would indicate the factors responsible for incurring of such wastages and their relation with output of the process. This would determine if such losses are controllable or uncontrollable. As indicated above, efficiency is a “RATIO” and therefore has no unit. It is normally expressed in percent. There are processes which operate in series. As shown in Fig. 6.1 below. Coal
BOILER
Steam
Rotational ENGINE
Energy
Electric Generator
Electrical Energy
Fig. 6.1
The above figure shows a simplified line diagram in which the potential energy reserved in coal has been transformed into Electrical energy in three stages. In the first stage potential energy in coal is converted into kinetic energy in the form of steam in a boiler. Here the input is coal energy and output is steam energy. If e1 is the efficiency of this process, then e1 =
Heat Equivalent of Output Steam Heat Equivalent of Input Coal
...(1)
In the second stage kinetic energy in steam is converted to rotational kinetic energy through an engine. The efficiency e2 is given by e2 =
Heat Equivalent of Rotational Energy Heat Equivalent of Steam Energy
...(2)
In the final stage, the rotational energy is converted into electrical energy via Generator. The efficiency e3 is given by e3 =
Heat Equivalent of Electrical Energy Heat Equivalent of Rotational Energy
...(3)
The efficiency of the total system e is given by e =
Heat Equivalent of Electrical Energy Heat Equivalent of Input Coal
...(4)
From the above four equations, we get e = e1.e2.e3
...(5)
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This follows that if a conversion-transmission-distribution process of energy consists of “n” number of processes all connected in series, then the combined efficiency of the entire system E is given by E = e1.e2.e3…..en Thus if more number of conversions are in series, lower will be the efficiency of the system.
6.3 TRANSPORTATION OF ENERGY RESOURCES Mining of fossil fuel requires substantial quantity of work, power, energy and money. A large number of persons and machines are required to be engaged for mining operations. This calls for substantial amount of commercial energy mainly in the form of electrical energy to operate machines for mining of fossil fuels. After mining operations, the raw fuel is required to be raised on the surface and then transported to the place of conversion then to the place of utilization. This calls for power and energy. The fluid fossil fuels could normally be transported from the place of mining to the place of refining/utilization through under-ground pipelines. These pipelines are equipped with a number of energy consuming equipment including the booster pumping stations which add to losses of energy. Coal is transported either through Railway Wagon or through water transport or through surface transport to the place of utilization. This requires spending of commercial energy in terms of running of Railway locomotives or water transport or the diesel engine driven heavy trucks. Again the coal has ash content. It is seen that ash content of Indian coal has been increasing. Subsequently, transportation of such coal with high ash content would be energy inefficient and costly. If the ash content in coal is 35% and if transportation of “M” Ton of coal requires “K” Kilo-litres of diesel, then fuel consumption per unit weight transportation of coal energy will work out to (K/(0.65M)). Thus transportation of coal with large ash content is energy in-efficient and un-economic. In many cases, where the point of conversion of coal is not far from the point of mining, conveyor systems and/or aerial rope-way systems are used. Operation of such bulk material handling equipment calls for sophisticated electro-mechanical equipment, which consumes sufficient quantity of electrical energy. Consumptions of such electrical energy add to losses. Sometime, inland water transport systems are used for transportation of coal. Such system calls for usage of either coal or liquid fossil fuel for running of the water transport. Crude oil is often required to be transported across the sea in accordance with international business and trade. This is normally carried out by large oil tankers and bulk carriers. Such ocean going vessels operate with diesel engine. It is seen that a sizeable portion of mined fossil fuel and/or purchased fossil fuel is converted into electrical energy for ease of transportation and end usages. Transportation of electricity in bulk is carried out through transmission lines. The transmission line may be underground cable or overhead line. Electrical energy is reached to consumption center/point through distribution net work, which may be made of underground cable or overhead line. It is to be noted that such transportation of electrical energy results sizeable quantity of energy losses in the total conveying system. The single line diagram below indicates, the type of transportation being followed for movement of fossil fuel.
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Type of Transportation For Fossil Fuel
Coal & Lignite
Crude oil Under ground pipe lines
Under sea pipe lines
Natural Gas Under ground pipe lines
Under sea pipe lines Ocean going vessels
Ocean going vessels
Railway wagons
Railway wagons
Road Transport
Road Transport
Conveyor Aerial Systems Ropeways
Railway wagons
Hand Road Carts Transport
Inland water Transport
Ocean going vessels
Wastages of Energy could be systematically studied by studying the individual processes of generation, transmission, distribution and utilization of Energy. Subsequently the wastages in each of these processes could be grouped under technical wastages and commercial wastages. Again the wastages may be in-built in the process or it may arise out of usages. In-built wastages arise from faulty design and selection of energy inefficient equipment and/ or system. Wastages in usages arise from faulty operation and maintenance of the plant and/or the system. The technical losses are mostly controllable factors and depend upon equipment selection, location, operation, maintenance etc. The commercial wastages are functions of sociopolitical environment. We would now discuss wastages in electric power generation, transmission, distribution and utilization.
6.4 GENERATION LOSSES Waste of energy in generating stations arises from low efficiency of conversion, consumption at generating station and commercial losses. The commercial losses arise from short receipt of fuel, low quality of fuel compared to agreed declared quality, pilferage of fuel at the generating station, bad storage of fuel, unauthorized power tapping from the generating station etc. The technical losses constitute low efficiency of conversion and high consumption of energy at Generating Station. The nett out-put power of a generating Station is given by Nett output = (Gross out-put Power at Generator Terminals) – (Auxiliary Consumption) – (Losses in Main Power Transformers)
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Gross output power at generator terminals is a function of combustion efficiency of the steam generator, efficiency of the prime-mover, efficiency of the electrical generator and also the coupling efficiency. The efficiency of combustion is dependant upon temperature of the input water, calorific value and ash content of the fuel used, efficiency of burner management and quality and type of heat insulators used. Heat loss arising out of convection and radiation plays a significant role in determination of thermal efficiency of a steam generator. Subsequently possible leakage of steam from the pipe lines are also a source for reduction of thermal efficiency of a boiler. Wastages/rejects from the fuel bunkers are required to be minimized. These are mainly dependant upon design parameters of the boiler although some portion depends upon quality of maintenance and operation. The efficiency of primemover is dependant upon blade angle loss in the turbine, friction and wind age losses and velocity and pressure of steam. The turbine is coupled to the electric generator for transmission of rotational power. Depending upon design and installation of a turbo-generator set the coupling efficiency could be increased to add to the systems efficiency. The generator while delivering electrical power suffers electrical and mechanical losses. The mechanical losses constitute friction, windage and noise losses. The electrical losses include the core loss and copper loss. Core loss constitutes hysterisis loss and eddy current loss. The core loss is independent of load and is a constant factor. This is sometime referred to as No-load loss. The copper loss is dependant upon load and is a function of square of the load. All these losses constitute design criterion and care is necessary at the time of selection of capital equipment. Mathematically, efficiency of a generator is given by E =
Output Output + Core Loss + Copper Loss
As core loss is constant at all levels of out-put and as copper loss is proportional to square of output. E = where
T T + K + CT2
T = Output K = core loss = constant C = an arbitrary constant
The efficiency will be maximum, when
Or when Or when Or when
dE =0 dT
(T + K + CT2 ).1 − T(1 + 2CT) dE =0 = (T + K + CT2 )2 dT
T + K + CT2 = T + 2CT2 CT2 = K
This means efficiency of the generator would be maximum, when core loss becomes equal to copper loss.
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At maximum (efficiency) the output is given by T =
K C
Subsequently the maximum efficiency is given by Emax =
T T + 2K
This expression holds good for all electrical machines. The power transformer which transforms generated voltage to a higher value for long distance transmission also suffers core loss, copper loss and noise loss. In selection of generator and transformer capacity, a study of the load pattern is a matter of necessity for determination of output and specifying of loss components such that the machines could operate at maximum efficiency for maximum time during operation. For bulk power transmission, the electrical losses in the main power transformer are substantial. It is, therefore, recommended that large power transformers are made energy efficient and it should be designed for giving maximum efficiency at 98% to 99% of its rated output for best Asset utilization. The type and rating of station auxiliary transformer depends upon the type of power station. Normally a generation voltage of 11, 000 volts has been standardized. The station auxiliaries mostly run on 415 volts although large fan motors or pump motors sometime operate at 6,600 volts. The supplies to this auxiliary equipment are normally given from a station auxiliary transformer of adequate capacity and class. For hydroelectric power station, the station auxiliary power mainly constitute lighting, cooling and heating. However, thermal power stations consume large auxiliary powers for operation of different systems. A recent study indicated following statistics in respect of station auxiliary power consumption. State/Place
Auxiliary Power Consumption as a percent of Gross Generation Power
All India
7.2
West Bengal
10.2
Punjab
4.6
Andhra Pradesh
4.8
The auxiliary power consumption is largely dependant upon mix of power stations, station load factor, choice of original equipment and maintenance and operation of the plant. The station auxiliaries of thermal power plants consist of auxiliaries for intake water, water treatment plant, water cooling plant, auxiliaries for fuel handling, storage, fuel processing and feeding, power required for air circuit including the induced draft fans and the forced draft fans, power for ash handling besides power for lighting, heating and cooling. Thermal power plants require large volume of water for its operation. Water is normally obtained from nearby streams and/or water is obtained from below the ground. In both the cases large motor drive pump sets and associated pipe lines are required to be installed. The water thus obtained is to be treated in a water treatment plant for production of demineralized water which could be fed to the boiler. The entire input water circuit consumes large power for operation of intake pump house, boiler feed pumps and the water treatment plants. The expanded steam after leaving the turbine is required to be artificially cooled which requires a small quantity of power for operation of cooling tower and/or cooling pond. Modern coal based super thermal power station receives coal through special purpose BOBYN/
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BOBR wagons which are fitted with door operated bottom discharge mechanism to discharge large quantity of coal in shortest possible time even when the wagon is on the move in the coal yard. Such coal is handled in the power station coal yard by stacker, reclaimer and coal loader which consumes large quantity of electric power for operation. The coal handling plant (CHP) constitute large coal conveyor, coal crusher, screens of different capacity and class before the coal is sent to coal mill for pulverization. The entire coal handling systems operate on electric power. The CHP employs large number of medium capacity electric motor which aggregates substantial amount of electric power. The coal mill employs large size electric motor. The ID Fan and the FD Fan may be more than one per boiler and are generally operated by large capacity induction motors. The ash handling plant requires large electric power for operation of the Electro-static precipitator (ESP), clinker grinder, and the slurry pumps. In addition to above auxiliaries, a small quantity of power is also required for the oil-handling plant when the thermal plant was required to operate on fuel oil. The load for station lighting, air-conditioning and heating is substantial. All these power comes via the station auxiliary transformers whose operating efficiency also adds to the station auxiliary power consumption.
6.5 TRANSMISSION AND DISTRIBUTION LOSSES This comprises loss of electric power while the same was being transmitted from the point of generation to the load centers. India is a sub-continent with vast land and a large population. The power stations are normally located near the water sources and/or the sources of fuel. Subsequently, the consumption centres are far away from these generating stations requiring extra high voltage transmission lines for transportation of power. A recent study showed that system losses of power produced is maximum in India and Bangladesh. System losses refer to loss of electric power in transmission and distribution system. The Table below shows system losses in some selected countries. Country
System Losses in Electric Power (% of Total Output)
Bangladesh
32
Pakistan
17
Sri Lanka
17
Mexico
14
Thailand
10
Malayasia
9
USA
8
UK
8
Canada
7
China
7
Germany
2
Source: World Development Report, 1996.
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The losses constitute commercial losses and also technical losses in transmission and distribution of electric power. Electric power is normally distributed in 415 volts, 6600 volts and 11,000 volts. The bulk power that could be transmitted depends upon the power systems stability. Systems stability has become a complex subject because of formation of large power grid. Such power grid is connected to large number of power stations having different characteristics. Subsequently the power that could be transmitted under stable condition would depend upon a large number of mechanical and electrical parameters connected to the system. The electrical parameters amongst others include the voltages at the sending end and at the receiving end, phase difference between these two voltages and the reactance of the entire system, which are considered essential parameters for determination of the quanta of power that could be transmitted under stable condition. The reactance of the system include the reactance of the synchronous generator, the reactance of the power transformer and the reactance of the transmission line. Length of the transmission line is directly proportional to line reactance. The line reactance is a vector sum of inductive reactance and the capacitive reactance. Again reactance is a function of systems frequency. The power that could be transmitted under stable condition is inversely proportional to the systems reactance. Thus the length of the transmission line and the system frequency determines the amount of power that should be transmitted and the voltage of transmission. Normally larger is the length of transmission, greater would be the transmission voltage. In India transmission voltage of 132 KV, 220 KV and 400 KV have been adopted. In some countries in Europe, DC transmission systems have been adopted for transfer of bulk power under stable condition. When the length of transmission line, voltage of transmission and the power being transmitted is determined, the transmission systems could be designed and constructed. The transmission loss generally constitute corona less, No lead loss, copper loss, seepage loss, loss in series capacitor, if any and loss in conversion equipment. The corona loss is a function of voltage of transmission. It also depends upon line conductor’s surface smoothness and weather condition. The no-load loss which constitute charging power of the line is constant. The copper loss is proportional to the square of the power being transmitted. It depends upon the resistance of the system. Again line resistance depends upon skin effect. Skin effect increases with increase in frequency. The skin effect increases resistance of the system and hence the copper loss increases. Seepage loss constitutes the power loss through the insulators. It is dependent on smoothness of insulator surface and the weather condition. Smoothness of insulator surface depends upon maintenance and up-keep of the transmission equipment. In long distance transmission line, sometime series capacitors are installed to reduce system reactance and transmit bulk power under stable condition. Such capacitor banks always have some loss component, which adds to system losses. Direct current transmission system calls for installation of conversion equipment at the sending end and inversion equipment at the receiving end. Such equipment also have loss components which adds to the transmission system. Again the power transformer at the receiving end adds to the transmission losses. Sometime bulk power is required to be transmitted through underground and/or under water cable lines. Such Extra high voltage cables are of specialized construction and costly. However, losses in such type of transmission are considerably low because of presence of parallel capacitive reactance throughout the run of the cable length.
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Distribution of power is carried out from substation through distributors. The bulktransmitted power after stepping down at the receiving station is fed to different substations located at various load centers. These sub-stations might be large or small and might be placed on surface or may be on poles above the surface depending upon the load requirement. In India, electric power has been distributed at voltages like 33 KV, 11 KV, 6.6 KV and at 440/415 volts. Bulk consumers like large integrated steel plants, Fertilizer plants, petroleum Refineries etc takes power at 33 KV. A large number of medium scale industries take power at 11 KV and/or at 6.6 KV, whereas small industries, commercial establishments, large apartment houses take power at 415 volts. The domestic power is taken at 220volts between one phase and the earth in a 3-phase 4 wire system of distribution. As said earlier, the distribution network requires more than one number of transformations in series. This requirement results more electrical losses in transformers and the distribution lines. Figure 6.2 below indicates Radial type distribution 11/132 KV
132/33 KV
Distribution at 33 KV Distribution at 11 KV
∼ Generator
Transmission Line
33/11 KV 11,000/415 Distribution at 415 Volt
Fig. 6.2
It would be observed that at least two distribution transformers viz the 33/11 KV transformer and the 11,000/415 volts transformers are in series. Subsequently the 415 volts distribution would have lower efficiency than 11 KV or 33 KV distribution systems. A distribution transformer unlike a power transformer may not operate at full load all the time. Normally a distribution transformer operates at partial load at most of the time of the day. Therefore for selecting a distribution transformer the losses should be specified to ensure that maximum efficiency of the transformer could be obtained at partial load only. The distributors may be of two types viz-Radial type as mentioned above and loop type or Ring main type. Distributor loss in the form of I2R loss is substantial. This could be minimized by reducing line resistance. Line resistance is proportional to resistivity of material used in line and inversely proportional to cross-sectional area of the line. Thus before installation of a distributor the choice of conductor should be judicious to reduce line resistance. Supply of power at low power factor through the distributors increases losses and reduces revenue. In a already constructed distribution line flow of power at high power factor should be ensured by connecting shunt capacitor banks. Commercial losses in distribution system were found to be maximum. This arises out of unauthorized tapping of power by consumer. This has now become a law and order problem and without active participation of the Government such pilferage of power could not be stopped. As Electric power distribution is a state subject, reduction on commercial losses depends upon the attitude of the concerned state Government.
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6.6 UTILISATION LOSSES For best utilization of fossil fuel for improving living standard of human, it is converted into electrical energy. The electrical energy could easily be transmitted and distributed up to the point of utilization, where it can be converted to other form of energy for consumption. Electricity could be converted into motive force, heat energy, light energy, sound energy, wind energy, magnetic energy etc. The efficiency of conversion indicates the losses. In addition a substantial quantity of converted energy is wasted during the process of consumption. Electricity has been used in traction, heating and welding, Electrolytic processes, Lighting, Air-conditioning, operating of fans, running of Air-compressor etc. Electrical energy was increasingly becoming popular for traction applications. The areas of operation amongst other includes locomotives, metro Railways, Aerial rope ways, electric trolley buses, Tramway, elevators, mine winders, long conveyors etc. All these equipment allows rapid movement of bulk cargo/material and human. The wastages included electrical losses in terms of conversion efficiency for conversion of AC system to DC system, transformation efficiency from one system voltage to other system voltage and/or in frequency conversion, wastages in the auxiliaries, losses in braking and speed control etc. The mechanical losses include friction loss, gearing and/or belting loss, braking loss etc. These are commonly known as systems losses and could be reduced at the design stage. However a substantial amount of wastages of energy in such systems arise during operation and maintenance. A sizeable amount of electrical energy gets wasted if it is used at low power factor. It is therefore essential to maintain a power-factor level of about 0.98 (Lag) capacitor banks. The mechanical losses include friction loss, gearing and / or belting loss breaking loss etc. These are commonly known as systems losses and could be reduced at the design stage. However a substantial amount of wastages of energy in such systems arise during operation and maintenance. A sizeable amount of electrical energy gets wasted if it is used at low power factor. It is therefore essential to maintain a power-factor level of about 0.98 (Lag). Shunt capacitor banks of adequate capacity and class are normally installed to compensate the adverse effect of low power factor. A substantial amount of energy is wasted in daily usages. Keeping open the door of refrigerator, keeping ON the lights, fans, room-coolers etc when you are not in the room adds to energy wastages. There are standard guide lines for conservation of energy in domestic sector, which when applied saves energy and money.
6.7 CONSERVATION OF ENERGY In this paragraph a brief outline has been given regarding the necessity for conservation of energy. It is observed that conservation of energy decelerates depletion rate of nonrenewable sources of energy and avoids further deterioration of environmental conditions. Energy Audit could be used as an effective tool for initiating a conservation programme. Conservation technique can be used as an instrument for demand management of energy. Demand management increases profitability. Conservation refers to preservation, prevention of loss, waste, damage etc of the energy. It has been established that mass-energy in the universe is constant. Conservation of energy
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therefore refers to preservation of natural non-renewable sources of energy and efficient utilization of same only for necessity. Conservation programme is a need for socio-economic considerations. Depletion of fossil fuels and increased consumption of energy would accelerate the gap between supply and demand of renewable sources of energy. This will cause price increase of energy resources if a substitute product is not available. This would affect economic development. On the other hand conversion of renewable natural resources would maintain ecology and environment, which will reduce social problems.
6.7A NEED FOR ENERGY CONSERVATION The Indian economy has grown from an average GDP growth of 3.5 percent in the seventies to more than 5.6 percent during eighties. Sectoral analysis indicates that the share of Agriculture sector in GDP has declined from 39.7 percent in 1970 to 29.5 percent in 1993, however the share of Industry sector in GDP has increased from 17.4 percent to 22 percent during the same period. The change in primary energy intensity of the economy during the period 1953-93 is given in Table 6.3 below: Table 6.3 Years
1953
1960
1970
1980
1990
1993
Non-Commercial energy
46.04
40.63
32.96
29.71
19.23
17.29
Commercial energy
18.39
21.55
22.57
26.89
28.75
29.73
TOTAL
64.34
62.18
55.53
56.60
47.98
47.02
Source: Planning commission, Govt. of India September 1996.
It can be observed from above that there was gradual decline of energy intensities during the 40 years period. This is mainly attributed to technological advancement in production of commercial energy. The co-efficient of elasticity of various forms of commercial energy consumption with respect to GDP at constant price is given in Table 6.4 below Table 6.4 Elasticity of Consumption with Respect to GDP
Total Commercial Energy
Period
Coal
Oil
Electricity
1953-54 to 1960-61
1.10
2.14
3.02
1.37
1960-61 to 1970-71
0.53
2.31
3.04
1.16
1970-71 to 1980-81
0.98
1.83
2.06
1.37
1980-81 to 1990-91
0.31
1.12
1.57
0.82
Source: Planning Commission, Government of India - 1992
The reduction in elasticity of consumption is mainly due to efficient conversion, improved plant load factor and gradual improvement in supply side and demand side management. It is estimated that coal accounts for 40 percent of the total commercial energy needs of the country. Again 70 percent of the total coal production originates from open cast mining. Transportation and combustion of coal lead to particulate and gaseous pollution. Open cast mining lead to land degradation, deforestation and social mitigation problems.
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The petroleum products accounts for 50 percent of total commercial energy requirement. The consumption of petroleum and diesel emits poisonous gases. Avoidance of such pollution is largely dependant on reduction in usages of such conventional non-renewable sources of energy and increased efficiency of conversion of such energy resources. This calls for conservation of energy and stress on use of renewable sources of energy. In India, the need for energy conservation was felt in early eighties. The Government of India accordingly initiated following policy decisions to promote the policy of conservation of Energy (i) In 1976, Petrolium conservation Action group, later known as petroleum conservation Research Association was established. (ii) In 1979, a working group on Energy policy was announced (iii) In 1981, an inter ministerial working group on utilization and conservation of energy was constituted. (iv)
In 1982, the Department of non-conventional energy was established
(v) In 1984, the department of power was identified as the nodal Agency for Energy conservation (vi) In 1989, the Government of India established the Energy Management center (vii) The Government allocated Rs. 1,000 crores in eighth five year plan (1992-97) for conservation of energy although a small amount of only Rs. 60 crores was released in actual practice. The objectives of PCRA include the following: • To create awareness among people • To promote R&D by use of efficient technologies, appliances, additives and devices • To promote inter-fuel substitution • To promote environmental protection • To provide training and technical advisory services.
6.8 CONSERVATION TECHNIQUE Energy in any form is consumed by an Individual. The individual person consumes energy directly and also indirectly through energy consuming industries. After adaptation of the open market policy in 1991, the Government of India is gradually minimizing subsidy in all sectors of economy. The production and pricing of four major forms of commercial energy viz coal; petroleum, natural gas and electricity which were under government control are being gradually relaxed in favour of market forces. Subsequently the energy producing agencies would face market competition. The market competition would be more severe with technological advancement towards inter-fuel substitution and rapid promotion of renewable form of alternative energy sources. Again stringent Environmental laws would necessitate additional capital expenses for the conversion process. All these factors would tend to increase market forces, shorten products life cycle and increase cost of conversion. To avoid possible loss of business and bankruptcy the energy generating and selling authority was required to reduce the cost of production. In an inflationary economy where input costs were increasing, conservation is the only route to reduce cost of production and at the same time fulfilling the legal obligations.
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The energy consuming industries were so long enjoying subsidized cheap commercial energy resources. The production of most of the items in India was regulated and controlled. Subsequently the cost of products used to be passed onto the consumer. With the adaptation of free market economy quality improvement, cost reduction and strict observance of environment protection Act has become necessity for economic survival of Industry. Cost of energy consumption constitutes one of the cognigible cost element of the total cost of production. Such energy cost could be kept under control and could be reduced by adopting conservation technique. Thus conservation of energy could be achieved by techno-economic methods. The economic factors governing conservation of energy constitute production, supply, demand, and pricing of energy. The demand is a function of income and taste of an household or an individual. In India production and pricing of four types of commercial energy resources are still under the control of the central Government. However, supply and demand of energy are not controlled by the Government. If energy prices are increased, the direct use of energy would come down in response. On the other hand, increased cost of production of energy using sector arising out of increase in prices of consumed energy are passed on to consumer in the form of higher prices. As a result their demand will get depressed. As a consequence of energy price increase, all other prices will tend to go up from cost side but tend to go down from demand side. The major variable which determines demand is income. Factor incomes are generated from production at all sectors of the economy, which determines profit rates and wage rate. Such change in wage rate affects income distribution. Therefore increase in prices of commercial energy is likely to push more persons particularly, in the non-organized sector of the economy, below the poverty line. Thus from economic and social point of view the route for conservation of all forms of non-renewable commercial form of energy is the best choice for sustainable development and growth of energy sector.
6.9 CONSERVATION IN ELECTRIC SUPPLY COMPANY Since mid-eighties economic, political, social, technological and supply factors have combined to change the electric supply company’s operating environment and its outlook for the future. Many companies are faced with staggering capital requirement, significant fluctuations in energy growth rates, decline financial performance and regulatory and consumer concern about rising prices. While demand side management is not a total cure for these difficulties, it provides the supply company with a number of additional alternatives. Demand side management is the planning and implementation of supply activities designed to influence customers’ use of electricity in a way that will produce desire changes in the supply company’s load shape curve. The programme generally included under the umbrella of demand side management are the following in particular: (i) Load management (ii) New uses (iii) Electrification (iv) customer generation (v) Adjustment in market share (vi) Strategic conservation.
6.10 ENERGY AUDIT Energy audit is a tool for Energy conservation. Energy demand is not an exception to the economic theory of limited means and unlimited demand. Energy cost is a significant factor in economic activity at par with land, labour and capital. The demand for energy is increasing. On the other hand energy resources are becoming scarce and costlier. This steady increase in gap calls for energy conservation. This is possible through systematic
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approach towards present trend of energy consumption through Energy Audit and application of modern techniques and methods for minimizing energy wastages.
6.11 NEED FOR ENERGY AUDIT Energy Audit is a vital link in the entire management chain. It is an effective tool in defining and pursuing comprehensive energy management programmes. Energy Audit acts as an instrument in energy cost optimization, pollution reduction, safety and identifies methods for improving operating performance and maintenance practices in an organization. The objectives of Energy Audit could be mentioned as follows: • Identifying the quality and cost of various energy inputs • Assessing current pattern of energy consumption in different cost centers of operation • Relating energy inputs and production out put • Identification of potential areas of thermal and electrical energy economy • Highlighting wastages in major areas • Fixing energy saving potential targets for individual cost centers • Implementation of measures for energy conservation and realization of saving Energy Audit has been broadly classified into two categories • Preliminary Energy Audit • Detail Energy Audit
6.12 ENERGY INTENSITY Energy intensity refers to the quantity of energy consumed per unit of real GDP created. Analysis in the trend of energy intensity calls for energy intensity changes because of structured and behavioural changes and separately for improved technical efficiency. The energy intensity is closely linked to economies of scale, technology, instrumentation and controls, structured changes, Government policy and end users taste. The energy intensive industries include iron & Steel, Fertilizer, Textiles, cement, paper and pulp, Aluminum, glass, sugar and refineries. Energy subsidy, particularly those encouraging energy consumption by keeping the energy prices low, impose a burden on economic efficiency, environmental pollution, Government budget and increase in energy intensities. Conservation of energy leads to sustainable development. On May 26, 2003 the Electricity Act, 2003 was passed by the Govt. of India to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition there-in, protecting consumers interest and supply of electricity to all areas, rationalization of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and eco-friendly policies, constitution of central Electricity Authority, Regulatory commissions and establishment of Appellate Tribunal and for matters connected therewith or incidental thereto
6.13 POWER SECTOR DEVELOPMENT IN INDIA The toughest roadblock stalling power sector development in India has been the poor financial health of the State Electricity Boards (SEB). It was observed that out of total
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energy generated, only 55% is billed and 41% is realized .The gap between average revenue realization and average cost of supply has been constantly increasing. Poor financial health of SEBs has effectively blocked investments by private sector despite the enabling and encouraging framework laid down by the Government of India. The major factors responsible for financial sickness of SEBs are as follows: • Skewed tariff structure leading to unsustainable cross subsidies • Overstaffing • High Line Losses • Lack of commercial discipline • Inadequate Cost Recovery due to (a) Huge Transmission & Distribution Losses, largely due to outright theft and unmetered supply. (b) Lack of accountability in distribution (c) Inadequate investment in distribution systems over the years leading to their steady degradation.
6.14 NEED FOR POWER SECTOR REFORMS The main objectives of power sector reforms are: • Quality supply of Electricity at affordable and reasonable prices. • Provide Universal access • Depoliticisation of tariff setting and rationalisation of the tariff structure • Commercial and Financial Viability of the entities operating in the sector. • Transparency and accountability in all areas of operation. • Providing operational and financial autonomy to various entities operating in the sector. • Enable investment in generation, transmission and distribution of Energy as per requirement. The Reform measures in various States have focused on the following • Setting up of an independent and autonomous Regulatory mechanism to determine tariffs, promote efficiency and competition and protect the interest of consumers. • Strict enforcement of Electricity Laws, prevention of power theft, installation of metered supply for all consumers, 100% billing and revenue collection. • Unbundling of the SEBs into separate entities for generation, transmission and distribution, corporatisation of the same under the Companies Act. • Increased investment in up-gradation of the distribution infrastructure. • Privatization of the Generation and Distribution companies
6.15 POWER SECTOR REFORM People have misconception about Reforms & Restructuring of Power sector in India. Some persons feel that Reform & Restructuring (R&R) is just an alternate terminology of
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globalization, liberalization and privatization. The misrepresentation continued in following areas also: • R&R is a World Bank and IMF dictum. • R&R is for the (Global) consultants of the consultants and by the consultants. • R&R is meant for rich urban and industrial consumers and against poor rural and agricultural consumers. • R&R is nothing but a strategy for upward revision of electricity tariff. In the background of above misconception in the minds of general public, power sector reform became a matter of necessity such that the Power utilities becomes financially viable for future growth. The following broad criteria would justify why Reform & Restructuring in Power Sector has become necessary. The State Electricity Boards (SEBs) handle almost the entire distribution activity in the country. Distribution sector continues to be the weakest link in the power sector due to various populist measures, such as • A very high distribution loss • Quality of services continued to be unsatisfactory. • Metering-Billing-Collection of Revenue (M-B-C) functions have become grossly inefficient making SEBs financially weak. • Growth came to near stand still in spite of opportunity both in Public sector and in private sector. • Government of India’s private power policy continued to be a non-starter. • Need felt for a driving force which could bring changes.
6.16 OBJECTIVE, ROLE AND RESPONSIBILITIES OF SEBS In successive Industrial Policy Resolutions starting with the Policy of 1948, the Government of India mentioned that the SEBs were the vehicles of growth. Section 18 of the Electricity (Supply) Act, 1918 specifies, among others the first duty of the Board that “The Board has to arrange in co-ordination with the Generating companies/Licencees, if any, operating in the state, for the supply of Electricity that may be required within the state and for the transmission and distribution of the same in the most efficient and economical manner with particular reference to those areas which are not for the time being supplied or adequately supplied with electricity”. During past five (5) decades SEBs had been solely instrumental in bringing electricity to the doorstep of common man. It has provided input for industry, trade, commerce and agricultural sector in a positive direction. Social responsibilities of SEBs necessitated taking of populist measures. Monopolistic attitude of SEB employees, administrative prices of electricity and Government policy to\operate SEBs as a part of department mounted huge losses for the SEBs. Subsequently the financial health of most of the SEBs deteriorated very fast. This phenomenon came as the main trouble for SEBs against modernization and expansion of activities.
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6.17 REFORM PROCESS Reform is not structured change nor financial restructuring nor corporatization/ privatization of the power sector. It is more importantly change in attitude of different stake holders. Figure 6.3 shows the Block Diagram of the reform process. The main requirement for a successful reform is to bring a significant change in the behavioural pattern of different stake holders connected with electric power as given below: Stake Holders
Attitudinal change
SEB/Successor companies
Focus on commercialization and business viability.
Employees
Acceptance of emerging work culture
Customers
Appreciation of commercialization efforts
Government
Reduced controls and involvement but continuance of support during transition phase
Regulator
Recognition of a transition period and need for delicate balancing
Reform process require board political consensus. Fig. 6.3.
6.18 RESTRUCTURING OPTIONS Theoretically there may be six different options for restructuring of the existing process of power generation, transmission and distribution by SEBs. Such re-engineering process of the existing SEB and the respective state Government is given hereunder in the form of model.
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Model 1 • • • •
Unbundled Generation, transmission and distribution (G-T-D) activities Multiple players in Generation & Distribution Single Transmission Company State Electricity Regulatory Commission (SERC)
This means that the SEBs might be restructured into number of generating companies and distribution companies, whereas there shall be only one Transmission Company. Installation of Regulator will bring autonomy in operation.
Model 2 • SEBs continues to be vertically integrated • SEBs are corporatised and arrangement made to disinvest equity gradually in favour of private sector. • SERC Rationalization of tariff on cost basis. If any subsidy is required it should come directly from the respective Government. This model recommends the concerned SEB to operate as a company under the companies Act, 1956. Therefore, at the initial stage the SEB will be restructured as company with 100 percent equity to be held by the concerned state Government. Over the years such equity shares might be dis-invested to private individuals/group of individuals as step towards corporatisation. The tariff shall be worked out on cost basis. If political compulsion calls for cross subsidy in tariff structure, the same shall be reimbursed by the state Government.
Model 3 • Unbundle G-T-D • SEB will be grid operator, but multiple GENCOS and DISCOMS • GENCOS would sell power directly to DISCOMS paying toll charge to SEB • SERC to fix bulk and retail tariff and toll charges This process of re-engineering demands unbundling of the SEB to form multiple generating companies and distribution companies. These companies would be initially 100 percent owned Public Sector enterprises of the state Government registered under Companies Act, 1956. The State Electricity Board will only operate as transporter of bulk power from generating station to the distribution company against wheeling charge. The price of bulk power sale, retail power sale and wheeling charges for transmission of bulk power would be fixed by the SREC.
Model 4 • • • •
SEBs retain existing generation and transmission functions Multiple DISCOMS New generation by IPP, new transmission systems by TV companies SERC
This model recommends that the distribution portion of the SEB be separated to form multiple distribution companies. These distribution companies would be initially 100% owned state Government Public Sector Undertakings and would be registered under the Companies
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155
Act, 1956. The SEBs would continue with generation and transmission of bulk power. The model suggested new companies in the areas of generation and transmission of bulk power. These companies would be incorporated under private initiative and would be registered under companies Act, 1956.
Model 5 • SEBs are converted into several Zonal Electricity Boards • Separate Transmission Company as independent system operator (ISO) • Corporatize the SEBs into holding company owning Transmission Company and the Zonal Electricity Boards • SERC This model suggests that unbundling of the SEBs should take place in stages. In the first stage the transmission system of the concerned SEB be separated to form a 100 percent state owned PSU. The SEBs generating portion and the distribution portion is divisionalised on geographical basis to form zonal electricity boards. A 100 percent government owned holding company is formed with subsidiaries zonal electricity boards and the transmission company. In the second stage the zonal electricity boards might be restructured and registered as per Companies Act, 1956. These 100 percent Government owned companies would thereafter disinvest for gradual privatization.
Model 6 • Unbundling of G-T-D functions with single or multiple players in each function. • Provision of supply companies to develop trading • Independent system operator (ISO) • SERC All these six options have many overlapping similarities but have two main common features viz. (a) Independent SERC (b) Privatization of the distribution function. The attitudinal changes of all the stakeholders connected with electricity generation, transmission and distribution, demands accountability in all sectors of operation. The reform processes suggested above would bring accountability in all divisions of electricity distribution. In most of the options a separate 100 percent owned Government Company for transmission of bulk power has been recommended. The revenue of the company for transmission of bulk power will be wheeling charge only. Thus profitability of such company will depend upon capacity utilization of the system and minimization of transmission loss. This again depends upon quality of maintenance of the system. Unbundling of the SEBs and formation of 100 percent owned state PSUs will give autonomy to these newly formed companies. Gradually, the state governments might like to sell their equity holdings in these companies and/or these companies might like to invite fresh new equity shares for further expansion and modernization. This process will bring accountability to these companies for giving a reasonable satisfactory Return on Investment (ROI) to the equity shareholders. This will call for efficiency and transparencies in operation in an economy where the prices of products are determined jointly by all stake holders where SERC will act as coordinating nodal Agency.
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6.19 ORGANIZATION STRUCTURE OF UNBUNDLED SEBs Figure 6.4 shows the organization structure of a state Electricity Board. It could be observed from above that the Chairman is responsible for all functions. Over the last five decades it was seen that the chairmen were either civil servants or technocrats. None of them was having any exposure to run an organization commercially. Subsequently most of the SEBs were operating with large trading losses and were mainly dependant upon the Government for budgetary support. This process of dependence on Government made all SEBs a hunting ground for politicians.
Fig. 6.4
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Unbundling of SEBs would generate the following 100 percent Government owned state PSUs. • Generating Company(ies) • Transmission Company • Distribution Company(ies) Figure 6.5 shows the proposed organization structure of a state public sector power development company at corporate level.
Figure 6.5 Organisation Structure of state public sector power development company at coporate Level.
Note: This is not a status chart. • Director (Project) looks after new Projects and Expansion. • Director (Operations) looks after running power stations including Repair, Maintence and Refurbishing • No of Class 3 and Class 4 staffs are as below: MDs Office
7
Personnel Dept
12
Finance Dept
12
Director (o)s Office
3
Director (p)s Office
3
Secretarys Dept and General Office
6
Total
43
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This shows that at corporate level the number of persons will be 85 as given below. Directors including MD
4
Officers
38
Non-Officers
43
Total
85
Figure 6.7 below shows the proposed organization structure of 4×60 MW coal based thermal power plant.
Fig. 6.7 Proposed Organization Charts of Coal Based Generating Plant Capacity : 4 × 60 MW
Note: This is not a Status Chart. Total Number of Employees Brief Particulars Officers
Number 40
NON- OFFICERS Turbine Operation
90
Boiler Operation
230
Coal Handling Operation
40
Ash Handling Sustem & Water Supply System
30
Control Room
10
Switch Yards
10
Stores
10
Supporting Staffs Including Crane Operator, Driver, Peon , Clerks
20
Total
480 Man power per MW Installed Capacity : 2
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This shows that manpower requirement per MW installed capacity is kept at 2 for coal based TPS. For large super thermal coal based TPS with latest state of the art technology the manpower per MW installed capacity will be lower. Figure 6.8 shows proposed organization structure at the corporate level of a Distribution company.
Fig. 6.8 Proposed Organisation structure at the Corporate Level of Discom
NOTE: This is not a status chart • Executive Director (Operation) Will be responsible for Maintenance ,Repair, New Connection and Revenue Collection • Executive Director (Commercial) will be responsible for Materials Management, Power Purchase, Liaison with Government and Regulatory Authorities, Revenue Intelligence, Corporate Plan and Energy Accounting. • General Manager (Finance) will be responsible for mopping up of Funds ,Accounting ,Statistics, MIS & Audit • General Manager (P & A) will be Responsible for Personnel, Administration, and HRD & Industrial Relations. The proposed organization structure at corporate level of a Transmission company (Transco) is given in Figure 6.9 below.
Fig. 6.9 Proposed Organisatin Structure at the corporate Level of a Transco.
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• The Executive Director (Operation) will be responsible for Maintenance and Repair of Existing Transmission Plants and Equipment for Transportation of Bulk Electrical Energy, New Construction and modernization and Systems Control Lines. • The Executive Director (Commercial) will be responsible for materials management, Marketing Management, Corporate Plan, liaison with Government and Regulatory Authorities and Energy Accounting. • The Executive Director (Finance) Will be responsible for mopping -up of Funds from within the Country and from Multi-lateral Agencies, Accounting, Statistics and MIS The General Manager (P & HRD) Will be responsible for personnel, Administration, HRD and Industrial Relations. This type of line management will produce accountability at all levels within an organization. It is observed from previous paragraph that most of the alternative models for restructuring of SEBs recommended that the (TRANSCOs) would remain as 100 percent Government owned PSU. The proposed organization structure at the operating level of a transmission company is given at Figure 6.10 below.
Fig. 6.10. Proposed Organization Structure at the Level of Executive Director (Operation) of a Transco.
Note: This is not a status chart. Figure 6.11 and figure 6.12 below show the proposed organization structures at the level of Executive Director (Commerical) of a TRANSCO and the proposed organization structure at the level of Executive Director (Operation) of a DISCOM respectively. These proposed organization structures would show that these new companies would need techno-commercial executives at all levels instead of only technical officers or Administrative personnel. Thus absorption of existing SEB officials into the proposed commercial companies will require extensive HRD and training of officials.
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Fig. 6.11. Proposed Organisation Structure at Level of Executive Director (Commercial) of a Transco.
Note : This is not a status chart.
Fig. 6.12. Proposed Organisation Structure at the Level of Executive Director (Operation) of a Discom.
Note : This is not a Status Chart.
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6.20 STATUS OF POWER SECTOR REFORM IN INDIA The states of Orissa, Haryana, Andhra Pradesh, Uttar Pradesh, Uttaranchal, Karnataka, Rajasthan, Madhya Pradesh, Delhi and Gujarat have enacted their state Reforms Acts, which provide, inter-alia, for unbundling/corporatisation of the SEBs, setting up of SERCS etc. The SEBs of Rajasthan, Delhi, Orissa, Haryana, Andhra Pradesh, Karnataka, Uttar Pradesh, Uttaranchal and Madhya Pradesh have been unbundled or corporatized. Distribution was privatized in the states of Orissa and Delhi. Twenty-three states have either constituted or notified the constitution of SERC, eighteen SERCs have issued tariff orders. Several states viz. Andhra Pradesh, Karnataka, Madhya Pradesh, Uttar Pradesh, West Bengal, Maharashtra, Kerala, Gujarat and Bihar have passed/drafted Anti-theft laws. The Government has introduced a Mega Power Policy to facilitate setting up of large sized thermal Power Plants in the country in order to derive the economics of scales. Power Trading Corporation (PTC) has been incorporated, for the purpose of buying power from mega power projects under long term Power Purchase Agreement (PPAs) and selling the same to the beneficiary states also under long term PPAs. Certain fiscal concessions were given to mega power projects to make the tariff cheaper. It is mentioned that 1000 MW super thermal power stations and 500 MW Hydel Power Plants would be eligible to get the mega project benefits.
% MANAGEMENT OF PUBLIC SECTOR UNDERTAKING
7.0 INDIAN INDUSTRIAL SCENE Ever since the publication of Dadabhai Naoroji’s “Poverty in India” in 1876, the need for social and economic justice was felt. Providing of social justice and basic necessity to all was also felt during the freedom movement. Because of resource constraints at the time, the need for planned co-ordinate economic development under Government guidance was felt essential. Accordingly, Five Year Plans were drawn up with effect from 1951. The Industrial Policy Resolution of 1948 called for a dynamic national policy directed to continuous increase in production by all possible means, side by side with measures to ensure equitable distribution. The policy encouraged free and fair participation of private industries. With the enunciation of Directive Principles of State Policy in January 1950 and with the acceptance in Parliament in 1954 of the desire to build a socialistic pattern of Society, the need for amplification of Industrial policy resulted in the Industrial Policy Resolution of 1956. This policy is based on the principle of reduction in disparities of income and wealth, prevention of monopolies and concentration of economic power, reduction in regional imbalances, improvement in living and working conditions etc. In fact, the policy, in a net shell enumerated the various social benefits required to be considered in granting industrial licenses. With the passage of time, it was observed that private industrial concerns were mainly concentrating on maximizing their return on investment and increasing assets in gross and willful violation of the policy and verdict of the Parliament in 1954. This led to compelling the Government to bring control on private industries with various instruments like MRTP Act, FERA etc with a view to accelerating the process of industrialization, promoting small and cottage industries and for betterment of rural landless labour as well as to curb utilization of public funds for financing of hoarding of food grains and other essential commodities. To fulfill the objective of building a socialistic pattern of society, the Government had to nationalize the Imperial Bank of India in 1955 and several other banks in phases. Some of the basic industries were also set up exclusively in the public sector. In the recent past, the Government made frantic attempts in all direction in order that the businessmen and the industrialists would reinvest their profits from their existing companies in such a manner that industrial growth rate would increase and unemployment/under-employment problem would be mitigated. Such attempt on the part of Government in terms of change in industrial policy did not produce purposeful results leading to building up of a strong parallel economy. The 163
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Government has recently made a pragmatic change in the industrial policy and has adopted fiscal and monetary measures for rapid industrialization in backward areas. The incentives include higher debts equity ratio, minimum promoters’ contribution, easy access to foreign technology and foreign exchange, easy availability of industrial infrastructure, subsidized land, factory shed, electricity and water, cash subsidy, assistance from the State Financial Corporations, larger cash credit facility from the nationalized banks, interest subsidy loans, exemption of statutory levies and even tax holidays. The Government had also allowed setting up of private industry in core sector as a major deviation from the industrial Policy Resolution of 1956. All these bold steps were taken by the Government for social benefit of the vastly populated rural sector and steps are likely to tell upon the revenue of the Government. But in spite of all such concessions, the private industrial growth in backward areas cannot be considered to have been the expectations. This is perhaps because of difference in basic objective between the industrialists and the socialist Government. On one hand when the Government has moved ahead for rural upliftment and industrialization, the problem of industrial sickness has taken multidimensional shape in existing private and Government industries. Thus, when the Government was about to take off for rapid industrialization with ploughed profit/gains from existing industry for providing social benefit in terms of providing job opportunities, improving living conditions of people etc; such diverse activities are throttling the industrial progress resulting in increased capital output ratio necessitating additional funds and hence more inflation. Presently, the Government is under two prong attack on industrialization. Firstly, the Government is under pressure to withdraw and/or at least modify MRTP Act, which is reportedly coming on way of large private investment. Secondly, the public sectors are under severe criticism for non-compliance to earn a satisfactory return on investment.
7.1 PUBLIC SECTOR UNDERTAKING Public Sector Undertakings: Public sector undertaking initially conceived to fulfill the dual objectives to act as an instrument for social and economic justice and secondly to act as a source of revenue for the State. With the passage of time, the public sector companies have expanded and/or multiplied with diverse activities. Accordingly the objective of such undertakings went on adding and will perhaps continue to add in the coming years. It is true that operation of such giant Government undertakings has resulted in creation of industrial infrastructure within the country. They are the main suppliers of essential raw materials to the consumer of private companies output and that they have at least opened up job opportunities, developed industries at rural level, etc. But their constraints remained with their inability to earn a satisfactory return on investment. A large number of factors could be attributed for such reasons some of the factors could be underlined as below: (a) Operational inefficiency resulting from backdated technology, productivity, uneconomic scale of operation etc. (b) Low demand for product resulting in stockpiling and un-remunerative prices. (c) Inadequate capital structure, high level of social cost and high rate of interest. Public Sector companies in this country originate from two distinct areas (i) taking over from the earlier colonial businessmen and/or taking over of sick industries (ii) building up of a new plant in accordance with the spirit of the 5 year plans.
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In case of take over, additional capital was necessary to make a unit viable and compatible with the objective of take over. It is seen that finance for such capital expenditure was shown as debt capital although the principal objective was not to maximize earning per share. Such increase in debt capital generates a strong tendency on the management to raise price of products with a view to reaching break-even at low volume of production resulting in further low demand and hence loss of production. To overcome such a vicious circle, it may be necessary to re-structure the capital of the undertaking. As the share capital and the debt capital comes from the same source, in the public sector companies, the cost of capital in both forms of financing should remain the same. Here lies the main difference between the basic philosophy of private company and a public sector company. The main objective of a private company is maximizing earning per share with a healthy growth. The earning per share is given by: E = where
(P − 1) . (1 − T) − D N
E = Earning per share P = Profit before interest and tax I = Interest T = Tax rate (%) D = Preference Dividend N = No of equity shares
The equation above indicates that an element of Debt-Capital is essential to maximize E. Now the cost of three types of capital is given by: Cost of Equity Capital =
Earning per Share Market Price per Share
Cost of Preference Capital =
Divident per Share Market Price per Share
Cost of Debt Capital = Rate of Interest (1 – Tax Rate) Thus, for a healthy company cost of Debt-Capital is much lower than other form of financing. This calls for a debt financing components in the Capital structure. The objective of public sector on the other hand is to maximize return on investment and not to maximize earning per share. It could be observed that most of the public sector companies are earning a satisfactory profit before interest, but the trading results show a loss mainly because of high interest burden, higher depreciation on Assets and finally on low Asset turnover ratio.
7.2
GROWTH OF PUBLIC SECTOR UNDERTAKING
Since 1956, there has been an impressive growth of Pubic Sector enterprises for production and dist5ribution of goods and services. Table 7.1 shows growth of Central Government Public Enterprises between 1951 and 2001.
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Table 7.1. Growth of Central Government Public Enterprises As at March 31
Number of Units
Investmen (Rs. crores)
1951
5
29
1961
47
950
1980
179
18,150
1990
244
99,330
2000
240
252,745
2001
242
274,114
Source: Public Enterprises Survey, 2000-2001, Government of India
It is seen from above that against only 5 units employing Rs. 29 crores as on 1951, the number of Public Sector enterprises (PSE) increased to 242 with investment of Rs. 274,114 crores. Table 7.2 below shows the pattern of investment in PSE by the Central Government. Table 7.2. Pattern of Investment in Central Public Sector Enterprises Type of Industry 1. 2.
Enterprises under construction
Investment in % of Total
8,089
3.6
Enterprises producing goods
181,499
66.2
Power
41,776
15.2
Steel
24,737
9.0
Coal & Lignite
28,692
10.5
Petroleum
25,880
9.4
Fertilizers
17,489
6.4
Chemicals & Pharmaceuticals
5,493
2.0
Minerals & Metals
4,711
1.7
Engineering
7,391
2.7
Textiles
16,691
6.2
Consumer Goods
4,202
1.5
Transportation Equipment
3,990
1.5
56
0.0
Enterprises Producing Services
84,525
30.8
Agro based industries 3.
Investment (Rs. crores)
Financial Services
51,273
18.7
Industrial Development & Consultancy Service
12,471
4.6
Transportation Services
6,995
3.1
Telecommunication Services
3,796
1.4
Other Services
9,990
3.6
274,114
100.0
Total
Source: Public Enterprises Survey 2000-2001, Government of India
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167
The above will show that the Government planned production sector as well as service sector. In the production sector maximum investment was made in Energy sector consisting of Power (15.2%), Coal and Lignite (10.5%) and Petroleum (9.4%). In the service sector about 60% of total service sector investment or 18.7% of total Government investment was made in financial services. Table 7.3 shows financial performance of Central Public Sector enterprises. Table 7.3. Financial Performance of Central Public Sector Enterprises (All figures are in Rs. Crores) Particulars
Financial Years 1991-92
1996-97
1997-98
1998-99
1999-00
237
236
236
235
232
Paid up Capital
53,000
69,800
72,000
76,900
82,400
Net Worth
60,300
113,900
135,100
148,100
161,100
118,000
231,200
249,900
265,100
303,400
13,700
30,900
37,200
39,700
42,400
Gross Profit to Capital employed (%)
12
13
15
15
14
Net Profit after Tax (PAT) to Net worth (%)
4
9
10
9
9
No. of Units
Capital Employed Gross Profits
Source: Economic Survey, Government of India, 2001-02.
It could be seen from above that compared to 1991-92, the performance of PSEs have inspired and stabilized from the financial year 1996-97. With adoption of open market policy in 1991-92 the Government of India wanted to exit from business in non-strategic areas. The SICA’85 has amended to include sick PSUs into the ambit of BIFR. This process was taking a long time, when the Government established the Ministry of Dis-investment as a route for privatization of PSEs. Table 7.4 below shows dis-investment in CPSUs. Table 7.4. Disinvestments in Central Public Sector Enterprises (All figures are in Rs. Crores) Financial year
Target
Actual
1991-92
2,500
3,038
1996-97
5,000
380
1997-98
4,800
902
1998-99
5,000
5,371
1999-2000
10,000
1,860
2000-01
10,000
1,871
2001-02
12,000
5,632
2002-03
12,000
3,348
2003-04
14,500
15,547
Source: Economic Survey, Government of India, 2003-04.
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It could be seen from above that the Government could not meet the target of disinvestments till 2002-03.
7.3 ROLE OF PUBLIC SECTOR IN ECONOMIC DEVELOPEMNT The public sector can be extended over a wide range of economic activities that tend to accelerate development. The importance of public sector lies in fulfilling the following objectives.
Public Utilities The establishment of public sector undertakings in the fields of road, sea and air transport, railways, electricity, water supply, postal, telegraph and telephone services benefits the development of the agricultural and industrial sectors of the economy. In fact, the timely creation of overhead capital through public undertakings facilitates investments in directly productive activities on the part of the private sector, which, in turn, lead to the rapid development of such economies.
Natural Resources For development, underdeveloped countries need to develop and conserve their natural resources in the most efficient manner. It is not that they do not possess them, but they are underutilized, unutilized or misutilized by private enterprise. The establishment of public undertakings in the field of mining, forestry, and fisheries, as the case may be, lead to their exploitation, the tapping of new sources, and research for harnessing them in an efficient manner. The production of minerals, in particular, leads to the building up of the domestic base for capital goods and also dispenses with imports of industrial raw material thereby saving foreign exchange.
Basic and Key Industries Further, in order to accelerate the rate of economic development, the establishment of basic and key industries like the iron and steel, heavy electricals, heavy chemicals, fertilizers, machine tools etc is essential. Such industries require huge investments and have long gestation periods. Private enterprise is, therefore, reluctant to undertake them. It is only when they are established in the public sector that rapid development takes place. The development of basic and key industries under the aegis of the state dispenses with the imports of machinery equipment and basic and intermediate goods, and ultimately leads the economy to the path of self-sustained growth.
Help Private Enterprise Moreover, heavy investments in economic and social overheads on the part of the state in establishing public undertakings create the necessary conditions for the expansion of the private sector. The formation of public undertakings like financial corporations, investment trusts, state banks, etc, helps in providing direct financial assistance by way of loans and credits to the private sector.
Exploitation in Trade Small producers in underdeveloped countries suffer from the lack of marketing organisation and intelligence. They are exploited by intermediaries and are not given remunerative prices for their products. The state can remove this exploitation by establishing
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public undertakings in the field of internal and external trade. When producers receive fair prices for their products they will tend to increase production. Moreover reasonable profits accruing to state trading corporations will be siphoned off to the treasury for investment in productive channels.
Indirect Benefits Besides, the public sector leads to a number of indirect benefits, which help the development of the economy. In underdeveloped countries unemployment is widespread. The setting up of public enterprises in different fields of economic activity leads to the employment of all types of labour-skilled and unskilled. Balanced economic development requires the location of pubic enterprises on priority basis in backward areas. Thus public undertakings lead to balanced regional development, increase the incomes of the people, improve their living standards, and cause an increase in their productive efficiency. The operation of public sector undertakings in a particular area creates the demands for such services as water, transport, electricity, education, housing etc. Moreover, the creation of demand on a large scale for various goods by the wage earners in such undertakings leads to the development of ancillary industries and trades, and small-scale industries. Certain public undertakings, which provide milk, water, drugs, fertilizer, gas postal transport services at low prices, have strong redistributional effects. The consumers are able to consume them more, spend less money on them and are left with a larger income for buying other goods and services. Besides, the creation of public undertakings in transport, electricity, gas, water, postal, telephone and telegraph services prevents the emergence of monopolies and concentration of wealth.
Source of Capital Formation Lastly, public sector enterprises are an important source of capital formation. When they are operated on profit-price policy like private undertakings, they earn sufficient profits, which can be partly ploughed back for reinvestment and partly for utilization by the state in other projects. The running of public undertakings on profit basis reduced the need for borrowing from external sources and debt servicing, and even dispenses with deficit financing. Surpluses accruing from these enterprises provide adequate funds for improvement, modernization, and expansion of the plants. Thus profits of public undertakings are an important source for the financing of economic development.
7.4 WORKING OF PUBLIC SECTOR UNDERTAKINGS The ‘secretariat culture’ brought by the initial band of civil service managers who manned the top and middle posts in the early years got enshrined in the public sector. Its effects were compounded by political interference often at ministerial level. At times both these elements came in conflict with elements representing industrial culture or professional management. A public sector enterprise is concerned with several Ministries and agencies in the Central Government and also with the parliament. The following are the major Ministries and agencies: 1. Administrative Ministry 2. Department of Expenditure (Ministry of Finance)
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3. Bureau of Public Enterprises (Ministry of Finance) 4. Planning Commission 5. Secretariat for Industrial Approvals (Ministry of Industry) 6. Capital Goods Committee (Ministry of Industry) 7. Foreign Investment Board (Ministry of Industry) 8. Directorate General of Technical Development (Ministry of Industry) 9. Department of Company Affairs (for those enterprises which are registered as Joint Stock Companies under the Companies Act) 10. Chief Controller of Imports & Exports (Ministry of Commerce) 11. Administrative Ministry
Administrative Ministry This is the primary point of contact between the enterprise and the Government. Some examples of an Administrative Ministry are the Ministry of Industry (for undertakings like Bharat Heavy Electricals Ltd, Hindustan Machine Tools & Hindustan Paper) Ministry of Steel and Mines (for undertakings like Steel Authority of India Ltd, National Mineral Development Corporation), Ministry of Commerce (for undertakings like State Trading Corporation and Minerals & Metals Trading Corporation); Ministry of Chemicals & Fertilizers (for undertakings like Fertilizers Corporation, Indian Drugs & Pharmaceuticals Ltd, Indian Petrochemicals Ltd), Department of Electronics (Electronic Corporation of India); Ministry of Agriculture (Food Corporation), Ministry of Shipping & Transport (Shipping Corporation), Ministry of Defense (GRSE Ltd). The Administrative Ministry is supposed to represent the President of India who owns almost the total share holding in the undertaking. Usually the Secretary of the Ministry holds a small number of shares to meet the requirements of registration as a private limited company. The President’s authority as shareholder is exercised by the Administrative Ministry. It stands at the top of the three-tier top management structure that has developed in the Indian public sector with its deep-rooted concepts of a colonial-type control. Below it is the Board of Directors on which the Government is represented by at least one officer from the Administrative Ministry, and one from, the Finance Ministry. Below the Board of Directors are the chief executives of the company (Managing Directors and functional Directors) some of whom may also be members of the Board. It is this general pattern, which has raised the very important question of Government control versus the autonomy of the undertaking, an issue that is still not satisfactorily solved. Autonomy has been accepted in principle. Indeed from the latest circulars and pronouncements on this subject it is apparent that today very considerable authority has been delegated by the Ministry to the enterprises under it. But in practice, thanks to the persistence of the “secretariat culture”, the Minister takes the final decision in a large number of cases on the advice of the Secretary. The prevailing hierarchical pattern of the Secretariat, the lack of clear conception of the scope of Government control, and the multiplicity of instruments cause further managerial problems. In theory, the Ministry exercises three general powers:
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1. Appointment of Chairman, Managing Director, Executive Directors and other members of the Board. In the initial years it was inevitable that in general Government officials were sent on deputation to fill these posts, and recruitment policies followed Government practices till the mid-sixties. There has also been the practice of appointing politicians as part-time Chairmen. An experiment was made with an Industrial Management Pool for recruiting a cadre of senior and middlelevel managers with commercial or industrial experience, but this was not followed up after the initial recruitment. After the Administrative Commission’s report the power of making all appointments below the Board level has been delegated to the enterprise itself. As regards higher-level appointments, in 1974, the Public Enterprises Selection Board (PSEB) was set up. It selects the Chairmen, the Managing Directors and the members of the Board after examining the records of applicants and interviewing them, and forwards these names to the Administrative Ministry, which appoints them after approval by the Appointments Committee of the Central Cabinet. The whole process tends to be long and time consuming and often vacancies in key posts continue for very long stretches causing dislocation of work in the enterprises and inviting public criticism. Apart from selecting members of the Board, the PESB is also associated with appraisal, training and personnel development programmes, the selection of first line managers and with the setting up of a data bank of suitable managerial candidates. 2. Approving the company’s capital budget, long-term borrowings and investment proposals. In this area of financial management the transplantation of the procedures and practices prevailing in the Government organisation has very adverse consequences. The founding fathers treated these enterprises largely as extensions of Government departments, a tradition that dies hard. Apart from too many accounts men serving as financial advisers or chief accounts officers, there is also the external financial control by the Ministry, in concert with the Ministry of Finance, and through the statutory audit and the audit board of the Controller & Auditor-General. It is only very recently that performance audit has been introduced. 3. Issuing general directions on the enterprise from time to time in national interest. The Articles of Association of nearly all the public sector companies contain an article to this effect. Apart from these three general powers, the Ministry also exercises three other functions in relation to the Parliament: 4. Laying down before the two Houses of the Parliament an annual report on the working of the enterprise, and piloting the discussion that may follow. 5. Dealing with the Parliamentary Committee on Public Undertakings (COPU); this has now emerged as the Parliament’s major agency for overseeing the performance of the public sector enterprises. Every year the Committee takes up 7 or 8 enterprises for examination. Its recommendations are considered by the Administrative Ministry, and suitable instructions are issued for the guidance of the enterprise concerned. It also conducts functional studies in areas such as material management, financial management, personnel management, industrial relations etc. The Ministry has to act as the via media or buffer between the undertaking on the one hand and the COPU on the other. The other Parliamentary bodies, which also get involved with
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public enterprises from time to time, are the Public Accounts Committee and the Estimates Committee. 6. Answering questions relating to the enterprise in Parliament. In the past MPs were sometimes known to ask questions which imposed unnecessary burden on the enterprise management and the Ministry, or impinged on the internal autonomy of the enterprise. After careful consideration Government has now issued guidelines under which the following types of questions should be disallowed: (i) Questions relating to day-to-day administration of the Public Enterprise. (ii) Questions which tend to throw work on the Ministries and the Public Enterprise incommensurate with the result to be obtained there from. (iii) Questions which seek to obtain information, which the Members may obtain directly by addressing the managements of the Enterprises. Questions identical to those, which have already been answered, and questions seeking statistical information which is normally available in the published documents, or annual reports etc. are also to be normally disallowed. In some industries the Administrative Ministry also exercise some measure of price and distribution control. This depends on the nature of the industry and its products. Such control, wherever it exists, operates for both public sector and private sector undertakings in the relevant industry. The Administrative Ministry is also expected to maintain an overview of the undertaking’s overall performance through periodical performance review meetings, briefing by Government directors, and effective method of reports and returns, and periodic joint appraisals with the Bureau of Public Enterprises. How effective this system is varies from Ministry to Ministry depending largely on the personality of the Minister, the Secretary and the Chief Executive of the enterprise. In 1980s, the Government came with the concept of holding company to keep the operating Public sector company at arms distancing from the Administrative Ministry. Accordingly the following holding companies were incorporated. Coal India Ltd (CIL) was incorporated with registered office at Calcutta and with ten (10) subsidiary companies. Bharat Bhari Udyog Nigam Ltd (BBUNL) was incorporated with ten (10) subsidiary companies. BBUNL’s registered office is at Calcutta. Bharat Yantra Nigam Ltd (BYNL) was incorporated with seven (7) subsidiary companies. Its registered office is located at Allahabad. However, the Board of Directors of all the subsidiary companies and the holding company was appointed by the Government. This minimized the objective for which the holding company concept was introduced.
Board of Directors The normal pattern of a Board is that it includes the Chairman, the Managing Director (nowadays they are usually the same person), one or more full time functional directors, officials representing the Administrative Ministry, Ministry of Finance, sometimes one or two other related Ministries and lastly one or two non-officials selected on account of their
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expertise or business experience. The question remains whether the Government should not go increasingly for functional boards by promoting key officials from the enterprise to the Board level so that the Board becomes a more cohesive and effective committee of management of the undertaking subject to whatever policy guidelines the Ministry may issue. Whether it is necessary to have representatives from Ministries on the public sector company’s board, as a general routine, is open to question. This might have been necessary in the early formative years of the public sector, or still now in exceptional cases where the work of the enterprise is of such nature that closes daily contact with the Ministry is essential. But as a general pattern this does not seem to serve much useful purpose. Some of the Government officials sit on too many boards doing justice neither to the boards nor to their own function s in the Secretariat. Quite often they do not have time to do the basic homework needed for effective participation in the boardroom deliberations. Thus their membership tends to be superfluous and non-functional. On the other hand their presence inhibits the management of the enterprise and adds to the normal duties of the senior functionaries which even otherwise are quiet heavy. This practice does not facilitate the emergence of an autonomous enterprise management with initiative and operating effectiveness and yet at the same time responsible and responsive to Government guidelines and policies.
7.5 ORGANISATION STRUCTURE OF CENTRAL PUBLIC SECTOR COMPANIES In this chapter, the suggested organization structure of various types of CPSU has been discussed. Organization structure is a dynamic process and depends upon objective of the organization. In this paragraph the organization structure of CPSU registered under companies Act, 1956 has been briefly discussed. The CPSU demands public Accountability and transparency in its operation besides the socio-economic objectives laid down by the Government from time to time. The organization structure of a large heavy Engineering Central Public Sector company (CPSU) is given below as Fig. 7.1.
Fig. 7.1. Organization Structure of a Multi-Unit large Heavy Engineering Company
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In this case, the Director (Operation) is required to look after the entire conversion process in the organization from various manufacturing units headed by a General Manager. The finance is considered to be centrally controlled because of its scarcity. Man management being a sensitive issue in a popular country like India, the same is controlled centrally. Figure 7.2 below shows the organization structure of a holding company along with the organization structure of a subsidiary company.
Fig. 7.2. Organization structure of a holding company.
Note : This is not a status chart. Organization structure of a subsidiary company.
Note : This is not a status chart. It could be seen from above that the subsidiary companies are having their own independent Board of Directors, where CMD of the holding company is an ex-officio nonexecutive member. The CMD of the holding company serves as ex-officio non-executive chairman in the board of the subsidiary company. It could be seen from above that the Managing Director of subsidiary companies are independent and are reporting to the Government regarding function of their companies. The CMD of the holding company as exofficio chairman of the subsidiary company only presides over the Board meeting of the subsidiary company. Some of the CPSUs have started re-structuring their organization based on the principle of MBO. In such cases, the entire organization has been divisionalised based on products/ function etc and each division has been made to run independently as profit center. The profit center heads are given total independence in operation right from the stage of arranging of inputs to marketing. The central office coordinates among various division for inter unit transfer of goods and services at transfer cost and ensuring that the Assets of the organization as a whole is fully utilized for optimization of return on investment (ROI).
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7.6 FUTURE OF PUBLIC SECTOR COMPANIES IN INDIA The working of Public undertaking has revealed several defects, which have been pointed out from time to time by the Estimates committees, and the committee in Pubic sector undertakings of the Parliament. The Government has established capital intensive industries like Steel Plant, Heavy Engineering, Heavy Electricals, Heavy Machine Tools, Petroleum, etc without appropriate demand survey and without carrying out proper project appraisal. These projects are having long gestation period. The capacity of such giant plants is mostly under utilized. This phenomenon, mainly contributed to operating losses. In 1998-99, 104 units had capacity utilization of more than 75 percent, 65 units between 50-75 percent, and 55 units below 50 percent. Most of the undertakings were built or modernized without any feasibilities study, project report and financial appraisal. Subsequently, there was faulty planning, which is responsible for time over run and cost over run of new projects. In fact because of faulty planning, the Haldia Fertilizer plant under Hindustan Fertilizers Corporation Ltd could not continue with commercial production and had to be closed down. Faulty planning and incompletely conceived project of modernization of the Kankinara plant of Tyre Corporation of India Ltd could not generate surplus till date although the employment was tapered and the existing employees are still facing a virtual salary freeze. Lack of management autonomy or commercial culture in PSU is the main reason for incurring operational loss. The Tyre Corporation of India Ltd (TCIL), Kolkata was granted budgetary support to the tune of Rs. 80 crores for modernization. The imported state of the art plant and machineries were installed, manpower was restructured but the company remained without a permanent paid Director since last six years. This shows lack of commercial culture with our secretariat. A serious defect in Public enterprises in India has been their inefficient management. While delivering the TTK Memorial Lecture on “Management of Industrial Change” on March 7, 1983 Dr. Manmohan Singh, the then Governor of reserve Bank of India (RBI), pointed out that the directors in some PSUs do not possess adequate experience and expertise to exercise their functions effectively. As per the Industrial Policy statement 1991, certain areas like Power generation, exploration, drilling and refining of oil and utilization of natural gas hitherto reserved for PSUs have been opened to both domestic and private enterprises. The India Government has allowed the Indian private sector to invest 100 percent in defense industry, restricting foreign equity to 26 percent. To remove frequent interference by the Government and ensure operational autonomy and accountability for results on the part of the PSU Management, the system of Memorandum of Understanding (MOU) has been introduced since 1989-90. The Government amended the sick industrial companies Act, 1985 (SICA’85) in December 1991 to bring sick PSUs under the preview of the Act. This makes mandatory for management of all sick PSUs for compulsory reference to the Board for Industrial and Financial Reconstruction (BIFR) for determination of measures to be adopted for BIFR registered sick companies. The BIFR ordered liquidation of a number of sick PSUs, who could not be revived, but this process took long time. During this long period, the production Assets in sick companies remained locked and could not be released for production purpose. The
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Government wanted to speed up the process of disinvestments in PSUs and decided to bring down its equity holding in all non-strategic PSUs to 26 percent or less from the year 19992000. A Ministry of Disinvestments was installed in place of Disinvestments Commission. During the period 1991-92 to 1998-99, disinvestments of Government Equity of Rs.18,698 crores had been realized. During the financial year 1999-2000 another Rs.1,829 crores were realized, although the union budget for 1999-2000 proposed to raise Rs.10,000 crores through disinvestments of PSU shares. To make PSUs more efficient and competitive, the Government has classified profit making PSUs into Navaratans and Mini Navaratans and granted them varied degree of autonomy. As on date there are 11 Navaratan PSUs like, IOC, MTNL. VSNL. BHEL, SAIL, GAIL etc. Subject to certain conditions, these companies have freedom to make capital expenditure, have joint ventures and set up subsidiary offices abroad for technological and strategic alliance. Mini-Ratans are those PSUs, which have earned profit continuously for last three years, have positive net worth, and have not defaulted in repayment of loans/interest to the Government and have not taken budgetary support from the Government since 1997. Such PSUs have been granted enhanced financial, managerial and operational autonomy subject to certain guide lines. A legal hurdle faced by management of PSUs in their daily activities arises from recognition by Hon’ble High Courts and Hon’ble Supreme Court of India that the PSUs are extended arm of the Government and they are Article 12 of the constitution of India. Subsequently all complainant could file a write petition under Article 226 of the Constitution of the country against any PSU to any High Court. This delays business decisions, which are detrimental to the interest of the company in an open market economy. The Government of India is gradually disinvesting in all Public Sector units. Equity shares of most of the Navaratan and mini-navaratan companies have been listed in various stock exchanges in the country. Equity shares of some of these companies are also traded abroad. It is hoped that care is taken to ensure that the equity shares of these companies are broad based instead of concentrating on a single individual or group of individuals. This will enable the Government to have control on such companies with minimum equity share holdings (say 26 percent) and the company will no longer be the extended arm of the Government. Public sector undertaking over the years has contributed to socio-economic development in India in terms of developing a large pool of technical and management manpower, development of backward areas, self sufficiency in Engineering and Technology and earning satisfactory return on investment in terms of profitability and dividend payment. The disinvestments route is generating large capital gains to the people of this country.
& MANAGEMENT OF POSTS AND TELEGRAPHS
8.0 The establishment of modern postal system in India can be traced back to the second half of 18th century, when Lord Clive introduced postal system at Calcutta in the year 1766. In the year 1774, Warren Hastings established Calcutta GPO under a Post Master General (PMG). GPO in Madras Presidency was established in 1786 and the Bombay GPO was established in 1793. The Act of 1837 first regulated the Post Office on a uniform basis to unite the three GPOs into one all India service. The Post Office Act of 1854 reformed the entire postal system and the post office of India was placed on Administrative footing from October 1, 1854.
8.1 POSTAL SERVICES Till later half of 19th century, the postal services included the following; • Communication Facilities • Facilities for remittance of Funds • Banking Services • Insurance Services After the Government adopted open market economy in 1991, the postal services developed rapidly. The Government allowed courier services by private entrepreneurs. Accordingly the Government of India established a Business Development Directorate in 1996 with the objective of marketing and promoting premium services for meeting the needs of customers. In the area of Posts the following products have been developed and offered.
Ordinary Mail Ordinary mails serve the need of large section of the population. This type of postal service could be done by Post Cards, Inland letters and stamped envelope. For speedy disposal of large volume of ordinary mail, pin codes are used. In many post offices separate mailboxes have been provided for local mail /outstation national mail/international mail for ease of sorting and accelerating delivery programme. Sometime such mails are sent duly registered from the sender post office and this is acknowledged as a legal document by an appropriate court of law.
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Speed Post This was introduced from August 1986 for delivery of letters, documents and parcels within a given time failing which full refund of postage is given to the customers.
Business Post This was launched with effect from January 1, 1997 to meet with specific needs of bulk customers. It provides value addition to all traditional services offered by the post in the form of collection, insertion, addressing, sending, franking etc.
Express Parcel Post This product seeks to produce a reliable and time bound parcel service through surface transport. It provides door-to-door delivery and value paid parcel (VPP) UPTO Rs.50000 to cater to corporate users and business establishments on contractual basis.
Media Post Under this facility, customers can use the following for their brand building exercise. • Advertisement on Post cards, Inland letters, Aerogramme and other postal stationary. • Space sponsorship options on letterboxes as well as mail motor vehicles.
Retail Post The department of Posts, through its vast network of 1.5 lakh Post Offices, offers to collect all public utility bills and sale of application form for Government and private organizations.
Greetings Post This product is introduced from September 2000. The greeting card comes with an envelope upon which a postage stamp is printed, which is miniature replica of the design of the card as well as the postage impression. This is beneficial to corporates who wish to brand their products.
Speed Net The Internet based track and trace service was launched on January 3, 2002. It provides tracking facility for speed post articles.
Philately Special and commemorative postage stamps issued by the Department of Posts cover a wide range of themes reflecting the rich natural and cultural heritage of India. Important national/international events, famous personalities, Institutions etc are honoured through the medium of commemorative postage stamps.
International Mails India has been a member of the Universal Postal Union (UPU) since 1876. India has also become a member of the Asia Pacific Postal Union (APPU) since 1964. These organizations aim at extending, facilitating and improving postal relations among member countries. Indian exchanges mail with more than 217 countries by air and surface. India has two way money order services with Nepal and Bhutan. British Postal orders and Irish Postal orders are encashable in selected Post Offices in India. Money can be
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remitted from selected foreign countries to India by way of money orders and postal orders. International EMS, which started in 1986 with five countries, is now extended to 97 countries.
8.2 FINANCIAL SERVICES Post Office Saving Bank Post Office Savings Bank (POSB) has a customer base of 14 crore account holders with annual deposits exceeding Rs.80,000 crores and a branch network of over 155,000 branches, which is double the size of all the banks put together. There are at least seven financial products retailed from Post Offices as below: • Savings Account Scheme • Recurring Deposit Scheme (RDS) • Time Deposit Schemes • Monthly Income Schemes (MIS) • Public Provident Fund (PPF) • Kisan Vikas Patra (KVP) • National Savings Certificates (NSC)
International Money Transfer Service This service is operated in association with a multinational company Western Union Financial Services International, provides customers the facility of receiving instantaneous remittances from more than 196 countries on real time basis.
Distribution of Mutual Funds and Securities Since February 2001, a growing network of nearly 220 post offices is distributing selected mutual funds and bonds.
Electronic Fund Transfer Launched in April 2001, this service leverages the VSAT network of the Department to facilitate end-to-end fund transfer by banks (UTI/IDBI/HDFC) on behalf of corporate sector as well as capital market.
Warrant Payment The scheme launched in January 2002, has facilitated redemption of over 73,000 dividend warrants of UTI and Citibank worth more than Rs.100 crores through the postal network.
Postal Life Insurance Postal Life Insurance (PLI) was introduced in 1884 as welfare measure for postal employees. Over the years, it has extended to the employees of Central/ State Government, Public Sector Undertakings, Universities, Government aided Institutes, nationalized Banks, Financial Institutions and Grameen Dak Sewaks of the Postal Department. PLI offers five insurance schemes as follows: (a) Suraksha
–
Whole Life Assurance
(b) Santosh
–
Endowment Assurance
(c) Suvidha
–
Convertible Whole Life Assurance
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(d) Sumangal
–
Anticipated Endowment Assurance
(e) Yugal Suraksha
–
Joint Endowment Assurance for couple
As on March 2003, total number of active Policies was 20,98,577. The Rural Postal Insurance (RPLI) was introduced by the PLI organization on March 24, 1995 to provide insurance cover at low premium to common man and weaker sections of the society in rural areas. There are five types of plans under RPLI as below: (a) Gram Suraksha
–
Whole Life Assurance
(b) Gram Suvidha
–
Convertible Whole Life Assurance
(c) Gram Santosh
–
Endowment Assurance
(d) Gram Sumangal
–
Anticipated Endowment Assurance
(e) Gram Priya
–
10 year Anticipated Endowment Assurance
As on March 31, 2003 the total number of Policies was 17,95,070.
8.3 TELECOMMUNICATIONS The telecommunication services were introduced in India soon after the invention of telegraphy and telephone. The first telegraph line between Calcutta and Diamond Harbour was introduced for commercial operation in 1851. As in the case of telegraph, telephone service was also introduced in Calcutta in 1881-82, barely six years after the invention of telephone. The telephone services in India have improved significantly after independence in 1947. The Industrial Policy Resolution, 1948 promulgated that Postal & Telegraph would be the sole monopoly of the Government. This was iterated in the Industrial Policy Resolution, 1956. Initially the telephone exchanges were of manual type, which were subsequently upgraded to Automatic electro-mechanical type telephone exchange. In last one and a half decade, a significant qualitative improvement has been brought about by inducting Digital Electronic Exchanges in the network on a large scale. The number of departmental exchanges which was 321 as on March 31,1948, has increased to 37,313 by May 2004. Today all telephone exchanges in the country are of electronic type. At the end of March 2004 the telecommunication assets in the country stood as below: Number of Telephone connections in the network
=
77.93 Millions
Number of Public Call Offices (PCO)
=
1.79 Millions
Number of Cellular Subscribers in India
=
21.17 Millions
Estimated growth rate of cellular Customer
=
1 Million/month
Number of Licenses in basic telecom Service in the private sector
=
49
Number of Licenses in basic telecom service in Public Sector
=
2
Number of Licenses in the area of Mobile telephone in Private sector
=
55
Number of Licenses in the area of Mobile telephone in Public sector
=
23
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Telephones connections (basic and Mobile) in private sector as percent of total telephone connection
=
41
Telephone connections (basic and Mobile) in public sector as percent of total telephone connection
=
59
Fullyautomatic International Subscriber Dialing (ISD) service is available to almost all the countries. As on May 31, 2004 a number of 31,686 stations have been connected to National Subscriber Dialing (NSD). Application of Satellite Communication and Submarine optic fibre links has helped to progress in the field of International communication. This has generated voice and non-voice telecom services. These services include data transmission, facsimile, mobile ratio, radio paging and leased line service. A dedicated packet switched Public data network with international access for computer communication services is also made available.
8.4 GROWTH OF POSTAL SERVICES In accordance with the Industrial Policy Resolutions 1948 and 1956, the Postal services in India witnessed growth under Government initiative. Table 8.1 shows the growth of post offices during the period 1948-2004. Table 8.1. Number of Post Offices during 1948-2004 Number of Post Offices
Growth in
Time
Rural
Urban
Total
Percent
31.3.1948
19,184
4,160
23,344
—
31.3.2004
139,280
16,557
158,837
680.42
Source: India 2005, Publication Division, Ministry of Information & Broadcasting, Government of India
The Department of Post employs about 5.71 lakhs employee equally divided between permanent employees and extra departmental employees. In 2004-05, the Department has incurred a revenue expenditure of Rs.5,508.51 crore with a revenue deficit of Rs.1,308.51 crore. The plan outlay for 2002-03 was only Rs.95 crore, which is 1.76 percent of the revenue expenditure. The entire plan outlay is funded through budgetary support. On an average a Post office serves an area of 21.09 square kilometer and a population of 6,602 persons. Post offices in rural areas are opened subject to satisfaction of norms regarding population, income and distance. Upto 85 percent of the cost of operating a post office in hilly, desert and inaccessible areas is subsidized. In normal rural areas, such subsidy is limited to 66.7 percent. Postal network consists of four categories of post offices as below: • Head Post Offices • Sub Post Offices • Extra Departmental sub-Post offices • Extra Departmental Branch Post offices. All post offices retail similar postal services, while delivery function is restricted to some offices.
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8.5 SOCIO ECONOMIC ISSUES OF POSTAL SERVICES Postal service is an essential Public system necessary for development and growth of business, trade and commerce. It is one of the powerful tools for increasing of social contacts. Till, 1980s the postal service was Government monopoly. With commercial use of computers and improvement in telecommunication, the importance of Postal services has been reduced but its growth continues. Such growth results from increased growth of business and trade and also for increased population. After adoption of open market economy by the Government of India in 1991, the Postal delivery system was opened to private sector. As a result a larger number of courier services offer mail delivery in any part of the world at least time and with a reasonable price. This is widely to reduce the revenue of Government owned Post offices, if the Government fails to cope up with such competition. This calls for innovative products and efficiency in services.
8.6 GROWTH AND ECONOMICS OF TELECOMMUNICATION SECTOR The Government is committed to make available reliable telecommunication facilities all over the country for use by general masses at affordable price. This important sector of Public Systems is essential for accelerated growth of economy and for increasing the size of the economy. Till 1990, this sector was the monopoly of the Government of India. The services were costly and highly unreliable. With adoption of open market policy in 1991, Telecommunication sector in India has undergone a series of structural and Institutional reform. The new Telecom Policy, 1999 has laid down the basic framework for future development and growth of telecommunication in the country. The major objectives envisaged in the tenth five year plan include the following: • Affordable and effective communication facilities to all citizens. • Provision of Universal service to all uncovered areas. • Building a modern and efficient telecommunication infrastructure to meet the convergence of telecom, IT and the media. • Transformation of the telecommunications sector to a greater competitive environment providing equal opportunity and level playing field for all the players. • Strengthening research and development efforts in the country. • Achieving efficiency and transparency in spectrum management. • Protecting Defence and security interest of the country. • Enabling Indian telecom companies to become truly global players. In pursuance of the New Telecom Policy (NTP) 1999, action was taken by the government of India to prepare a new comprehensive status to replace the Indian Telegraph Act, 1885 keeping in view the rapid convergence of telecom, computers, television and electronics. Accordingly the communication convergence bill 2001 was introduced in the Parliament on August 31, 2001.
Regulatory Framework in the Telecom Sector In early 1997, the Telecom Regulatory Authority of India (TRAI) was established to regulate the telecommunication services. The TRAI Act was amended for clarification and functions of the Regulation. A separate settlement body known as the Telecom Disputes settlement and Appellate Tribunal was constituted for expeditious settlement of disputes.
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Internet Services Internet services are opened for private participation since November 1998. Foreign equity upto 100 percent is permitted for Internet Service Providers (ISPs) without gateways and upto 74 percent is permitted for ISPs with gateways.
Other Service Providers Services like Tele-education, Tele-medicine, Tele-banking, call center etc, as defined in NTP-1999, are covered under Other Service Providers (OSPs). Only registration is required for specific service. There is no license fee. Call Centers/Business Process Outsourcing (BPOs) are permitted Internet at IPLC connectivity on the same local area Network (LAN).
FDI in Telecom Sector The total Foreign Direct Investment (FDI) received in the telecom sector from August 1991 upto January 2004 is Rs.9,872.5 crore.
Public Sector Undertakings The telephone system in India was operational as a Government Department. Since middle of 1980s the telephone systems have been brought under Public Sector Undertakings. These are separate companies registered under Companies Act, 1956. Table 8.2 below will indicate salient techno-commercial particulars of all Public Sector companies under the Ministry of Communications, Department of Telecommunication, Government of India. Table 8.2 Salient Techno-Commercial Particulars of PSUs Name of the Undertaking
Date of Incorporation
Bharat Sanchar Nigam Ltd (BSNL)
15/09/2000
Main Functions (i) Providing entire range of telecom services except inter national long distance service to the whole country excepting Delhi and Mumbai.
Status as on 31.3.2005 Paid up capital = Rs.12,500 crore. Fully owned by the Government of India. Work force: 3.6 Lakh
(ii) Providing countrywide cellular service (iii) Providing Internet telephony services Mahanagar Telephone Nigam Ltd (MTNL)
01/04/ 1986
Same as above but in Delhi and Mumbai
Paid up capital Rs.630 crore The Government of India holds 56.25%
Indian Telephone Industries (ITI)
1948
Manufacture of entire range of Telecom equipment
ITI has consolidated its diversification into IT and IT enabled services.
Telecommuni1978 cation Consultants India Ltd (TCIL) Videsh Sanchar Nigam Ltd (VSNL)
Telecom solutions from concept Paid up Capital: Rs.14.40 to completion crores. Net worth Rs.387.42 Crore With 26.12% Government holding, the Company was privatized from February 13, 2002
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It is said that after the Government adopted the liberalized economic policy in 1991, there was substandard degree of reform in the telecommunication sector. Till 1980s, the telecommunication industries were growing as Government monopoly. The services were scarce and quality as well as reliability of services was sub-standard and unsatisfactory. However, the department of telecommunication had to depend upon budgetary support from the Government of India for its sustenance. After liberalization of the economic policy in 1991, the department of telecom underwent major structural reform which resulted incorporation of BSNL and de-shackling of all the Public sectors under the Ministry of Posts & Telegraphs from bureaucratic control. Over the years, the Government equity holdings in some of these Public sector companies were reduced in stages. This resulted in total privatization of VSNL. Simultaneously more companies in the private sector could be attracted to tap the large market potential in the country. To regularize the business and make all services customer friendly TRAI was established. Today there are at least four companies for giving services to land telephone lines namely MTNL, BSNL, the house of Reliance and the house of Tatas. The technology adopted by these companies for the same services are different. This has improved quality and reliability of services, while reducing prices. Today a common person can afford to take a land telephone connection. In the field of mobile telephones, the number of service providers is increasing on a regular basis. Subsequently the quality and variety of services are increasing and prices are dropping to the advantage of consumers. The reform and restructure in the field of Posts & Telecommunications have helped the economy to increase at faster rate. This is one of the main ingredients for expansion of trade and commerce.
8.7 FUTURE OF POSTS AND TELEGRAPHS Global economy today is integrating with that of India. Apart from wider marketing opportunities, it has created access to advanced technology, faster output, and enhanced quality standards all at competitive prices. This has seen emergence of highly skilled workforce and a new professional management cadre as the driving force. All such achievement could be possible because of tremendous improvement and sea change in postal telecommunication services. With rapid advancement in space science and telecommunication technology, communication is going to be more reliable and cheap. This will lead to access of communication facilities to common man. This is going for an ever-increasing demand in the market. Subsequently more and more private entrepreneurs are going to invest in posts and telecommunication business. Subsequently private courier business will expand but Government Post offices would also continues duly reformed and restructured. However, Government control on telecommunication business would loosen over passage of time. This sector will stand emergence with new companies and closure of inefficient private organizations.
' MANAGEMENT OF EDUCATION
9.0 Education matters to industrial competitiveness at three distinct levels: Schools, Higher Education and Mover and Shaker higher education. School matters in providing basic literacy and numeracy for the general work force, and have the vital side effect of spreading attributes of efficiency, and planning which give factories a head start with their employees. Widespread numeracy and analytical abilities played a key role in Japan’s success - ideas to improve the operation of imported technology more often than not originating on the shop floor. The East Asian Mirade countries were particularly successful in providing widespread numeracy and literacy. It was not that these countries spent more on education than comparable countries; instead they gave a greater share of public spending to primary education. General higher technical education is also important, to provide all those engineers who can seek out the best technology, unpackage it effectively, fill in gaps in the package through local effort, and then adapt and improve the technology further. Finally the “Mover & Shaker” category is necessarily a small number of people, the people who make things happen.
9.1 EDUCATION—A PUBLIC SYSTEM Providing facilities for education is an essential component of socio-economic development process. A development process calls for human resources of adequate capacity and class to implement the plan. This requires work force, technologists, managers etc with competence to execute the development plan. Pre-independence India had not more than six undergraduate Engineering colleges, a few undergraduate medical colleges, not more than six universities and primary education around metropolitan towns only. These were considered sufficient to meet with the demand at that time. After independence planned socio-economic upliftment under a democratic government was planned. Such plan required engineers and technologists to meet with the construction boom. Engineers and technologists were also demanded for meeting with large volume of production commitment. The need for physicians and doctors increased to build a systematic health care structure in the country. Social reform process including social integration and population control calls for strengthening of primary education base. Thus educational infrastructure plays an important role in enlarging the size of the economy. The adoption of open market economy by the Government of India in 1991 and the structural change demanded large number of skilled man power to find fuel the planned 185
186
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growth. The emergence of information age and high rate of technological obsolesce in this area opened and widened requirement for manpower with high skill compatible with international standard. Thus education plays the vital role in socio-economic development of a country. In a country like India, where there is scarcity for material resources, but there are large number of persons willing to take education it is necessary to install an appropriate management system for optimum utilization of the assets created for education.
9.2 EDUCATION IN INDIA India invested in education in general and higher education in particular in the first decades of independence. While the focus of Indian Government spending on education has been primary education, especially in recent years, investment in higher education has also been significant. Higher education in India, as in most countries, was generally provided by the state. Since independence, the numbers show significant increase in higher education; the number of Universities increased from fifteen at independence to 250 in 2001 and 306 as on March 2004. Investing in higher education and scientific research has long been viewed as essential to the development process, though attempt to qualify their contribution to the actual growth experience across countries have been unsuccessful. India invested early and strongly in both higher education and scientific research, with the explicit objective of economic development. Before 1976, education was the exclusive responsibility of the states. The constitutional amendment of 1976, which included education in the concurrent list, was a far-reaching step. While the role and responsibility of the states in education remained largely unchanged, the union Government accepted a larger responsibility of reinforcing the national and integrative character of education, to maintain quality and standards including those of the teaching profession at all levels, and the study and monitoring of the educational requirements of the country. The Central Government annunciated National Policy on Education (NPE), 1986 and programme of Action (POA), 1986. This POA was updated in 1992. The modified policy envisages a national system of education to bring about uniformity in education, making adult education a mass movement, providing universal access, retention and quality in elementary education, synthesis of knowledge and inter-disciplinary research in higher education, starting more open universities in the states, strengthening of the All India Council of Technical Education (AICTE), encouraging sports, physical education, yoga and adoption of an effective evaluation method etc. Besides, a decentralized management structure had also been suggested to ensure popular participation in education. The NPE has recommended higher level of investment of at least 6 percent of national income in education.
9.3 PRIMARY EDUCATION IN INDIA The 86th Constitutional Amendment Bill, notified on December 13, 2002 provides for free and compulsory elementary education as a Fundamental Right, for all children in the age group of 6-14 years. This has now become an Act.
Elementary Education The scheme of Sarva Shiksha Abhiyan (SSA) was launched in 2001 to ensure that primary education is given to all Indian citizens by 2010.
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An education guarantee scheme and alternative and innovative Education (EGS & AIE) scheme has been introduced to bring out-of-school children in the fold of elementary education. The scheme envisages that child-wise planning is undertaken for each out of school child. The mid-day meal scheme was formally launched on August 15, 1995 to give a boost to Universalisation of primary education by increasing enrolment, attendance and retention and also improving nutritional status of children in primary classes studying in Government, Local Body and Government aided schools. The centrally sponsored District Primary Education Programme (DPEP) was launched in 1994 as a major initiative to revitalize the primary education system and to achieve the objective of universalisation of primary education. The DPEP has so far opened more than 1,60,000 new schools, including almost 84,000 alternative schooling (AS) centers. An innovative Project “LOK JUMBISH” with assistance from Swedish International Development Agency (SIDA) was launched in Rajasthan to achieve education for all through peoples’ mobilization and their participation. The SHIKSHA KARMI PROJECT aims at universalisation and qualitative improvement of primary education in remote and socioeconomically backward villages in Rajasthan with primary attention given to girls. The project identifies teacher absenteeism as a major obstacle in achieving the goal of Universalisation of Elementary Education (UEE). The Mahila Samakhya (Education for Women’s Equality) started in 1989 is a concrete programme for education and empowerment of women in rural areas, particularly of women from socially and economically marginalized group. It is being implemented in more than 13,000 villages in 60 districts of 9 states. The JANSHALA programme aims at making primary education more accessible and effective, especially for girls and children in deprived communities, marginalized group, SC/ST/ minorities, working children and children with specific needs. This programme is a collaborative effort of the Government of India and UN Agencies- DNDP, UNICEF, UNESCO, ILO etc.
Teacher Education A centrally sponsored scheme of Restructuring and Reorganization of Teacher Education was taken up by the Government in 1987. Its objective was to create a viable institutional Informative, academic and technical resource base for orientation, training and continuous upgradation of knowledge, competence and pedagogical skills of school teachers in the country.
National Council For Teacher Education The NCTE was established in August 1995 with a view to achieve planned and coordinated development of teacher education system throughout the country and to regulate and maintain properly the norms and standards of teacher education.
Quality Improvement in Schools The Government of India has decided to introduce a composite centrally sponsored scheme “Quality Improvement in Schools” by covering the following components: • National, Population Education Project (NPEP) • Environmental Orientation to School Education • Improvement of Science Education in Schools • Promotion of Yoga in schools
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The NPEP was launched with a view to institutionalize population education in the school education system. This is fully funded by United Nation’s Population Fund. The scheme for “Environmental Orientation to School Education” was initiated during 1988-89. In this scheme, voluntary agencies conduct experimental and innovative programmes aimed at promoting integration of educational programmes in schools with local environmental conditions. To promote scientific temperament among school children a centrally sponsored scheme “Improvement of Science Education in Schools” was launched in 1987-88. One of the important components of this scheme is participation of Indian schools at International Olympiads, viz. International Mathematical Olympiad (since 1989), International Physics Olympiad (since 1998), International Chemistry Olympiad (since 1999) and International Biology Olympiad (since 2000). Figure 9.1 shows progress of enrolment in elementary education in India between 195051 and 2002-03. It could be observed that 1,184 lakh persons were enrolled in elementary education during 2002-03 compared to only 192 lakh persons as on 1950-51.
Fig. 9.1
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189
The Government of India has established National Council of Educational Research and Training (NCERT) in September 1961 to advise the state and Central Governments on academic matters related to school education. The primary education and the secondary school education have also been kept open to private initiative.
9.4 HIGHER EDUCATION IN INDIA Higher education in India expanded well ahead of the demand for qualified people, leading to chronic educated unemployment. Table 9.1 shows growth in universities and university enrolment by state. Table 9.1. Number of UGC recognized Universities and Institutions. State
1947
2001
Enrolment 2000-01
Uttar Pradesh
5
21
1,141,364
West Bengal
1
11
449,908
Delhi
1
5
159,437
Tamilnadu
1
15
616,388
Orissa
1
8
286,927
Maharashtra
1
18
1,159,031
Kerala
1
7
223,476
Karnataka
1
13
552,290
Bihar
1
11
642,333
Andhra Pradesh
2
16
590,532
Madhya Pradesh
1
14
472,429
Others
0
54
1,706,120
16
193
8,000,235
Total
Source: UGC (2002) appendix I and IV
UGC shows the split in statement enrolment by faculty as given in Table 9.2 below: Table 9.2. Faculty wise Student Enrollment as on 2001-2001 Faculty
Total Enrollment in Number
Percentage of total
61,855
1
Arts including oriented learning
3,421,912
43
Commerce including Management
1,654,617
21
Education
135,369
2
Engineering & Technology
529,461
7
Law
273,319
3
Medicine
261,207
3
Agriculture
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PUBLIC SYSTEMS MANAGEMENT
Science
1,573,966
20
Veterinary
17,139
0
Others (including Music, Fine Arts etc)
72,090
1
8,000,935
100
Total Source: Appendix VI of UGC 2000-01
As on March 31, 2005, the number of different types of universities in India is presented in Table 9.3. Table 9.3. Number of Different Types of Universities in India as on March 31, 2005 Types of Universities
No.
Central Universities
=
18
State Universities
=
186
Institutions established under state legislation
=
89
Institutes of National Importance
=
13
Open Universities
=
9
Women Universities
=
5
(Source: India 2005, Government of India)
The enrollment of students in Universities and colleges is 88 Lakhs and number of teachers more than 4 lakhs.
9.5 HIGHER TECHNICAL EDUCATION IN INDIA Through to the early eighties, almost all Engineering colleges in India were either Government or Government aided. In 1983, in a major liberalization, private unaided colleges were encouraged. All education, including higher education, is a state subject in India’s federal system. The central role is limited to course approval, accreditation, recognition and universities, and a few central universities and institutions. Table 9.4 gives the different types of central establishments that have been created by the Government: Table 9.4 Different Types of Central Establishments of GoI Types of Establishment
No.
• All India Council for Technical Education (AICTE)
=
1
• Indian Institutes of Technology (IIT)
=
7
• Indian Institutes of Managements (IIM)
=
6
• Indian Institute of Science, Bangalore
=
1
• IIITM, Gwalior
=
1
• IIIT, Allahabad
=
1
• National Institutes of Technology (NIT) converted FROM regional Engineering Colleges
=
18
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191
Consequent upon liberalization in 1983, there was rapid growth in private engineering colleges as could be seen from Table 9.5. Table 9.5. Number of Private Engineering Colleges State/Union Territory
No. of Engg Institutes
Annual Student intake
% of total
Population Census 2001
% Total
Tamilnadu
250
79122
22
62,110,839
6
Andhra Pradesh
215
64300
18
75,727,541
7
Maharashtra
151
47035
13
96,752,247
9
Karnataka
111
40385
11
52,733,958
5
Uttar Pradesh
83
22491
6
166,052,859
16
Kerala
73
17858
5
31,838,619
3
Madhya Pradesh
45
12970
4
60,385,118
6
West Bengal
45
10709
3
80,221,171
8
Gujarat
25
9559
3
50,596,992
5
Orissa
38
9505
3
36,706,920
4
Haryana
33
9385
3
21,082,989
2
Punjab
33
8875
2
24,289,296
2
Rajasthan
29
7807
2
56,473,122
6
Bihar
7
1575
0
82,878,796
8
Others
77
19720
5
212,043,576
13
1215
361296
100
1,027,015,247
100
Total
It is this expansion of engineering education that fueled India’s software too, and it is no accident that the states with massive private expansion of engineering education are precisely those where the software industry is located. It is seen from above that the Government has established an infrastructure for development and growth of elementary education, primary education, secondary education, higher education and higher technical education in India where Government and private individuals played significant role in establishment of school, colleges, institutions and universities.
9.6 MANAGEMENT OF EDUCATONAL INSTITUTIONS In India, a formal course and/or training scheme for management of educational Institutions have not been prepared till date. Till 1983 all the Institutions were administered as Government departments. The heads of the Institutions were mainly concentrating around academic work, and very little time and attention was given to management of the institutions as a whole. With the growth of private institutions for higher technical education, a need is felt for introduction of a system and management of educational institution. Today higher technical education is no longer the monopoly of the state. Subsequently the number of such institutions in private sector is increasing and competing among each other. Survival in a competitive market calls for efficient management of the institution.
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In India, we have so far observed three types of private colleges. • Institution owned and operated by an individual or group of individual, who were unconnected with education. • Institution owned and operated by an individual who was an educationist. • Institution owned by an individual or group of individuals but operated by Educationists. Institutions owned and operated by individual/group of individuals not connected with education mainly operate the college as a business venture and very little effort is given for improving upon quality of education. In erstwhile Government owned and controlled Institutions, the principals used to spend their total time in upgradation of quality of teaching. It is, therefore, suggested that an Institution owned by business persons but operated by professionals will give the best result. Professionals in education management were not forthcoming. This requires an inclination for development and promotion of education and training in management. Normally an educational institution for higher technical education in India is required to take care of the following functions: • Co-ordination with AICTE, State Government, affiliating University. • New Admission & Registration with University • Arranging for University Examinations • Running of day to day classes • Co-ordination with faculty members • Arranging Training and Placement of students • Quality improvement in teaching • Expansion, modernization and diversification The following type of organisation structure is recommended.
Note that this is not a status chart.
MANAGEMENT OF EDUCATION
193
The Principal is responsible to the Board of Governors for earning an agreed return on investment with growth and good will. The ultimate objective is to attain excellence in the respective field and become a deemed University. The Dean (Academic Affairs) is responsible for improvement in quality of education and teaching in the college. As on date instruction based teaching has been replaced by teaching learning process. The aim of the Dean is to develop and promote Research based teaching for improvement in quality of teaching. The Personnel and Administration officer is required to design suitable training schemes for teachers for their continuous upgradation in knowledge and skill besides preparing a career plan and maintaining a transparent administration. The training and placement officer, apart from co-coordinating training and placement between the students and the industry/ trade, shall also provide market fed back to the Dean regarding marketability of the passed students.
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QUESTIONS
CHAPTER 1 1. What is meant by Public Systems Management? Enumerate the role and importance of Public Systems in current socio-economic environment. 2. Distinguish among Public Systems Management, Public Sector Management, Joint Sector Management, Corporate Sector Management and Private Sector Management. What are the salient features of Public Systems Management? 3. Enumerate the development and growth of Public Systems in India. 4. What are Public Systems? Discuss the coverage, importance and Role of Public systems Management in India. 5. “Public Systems Managers are required to be developed and trained for accelerated growth of economy in an open market economy” — Elucidate. 6. Identify and discuss the components necessary to be considered for efficient management of public systems in India. 7. “Public Systems, being a service provider require large resources, efficient Quality management, Revenue Management and Commercial Management”— Elucidate.
CHAPTER 2 1. Enumerate the factors influencing Human Health. Identify the factors which constitute threat to Human Health and briefly discuss methods for its prevention. 2. “Global Health conditions improved more in past half century”— Elucidate. 3. Identify various Biological Hazards leading to infections/diseases and cost effective preventive measures. 4. “Health Care Management is an important Public system for sustainable socioeconomic development of a country”— Elucidate. 5. Discuss Health Policy and Health Care Programme of the Government of India. 6. What is health delivery system? Discuss Public Health Policy of the Government of India and its organization. 7. Enumerate the constitutional and Administrative framework of the Government of India for Health care delivery systems. 194
QUESTIONS
195
8. Discuss the Health Policy and its implementation in India. 9. “The Public Health delivery system of the Government of India is more tilted towards prevention of diseases”—Elucidate with reference to disease control programmes. 10. “Medical Relief and Supplies is an important component of Health Care delivery system”— Elucidate. 11. “Health care delivery systems have been institutionalized by the Government of India”— Elucidate. 12. Enumerate the Institutional frame work for Health delivery systems in India. 13. “Health Insurance for all Indian is a matter of necessity for providing Health to all at affordable price”— Elucidate. Discuss the present status of Health Insurance in India. 14. What is AYUSH? Discuss its role in Health delivery system in India. 15. “Maternal Health Programme is an essential component of Health delivery system in India”— Elucidate and discuss its components.
CHAPTER 3 1. Define Hospital Management. Discuss the factors required to be considered in Hospital Planning. 2. Enumerate the factors required to be considered for building Hospital Infrastructure 3. “Record Keeping in Hospital is essential for monitoring quantitative and qualitative aspect of Hospital operation and for socio-legal protection of all concerned connected persons”— Elucidate. 4. Discuss various methods of Application of Hospital Records and enumerate the process for monitoring quality of medical records. 5. Enumerate the factors required to be considered in installing a materials management systems in a Hospital. Prepare an organization chart for materials management department of a 500 bed Hospital in corporate sector. 6. “Selection and Leasing of Hospital equipment is essential component of Materials Management in a modern hospital”— Enumerate the process of selection and lease financing of Hospital plant and equipment, bio-medical, diagnostic and surgical equipment. 7. “Quality delivery of Health care depends to a large extent on proper management of maintenance of Hospital facilities”— Elucidate. 8. Discuss the factors required to be considered in installing a maintenance management system in a Hospital. Prepare an organization chart for maintenance department. 9. Discuss the policy for replacement of hospital equipment vis-à-vis spare parts policy of a 500 bed hospital in corporate sector. 10. “Management of Hospital waste is an important component for management and operation of a Hospital”— Elucidate. Identify each component of Hospital waste and discuss methods for their safe disposal as per the relevant statute.
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DATA WEARHOUSING IMPLEMENTATION
11. Enumerate the application of computer in Hospital Administration. 12. “Computers have helped people in backward areas and in hilly terrains to receive specialized doctor’s advise and treatment”— Elucidate with particular reference to Medical Informatics and Tele medicine”. 13. “Marketing of Hospital products requires product policy, pricing policy and marketing policy”— Elucidate. Suggests an organization structure for marketing department of a 500 bed hospital in corporate sector. 14. “Hospital is a cash rich organization”— Elucidate. Prepare organization structure for financial management of a hospital. 15. Identify and briefly discuss the sources for funding of a Hospital Project. Enumerate the role of the Government in promoting private hospital. 16. Discuss the factors necessarily required to be considered in preparation of Feasibility study and detail project report (DPR) of a large hospital complex. 17. Identify and discuss the appraisal criteria and business risk analysis of a hospital project. 18. Discuss man power policy for a large hospital. Identify the components for manpower planning in a hospital and briefly describe each component. 19. “A well thought out Training Policy is the key to increase productivity and Quality of services in the long run in a large Hospital”— Elucidate. 20. Prepare organization structure of a large 500 bed hospital in the corporate sector and briefly explain the functions of each departmental heads. 21. Prepare organization structure of a large 400 bed state general non-teaching hospital and briefly explain each function. 22. Discuss the importance and need for quality control in health care, and enumerate the need for medical audit.
CHAPTER 4 1. “Expansion and development of Road networks is an essential component for sustainable economic growth”— Elucidate. 2. “Roads have been classified into functional groups in India”— Elucidate and enumerate the programme of the Government of India in respect of Road network expansion and strengthening programme. 3. “Highways are required to be connected with Ports for speedy movement of Cargo”— Elucidate and discuss the programme initiated by the Government for such purposes. 4. “Uni-gauge track and discontinuance of Steam locomotive have increased availability of existing passenger coaches and Wagons in Indian Railways”— Elucidate. 5. “Profitability of Indian Railways increased with improved capacity utilization of Wagons”— Elucidate. 6. “Indian Railways was divisionalised into 16 Zonal Railways as first step towards privatization of Railway Operations”— Elucidate.
QUESTIONS
197
7. Draw an Organization Structure of a Zonal Railway and explain in brief the function of each HODs. 8. Discuss the measures taken by the Indian Railways for improving freight traffic. 9. Discuss Economics and Commercial operations of Indian Railways. 10. Discuss the process of Reform and restructuring of Indian Railways for possible privatization.
CHAPTER 5 1. Identify components of water transport infrastructure of India and briefly discuss each component 2. Identify and discuss each component of shipping infrastructure in India. How development of coastal shipping and inland water transport could reduce transportation cost while giving eco-friendly services? Discuss the role played by the Government in promotion of Inland Water Transport and coastal shipping. 3. “HRD is a an important factor for development of water transport infrastructure in India”—Elucidate. Enumerate the Role of the Government in promoting HRD in water transport management. 4. Distinguish between Major ports and Minor ports. Discuss the Government policy in modernization of existing ports and development of new ports. 5. What are the functions of the ministry of civil aviation, Government of India? Discuss the operational function of the ministry of civil aviation. 6. Enumerate the Regulatory Functions of the ministry of civil aviation. 7. “The Government has taken measures for improving upon infrastructural facilities and HRD in civil aviation for rapid growth of aviation Industry”—Elucidate 8. Discuss the policy of the Government for expansion and healthy growth of Airlines Industry in India.
CHAPTER 6 1. “The Government is committed to supply Electricity to all Indians at affordable price by the year 2012”—Elucidate and discuss the salient features of the long range plan prepared by the Government to comply with such commitment. 2. Define Efficiency and prove that conversions of energy in series reduce efficiency. 3. Discus various methods of transportation of Energy Resources. 4. What is efficiency of Generation of Electricity? At what load an Electric Generator operates at maximum efficiency? What is the maximum efficiency of a generator? 5. “In India loss of Energy in Electric Power Transmission and Distribution is quite high because of Techno-political reasons”—Elucidate. 6. “Energy conservation, pre-supposes Energy Audit”—Elucidate. 7. Discuss the need for Energy Audit and Energy conservation and suggest conservation techniques. 8. “Power sector Reform is a necessity for financial sickness of state electricity boards”
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(a) What are power sector reform and its necessity in India? (b) Enumerate the major factors responsible for sickness of SEBS and the objective, Role and responsibilities of SEBS. 9. Explain Power sector Reform process, and suggests re-structuring options of State Electricity Boards 10. As Consultant, please prepare re-structured un-bundled organization structures of a SEB having three coal based thermal power plants and large transmission network and distributors to supply a population of 68 million. Advance your arguments with examples.
CHAPTER 7 1. Enumerate the objective of the Government for promotion and development of Public sector undertakings in India. 2. “The capital base of PSUs should be restructured for optimizing return on Investment (ROI) and not for maximizing return on equity”—Elucidate. 3. Discuss the role played by PSUs in Economic and Social development of India 4. “Secretarial culture influenced working of Public sector undertakings”—Elucidate. Discuss the working of CPSUs. 5. “PSUs have been re-structured and rationalized to apply MBO, to operate as Holding Company etc.”—Elucidate. Prepare organization structures of a multi-unit, multilocational Heavy Engineering PSU and compare its functioning with the concept of Holding company and its subsidiary companies. Discuss the merits and demerits. 6. What is the future of Public sector companies in India?
CHAPTER 8 1. Briefly enumerate various postal services available in India. 2. Discuss various financial services being received from post offices in India. 3. Discuss the growth and economics of Telecommunication sector in India.
CHAPTER 9 1. “Education is an essential Public system in India”—Elucidate. 2. Discuss the Role of the Government in promoting Primary education in India. 3. Discuss the role of AICTE and University in promoting higher technical education in India. 4. Prepare the organization structure of a private Institution offering university affiliated AICTE approved Engineering & Management courses having 6 Engineering streams and MBA, BBA streams. Allocate work for each organization heads.
BIBLIOGRAPHY
1994, China’s Macroeconomic Performanc and Management during transition, Journal of Economic perspectives. AAMI (1986): Good Hospital practices Guidelines. Altelee Clement: Empire into Commonwealth, 1961. Amarchand D: Government and Business, Tata McGraw Hill. Arora & Bhatia: Management Information System, Excel Books. Asian Development Bank (1994): Asian Development outlook 1994, Asian Development Outlook, Manila. Bahr J & Wehrhatn, R (1993): Life Expectancy and Infant Mortality in Developing Nations, Social Science and Medicine Vol. 36, No. 10 pp. 1373-1382. Barthwal R R : Industrial Economics, 2nd Edition, New Age Internatinoal (P) Ltd., New Delhi. Beri G C: Marketing Research, Tata McGraw Hill. Beteille Andre: Society and Politics in India, OUP. Bhattacharyya S K and Dearden John: Accounting for Management, Vikas. Burack, Elmer & Walker James, Manpower Planning and Programming, Boston: Allyn & Bacon 1972 pp. 102-120. Bronfman, M (1992): Infant Mortality and crisis in Mexico, Internaional Journal of Health Services Vol. 22, No. 1. PP: 157-167. Buffa E S & Sarin R K : Modern Produciton/Operations Management, John Wiley. Bureau of Indian Standards: Quality Management and Quality System Guidelines. Cables, J.R. Organizational Form and Economic Performance ; in Thomson S & M Wright (Eds) Internal Organisation, Efficiency and Profit, Oxford Philip Allen Publisher. Catalanello, R E & kirpatrick B L: “Evaluating Training Programmes — The state of the yard”, Training and Development Journal, Vol: 22, May 1968. Chandler AD, Managerial Hierarchies, Harvard University Press, 1980. Chandler AD, Strategy and Structure:Chapters in the History of Industrial Enterprises, the MIT Press, 1962. Chary S N: Production and Operations Management, Tata McGraw Hill Publishing Co. Ltd., New Delhi. 199
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