PMO sets ambitious target for IR – ask Railways to increase Non-Fare Revenue for FY:17-18 by 15%

To meet the target, the railways will have to earn Rs 28,350 crore as NFR in the current fiscal, almost three times the level achieved in the last financial year.

NEW DELHI: The Prime Minister’s Office (PMO) has given Indian Railways an ambitious target to increase the transporter’s non-fare revenue (NFR) to 15% of the total receipts in the financial year 2017-18. To meet the target, the railways will have to earn Rs 28,350 crore as NFR in the current fiscal, almost three times the level achieved in the last financial year. Though NFR increased 70% in 2016-17 to Rs 10,181 crore, its share was still just 6.17% of the total earnings. During 2015-16, NFR constituted only 3.62% of the total revenue.

The PMO has identified stepped-up advertising the of government-sponsored programmes and schemes on the railways’ websites and apps as a major source of NFR. Hoardings on the railway properties, content on demand, branding of trains and rentals from ATM outlets are among other potential NFR sources. Railway minister Suresh Prabhu had in January 2017 launched various policy initiatives to increase the transporter’s non-fare revenue.

The PMO has directed the ministry of railways and government thinktank NITI  Aayog to encourage the state governments and central government departments to advertise their programmes on railways’ online assets boost the latter’s income.

The total income of the Indian Railways for 2016-17 stood at Rs 1,65,068 crore against a revised target of Rs 1,72,000 crore. The passenger segment accounted for Rs 46,279 crore in the last fiscal, whereas the goods segment garnered a revenue of Rs 1,04,310 crore. The total earnings for the current fiscal are estimated at Rs 1,89,000 crore. However, analysts said the railways might find it difficult to achieve the NFR target of 15%.

It had earlier projected Rs 3,475 crore each year from non-fare revenue initiatives, which also include rail radio, integrated mobile app — which, according to member-traffic of the Railway Board, Mohd Jamshed, is ready for launch — and railway display network, among others. In total, the non-fare initiatives are expected to fetch Rs 18,450 crore over the next five years.

Accelerated growth in NFR is important for the transporter, which is hardly making a surplus from its operations owing to huge cross-subsidy for the passenger segment. Sources said a “creeping increase” in passenger fares is being planned by the transporter starting September this year, although they refused to elaborate on this.

Giving impetus to digital modes of transactions, the PMO has also directed the railways to increase use of the digital platform to promote a cashless ecosystem. It has also recommended to look for ways for cashless collection of penalties.

NFR is a fresh stream of earnings for the carrier, which is looking at ways to augment its cash registers. It has also implemented a flexi pricing policy—wherein prices in some categories in premium trains as bookings go up—which has also raked in money for it. According to Jamshed, the Mumbai Rajdhani, for instance, has witnessed increase in occupancy this year compared with the previous year despite hike in tariffs.