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Economic Survey: Railways freight earnings dip on increasing volume

LiveMint logoLiveMint 11-08-2017 Jyotika Sood

New Delhi: Even as Indian Railways’ freight traffic increased by 0.5% in the last financial year, earnings took a hit as the national carrier transported a larger volume of low-tariff freight, the Economic Survey said.

This comes at a time when railways’ finances are stressed as it faces stiff competition from airlines and road transport for carrying people as well as freight.

However, passenger earnings in 2016-17 grew 4.5% to Rs.46,280 crore due to steps such as dynamic pricing system, which charges consumers more when fewer tickets are available.

“For generating revenue, the Railways should go for more non-fare sources along with station redevelopment and commercially exploiting vacant buildings at the station, monetizing land along tracks by leasing out to promote horticulture and tree plantation, and through advertisement and parcel earnings,” the Survey said.

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

Aware of the challenges, the railways has placed its bets on non-fare revenue and 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 provisional estimates for 2016-17, railways carried 1106.6 million tonnes (mt) of revenue-earning freight traffic as compared to 1101.5 mt during 2015-16. This comes at a time when passenger fare has remained flat, while freight fare has risen sharply.

The national carrier has a track length of around 115,000km, making it the world’s largest railway network under a single management. It runs around 20,849 trains daily and transports 23 million passengers.

“After a consistent rise from 2002-03 to 2012-13, the number of passengers travelling by train has started declining since 2013-14 while the freight traffic has increased over the years. However, during 2002-03 to 2015-16 while passenger fare increased at a CAGR (compound annual growth rate) of 3.6 per cent, the freight fare increased at a CAGR of 6.2%,” the Survey said.

Given the task ahead for the national carrier, the National Democratic Alliance government unveiled the largest-ever rail budget of Rs1.31 trillion, an 8.26% increase over the Rs1.21 trillion allocated to the national carrier in 2016-17.

According to the Survey, railways remains the people’s carrier.

“Among different modes of transportation, Railways is still preferable means for majority of Indians for long distance travel,” the Survey noted.

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