Railways faces outlay cut as passenger revenue lags

Written by Rajat Arora | New Delhi | Updated: Oct 11 2013, 17:03pm hrs
With a Rs 2,000-crore shortfall in Indian Railways passenger revenues in the first six months of the current fiscal, the spectre of a cut in the Plan outlay is looming large over the national transporter this year as well.

The national carrier, despite increasing passenger fares by 20% in January, is falling short of the target because of a dip in traffic in suburban and non-urban trains. Last year, too, the plan outlay was slashed by R8,000 crore, from R60,000 crore to R52,000 crore.

Our earnings haven't been according to the budget target as there has been a dip in passenger traffic. If the widening gap doesnt stop, we have to slash the plan outlay for this year. The picture will become clearer in December, a railway board official said.

Passenger earnings for the first six months have been around R18,000 crore, over R2,000 crore less than Budget estimates. The current years target for passenger revenue set by the railways is R42,210 crore and the operating ratio has been set at 87.8%.

The national transporter has set a plan outlay for R63,363 crore for the current fiscal and it expects to generate R14,260 crore from internal generation. If the internal generation remains low, we have to reduce our debt expenditure fund and passenger amenities fund, the railway board official added.

Railways says an increase in ticketless travel in suburban trains is causing the shortfall. The shortfall is majorly due to the increase in ticketless travel in suburban and non-urban sections. We have increased ticket checking in all such segments to curb the increasing trend, the official added.

Recently, railways had implemented a fuel adjustment component (FAC) of 2% on passenger tickets, but the extra earnings from that will offset the increasing fuel cost. However, the railways says it is trying to make up for the loss from the freight segment as it is doing better than the budget estimates. But its unlikely it will be able to cover up from the passenger segment as the growth in freight traffic is not that high.

Despite the around 20% hike in passenger fares in January 2013, passenger receipts haven't risen as budgeted because of a dip in short-distance (up to 50-km) suburban traffic (air-conditioned and sleeper classes are doing well). In the April-August period, passenger earnings stood at R14,000 crore, some R2,000 crore less than expected. We are finding ways to make good this shortfall in the remaining period of the year, Arunendra Kumar, chairman of the Railway Board, had told FE earlier.