Tap non-fare revenue for Cash Flow, Railways told

NEW DELHI: Noting that the Indian Railways is trying to be back on track with a host of initiatives, the Economic Survey for the year 2017-18 has cautioned the national transport monolith on its falling revenue and has thus suggested it to tap non-fare revenue to keep pace with its cash requirement.

Highlighting the various “transformative” steps taken by the Centre to keep the Indian Railways moving, the Survey, which was placed before the two Houses of Parliament, mentioned the transport monolith’s efforts in prioritising key investment areas like dedicated freight corridors, high-speed rail, high capacity rolling stock, last mile rail linkages and port connectivity among other things. It, however, raised red flag on falling revenue from its core operations and therefore suggested that the railways should look to tap non-fare revenue to keep the required cash flow.

“To make rail transportation attractive and arrest the declining trend of rail share, various initiatives were taken, including tariff rationalisation, classification of new commodities, new policy guidelines for station to station rates…,” it said.

The survey also said “station redevelopment” could be a big source of revenue generation by providing “world-class amenities and services” in and around railway station like digital signage, escalators/elevators, self-ticketing counters, executive lounges, luggage screening machines, walkways, holding areas for passengers, grand and distinctive roofing and flooring, free and paid Wi-Fi connection.

“Station redevelopment programme is envisaged to be done by leveraging commercial development of railways’ spare space in and around the station,” the survey said. The Survey also talks of various steps taken to make rail transport attractive. “The share of Railways in freight movement has been declining primarily due to non-competitive tariff structure.

While the passenger fare had remained more or less flat, the freight has increased sharply over the years. To make rail transportation attractive and arrest the declining trend of rail share, various initiatives were taken in 2016-17,” it said.

Let railway revamp pick up steam

Indian Railways faces multiple headwinds as it traverses the reform track to upgrade rail infrastructure, improve operations and shore up finances. The rail network would be increasingly vital as India picks up economic speed, provided there’s focused attention to boost operational efficiency with improved customer orientation, and stepped-up resource allocation for that express purpose. The way forward is for the Railways to make better use of current assets, seek multilateral funding, foreign direct investment, private capital via joint ventures and various other modes of financing, and to gainfully leverage private sector expertise to rev up on-board rail services with the clear-cut aim to raise quality standards.

The Railways needs to rapidly upgrade its signalling systems, invest in sidings on to which slow-moving trains can be diverted just in time to allow faster trains to move unhindered, so that track capacity is utilised to the fullest extent possible, instead of being kept vacant for long stretches to let fast trains pass. Strengthening safety, critical revamp of bridges and rationalisation of operations deserve priority. About 40% of freight revenue is derived from hauling coal, meaning more than 50% of haulage costs are on coal. This so-called coal is 40% non-combustible shale and rock, which the Railways carries around for no sane reason. Railways should carry only beneficiated coal. If ash content of transported coal is brought down to 20%, half the coal haulage capacity can be released for hauling higher value cargo, say, white goods and automobiles.

The Railways have announced a huge multi-year investment plan. But, surely, the way ahead is to prioritise and opt for modular projects that have quick payback and turnaround time. In parallel, there’s the pressing need to ramp up much-needed infrastructure like dedicated freight corridors, multi-modal logistics parks, and connectivity to port, mining and industrial clusters. And for such long-gestation projects, what’s essential is to tap equity and debt finance at fine rates from multiple sources and to fast-forward project implementation.