Railway Accounts Department Examinations

Showing posts with label cost benefit analysis. Show all posts
Showing posts with label cost benefit analysis. Show all posts

Wednesday, January 22, 2020

Social Cost Benefit Analysis

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Social Cost Benefit Analysis
LDCE 2015 - Southern Railway

·         A social cost benefit analysis is a systematic and cohesive method to survey all the impacts caused by an development project or other policy measure.

·         Also known as Economic analysis.

·         A decision-making strategy  - assessing the impact of Investments/Projects on the Society as a whole.

·         It evaluates not just the financial benefits/costs (profits /losses), but all economical benefits/costs (pollution, health, safety, travel times etc)

·         Social Benefit  - if it is positive impact

·         Social Cost       - if it is negative impact

·         Main objective:  To attach a price to as many effects as possible in order to uniformly weigh all the mixed (i.e., positive and negative) effects.

·         Example: PRS (Passenger Reservation System) project in Indian Railways.

Ø  PRS started as a pilot project in 1985 on two trains between Delhi and Chennai with a few reservation centres in Delhi. In 2003–04, it was operational at 1,200 centres, had 4,000 terminals, covered 3,000 trains and handled one million reservations per day.

Ø  Financial benefits: cost savings, staff reduction and increase in revenue.

Ø  Economic benefits: Improved customer service, higher quality of information, improved work environment, streamlined operations, and higher employee self-esteem and morale

Ø  “from anywhere to anywhere reservations”,

Ø  With IRCTC online ticketing, the booking of train tickets is much more easier.

Ø  An approximate estimate that about Rs. 250 crore was spent on the PRS up to the CONCERT stage.  At proposal stage, it was observed as negative Rate of Return from the point of financial returns.   

Ø  A very significant intangible benefit is national pride.

Ø  The Indian Railways management and staff are justifiably proud that they have successfully implemented a world-class, state of-the-art system in a developing country.

Ø  The success of the railway PRS provided the launch pad for India’s software industry exports.