Page 31 - MA - May 2017

Rail freight traffic growth:

Plan Estimated contribution to GDP Ratio of rail and road freight transport

12 Five year plan (2012-17) 6.9% 35:65
th
13 Five year plan (2017-22) 8% 39:61
th
14 Five year plan (2022-27) 8.5% 45:55
th
15 Five year plan (2027-32) 9% 50:50
th
(Source: Report of National Planning Commission of India)

Rail passenger service growth: following steps:
The rail passenger traffic has been expected to grow
at the rate of 15 percent per annum. The growth in Figure 3: Steps of Activity Based Costing
passenger kilometre under several five year plans has
been estimated as follows:

Year Passenger kilometres in billions

2011-12 1,047

2016-17 1,509

2021-22 2,300

2026-27 3,596

2031-32 5,765

(Source: NTDPC, Report of Working group on Railways)

Activity Based Costing is important for monopoly firm
as their pricing policy is based on product cost rather
than any influence by market price. ABC is a costing
model that identifies the cost pools and activity centres
in an organization. It assigns costs to products and
services (cost drivers) based on the number of events
or transactions involved in the process of providing a
product or a service. Hence, the shareholders value
can be maximised and performance can be improved
with the help of ABC model. In order to set up Activity
Based Costing, the resource cost should be identified and
classified in direct and indirect costs. Direct costs can be
allocated directly to the services. However, the indirect
costs will be identified and it can be allocated by specific
cost distribution procedure.
This ABC model operates with the help of

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