Empirical Analysis of Railway Efficiency in Pakistan

This paper estimates change in Pakistan Railways (PR) efficiency over time. It is important to see the performance in a dynamic context. Based on the fundamental CCR-BCC (Charnes, Cooper and Rhodes, 1978; Banker, Charnes and Cooper, 1984) model, we use an extended Data Envelopment Analysis (DEA) model developed to deal with time series method for the period 1966-2017. The PR became financially inefficient from 1985 onwards. Fewer and redundant inputs were used for service delivery which caused product inefficiency. Rising expenditures increased cost of operations which became the source of allocative inefficiency. Both resulted in train closures and shrinking business. Our results show pure technical efficiency of production at 69 per cent, indicating the output waste of 31 per cent. The empirical findings suggest that the pure technical efficiency of production outweighs the pure technical efficiency of allocation. The main policy implication is that steady investment under an autonomous and professional management is required for a turn around. Keywords: Efficiency, Data Envelopment Analysis, Pakistan Railways, Transportation Policy