Railways back in black on non-fare revenue

Indian Railways clocks revenue of Rs165,068 crore in 2016-17, a marginal rise over Rs163,791crore in 2015-16, powered by a 72% increase in non-fare revenue


Railway minister Suresh Prabhu’s bet on non-fare revenue—earnings from streams other than passenger fares and freight charges—is paying off. Photo: Priyanka Parashar/Mint
Railway minister Suresh Prabhu’s bet on non-fare revenue—earnings from streams other than passenger fares and freight charges—is paying off. Photo: Priyanka Parashar/Mint

New Delhi: The loss-making Indian Railways is back in the black, with railway minister Suresh Prabhu’s bet on non-fare revenue from right of way charges, reimbursements for strategic lines, advertising, land monetization, catering and parking paying off.

The performance is all the more creditable because Indian Railways’ freight revenue has stayed almost flat.

Indian Railways clocked revenue of Rs165,068 crore in 2016-17, a marginal increase over the Rs163,791crore registered in 2015-16. The revenue was powered by a 72% increase in non-fare revenue from sources including right of way charges to Rs10,181 crore from Rs5,928 crore in 2015-16, according to an official who shared the numbers with Mint on condition of anonymity.

Earnings from freight traffic continued to fall, declining by 4.4% to Rs104,310 crore in 2016-17, reflecting the competition railways is facing from airlines and road transport, a slower-than-expected economic recovery and the declining demand for coal.

““The major heads that led to a hike are reimbursement for strategic lines (trains run for defence), dividend from public sector undertakings, right of way charges, siding charges, advertisement, parking and catering, to name a few,” added the official.

Non-fare revenue accounted for 6.17% of railways’ total revenue in 2016-17, up from 3.62% a year ago.

The non-fare revenue policy announced by the Indian Railways in January projects a revenue of Rs15,000 crore over the next 10 years through sources such as advertising on trains, railway bridges and other assets, setting up of ATMs on platforms and offering digital content to passengers on railway stations and trains.

A railway ministry spokesperson confirmed the numbers: “The financial statement shows a positive outlook for Indian Railways.”

The numbers come against a poor operational performance: the national transporter ran up a record operating ratio of 109% in the nine months to December, meaning it spent Rs109 to generate Rs100, Mint reported in February.

The operating ratio is a gauge of operational efficiency that measures expenses as a proportion of revenue.

In 2015-16, the operating ratio around the end of November was 96%, but Indian Railways managed to lower it to 92% before closing its books for that fiscal year. An operating ratio of 80 or lower is considered desirable for a railway operator.

Prabhu had announced his focus on non-fare revenue in his 2016 Railway Budget. He said then that he would prefer to increase the revenue of Indian Railways through other means and not by increasing passenger fares.

Prabhu asked the Railway Board, the top administrative body of railways, to focus on ways to increase revenue from non-tariff sources by 10-20% and formed a special Non-Fare Revenue Directorate in May 2016.

The ministry official added that he is confident that Indian Railways will sustain the growth in non-fare revenues.

“The major component of this revenue of Rs15,000 crore will start showing up in (the next) 1-2 years once contracts are executed,” the official added.

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