Revenue Generation by Indian Railways – a Review

NEW DELHI: Revenue generation is a critical function of Indian Railways which is contingent upon a number of factors including passenger fare and freight rates, demand for transportation, domestic and international macro-economic scenario, growth in core sectors of economy and availabilities & pricing of alternative modes of transportation.

Evaluation of various alternatives relating to rationalisation of passenger & freight structure is an on-going process. Recently, a number of measures have been taken to rationalize the tariff so as to increase revenue. Some of them are:-

  • Liberalised Automatic Freight Rebate scheme for traffic loaded in empty flow direction,
  • Rebate in freight under Long Term Tariff Contracts (LTTC) with key freight customers
  • Discount on loading of bagged consignment in open & flat wagon
  • Withdrawal of port congestion charge
  • Rationalization of coal & coke tariff etc.

A number of measures for enhancing ease of doing business have also been taken such as Registration of Demand for wagons electronically, Electronic Transmission of Railway Receipt (eT-RR), Multiple RRs for single container train, Customer friendly rationalization of weighment policy etc.

Indian Railways has taken various initiatives to increase earnings from passenger and non-fare services including parcel.

A number of measures have been taken in passenger segment. Some of them are Introduction of Flexi Fare system in higher category of trains i.e. Rajdhani, Shatabdi and Duronto trains. In view of special attempts/ arrangements made for running of special train services during peak period, higher fares have been fixed for running of special trains. Suvidha trains are introduced on variable fare structure during the peak seasons depending on the demand pattern. Humsafar Express, Tejas Express, Antyodaya Express and Mahamana Express have been introduced on higher fare on cost recovery basis.

The endeavor is to realize higher fare for better facility trains and continue to provide service at affordable and economic rates to common man.

Number of Steps have been taken to improve parcel earnings including having a policy of ‘Comprehensive Parcel Leasing Policy (CPLP), ‘Parcel Cargo Express Trains (PCET)’ and Opening of parcel business to container traffic etc.

During 2016-17 and 2017-18, the growth of traffic earnings was not commensurate to the high growth of working expenses comprising inter alia of pay, allowances and pension on account of implementation of 7th Central Pay Commission recommendations. Though Railways have been generating ‘Excess’ after meeting working expenses from own revenues, the amount of ‘Excess’ has varied over the years depending on the pace of growth of working expenses vis-a-vis the earnings of Railways.

Periodic Pay Commissions, performance of the economy at large, intense competition from other modes of transport like road and air effects the capability of Railways to raise revenue earnings at a faster pace than the growth in working expenditure.

Thus, while there has been a progressive rise in Railways’ capital expenditure, the contribution of Railways’ internal resources to the same has gone down occasionally especially during the years of implementation of Pay Commission recommendations.

As experienced in the past, stabilization of impact of the pay commission recommendations and with the traffic earning picking up in subsequent years, the financial performance of Railways improves.

Accordingly, the Budget Estimates of 2018-19 stipulate adequate revenue generation to meet the working expenses of the Railways and also to make a contribution of ₹11,500 Cr to capital expenditure.

Flexi fare was introduced from 9th September 2016. During the Financial Year 2016-17 (Sept to Mar), 2017-18 and 2018-19 (April to June), Railway earned approximately ₹371 Cr., ₹860 Cr. and ₹262 cr. respectively as additional earnings from trains having flexi fare.

There has been mixed response from various quarters to the introduction of flexi fare scheme. Further, review of existing scheme is an ongoing and continuous process.

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