Empirical Analysis of Railway Efficiency in Pakistan
Managing Director, QAA, HEC, Islamabad
Visiting Senior Fellow at the Pakistan Institute of Development Economics,Islamabad
This paper estimates change in Pakistan Railways (PR) efficiency over time. It is important to seethe performance in a dynamic context. Based on the fundamental CCR-BCC (Charnes, Cooper andRhodes, 1978; Banker, Charnes and Cooper, 1984) model, we use an extended Data EnvelopmentAnalysis (DEA) model developed to deal with time series method for the period 1966-2017. The PRbecame financially inefficient from 1985 onwards. Fewer and redundant inputs were used forservice delivery which caused product inefficiency. Rising expenditures increased cost of operationswhich became the source of allocative inefficiency. Both resulted in train closures and shrinkingbusiness. Our results show pure technical efficiency of production at 69 per cent, indicating theoutput waste of 31 per cent. The empirical findings suggest that the pure technical efficiency ofproduction outweighs the pure technical efficiency of allocation. The main policy implication isthat steady investment under an autonomous and professional management is required for a turnaround.
Keywords: Efficiency, Data Envelopment Analysis, Pakistan Railways, Transportation Policy