Train Fare Hike on Cards as Railway Earnings Plummet

New Delhi: Facing a drastic fall in earnings, Indian Railways is actively considering hiking passenger fares in the near future to shore up its revenues.

According to informed sources, the fare hike will be marginal between 5% and 10% on Mail/Express trains.

“We are examining the possibility of rationalising fares considering various factors, including increased input cost. A final decision on the quantum of hike is yet to be taken”, sources added.

Since Parliament is in session, it is unlikley that a fare hike will be effected during this period.

Railways will also take a call on whether to spare daily commuters on local trains or effect a marginal increase on monthly pass holders.  

It is learnt that since flexi fare is applicable to Rajdhani, Shatabdi and Duronto trains, a decision has to be taken whether premier services will be included in the fare hike list.

Recently, Indian Railways revised catering charges at rail premises, as a result of which passengers have to pay more for opting for catering service in premier trains.

The last time fares were hiked across the board was in June 25, 2014, soon after the Narendra Modi government took over at the Centre. Passenger fares were increased by 14.2% and freight charges by 6.5 per cent%.

Meanwhile, Railways registered a Rs 19,000-crore shortfall by the end of October 2019 in the current fiscal.

Besides, the national transporter has also exceeded its expenditure target so far this fiscal by over Rs 4,000 crore.

It suffered an earnings slide on all fronts – passenger, freight and sundries – in the April-October 2019 period against the Budget projections.

Despite the move to increase non-fare revenue from advertisements and station redevelopment, earnings from these sources are also not significant.  

While total earnings were projected at Rs 1,18,634.69 crore for the seven-month period, Railways earned only Rs 99,222.72 crore, a shortfall of Rs 19,411.97 crore.

The current year revenue so far is also down by Rs 571.47 crore in comparison to the fiscal earnings during the same period last year. In April-October 2018, the national transporter’s earnings were Rs 99,794.19 crore.

Working expenses also exceeded the target of Rs 97,264.73 crore to Rs 1,01,363.90 crore, an increase of Rs 4,099 crore for the same period.

In the passenger segment, the target was Rs 32,681.10 crore for April-October 2019 while the Railways earned Rs 30,715.10 crore only, leaving a gap of Rs 1966.33 crore. Goods earnings took a big hit. Against the target of Rs 77,615.89 crore, it earned Rs 62,733.17 crore, a minus of Rs 14,882.72 crore.

The sharp fall in freight earnings is a cause for worry as this segment is considered the bread and butter of Railways — the national transporter does not make a profit in the passenger segment and instead cross-subsidises it from goods revenue.  

In October, the Railways’ total earnings target was Rs 18,196.40 crore. Here it has fallen short by Rs 4,808.73 crore, as it earned only Rs 13,387.67 crore.

Though the financial performance report for the year does not show the operating ratio, it is estimated to be well above the 100% mark, an indication of deteriorating financial health of the Railways.

Incidentally, a report by the Comptroller and Auditor General, tabled in Lok Sabha on Monday, has shown the operating ratio for 2017-18 as  the worst in 10 years, at 98.44%.

With the earnings not picking up pace, the Railways had waived its “busy season” surcharge, which is levied on freight customers from October to June, hoping to wean away traffic from the road sector. Despite pressing many special trains to cater to festive season, passenger earnings were low in October compared with the same period last year.
 

The economic slowdown has affected the national transporter’s performance with the demand for wagons falling sharply. It had earlier set a target of procurement of about 10,500 wagons, which was reduced to 5,000 after a review of the prevailing situation, and has further revised it to 1,860 due to the absence of demand.
 

As the Railways are dependent on the market for its wagons, the drastic reduction in procurement has led to the market taking a hit of more than Rs 4,000 crore.

In October 2019, Indian Railways earned Rs 4,072.37 crore against Rs 4,126.21 crore earned in October 2018. Keeping the festive rush in mind, Railways had kept the target at Rs 4,548.28 crore for October this year.
 

The writer is a Delhi-based freelance journalist. He can be contacted at [email protected].