1. Railway traffic increases, revenue falls in 2016-17

Railway traffic increases, revenue falls in 2016-17

Despite a year-on-year increase in the number of passengers ferried and goods transported in the financial year 2016-17, Indian Railways missed its revenue target in the year.

By: | New Delhi | Updated: April 15, 2017 5:56 AM
The current scenario calls for relook at the subsidised passenger fares, which costs the railways to the tune of `30,000 crore-plus each year. (Reuters)

Despite a year-on-year increase in the number of passengers ferried and goods transported in the financial year 2016-17, Indian Railways missed its revenue target in the year. Gross traffic receipts (GTR) stood at `1,63,718 crore, down 3.28% from the revised estimate announced in the recent Budget. This is despite the national transporter carrying around 8,219 million passengers in 2016-17 compared with a target of 8,182 million (RE) and 8,151 million achieved in 2015-16.

This, according to analysts, is a tell-tale that the national transporter needs to increase its passenger fares across the board to improve its balance sheet.Last year, the railways introduced differential pricing in select premium trains, added 1.01 crore berths and introduced various categories of trains. Earnings from the passenger segment stood at around `47,500 crore, a tad below the revised target of `48,000 crore for 2016-17, but better than the `45,376 crore achieved a year ago.

The current scenario calls for relook at the subsidised passenger fares, which costs the railways to the tune of `30,000 crore-plus each year. However, according to the the Cabinet’s recent decision, the Rail Development Authority has been kept as as an advisory body and will not be able to force changes in the tariff. Also, a passenger rate revision may be required across categories, given the sleeper class contributes around 45% to the total passenger revenue, with the air-conditioned 3-tier coming in at a close second at around 34%. However, a price revision in passenger fares is always looked at as an unpopular move, given that majority of long-distance travel in India is undertaken by trains. It is estimated that a 10% across-the-board increase in passenger revenue can generate `4,500 crore additional revenue.

On the freight side, the revised target for 2016-17 of 1,094 MT was surpassed with actual loading of around 1,109 MT and 1,104 MT a year ago. However, the revenue from the segment stood at `1,05,162 crore as against a revised target of around `1,09,446 crore for 2016-17 and `1,10,606 crore earned in 2015-16.

The cause of concern for the railways is the falling average lead — distance goods travel —which has come down from 594 km in 2015-16 to 559 km in 2016-17, despite the transporter offering 7% discount in charges for long leads. The share of freight carried by the railways has fallen from around 90% in 1950 to around 30% now, and most of the lost traffic has moved to roads, which offer competitive rates.

However, Mohd Jamshed, member traffic, Railway Board, recently told FE that given the recent increase in freight and passenger traffic, the carrier is expecting the current financial year to be better.

FE had earlier reported that the 10-day freight loading average of the railways started in November and continued till March.

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