Indian Railways shies away from hiking passengers fares, eyes non-fare receipts boost

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New Delhi | Updated: August 23, 2016 7:20 AM

With Indian Railways’ traffic receipts struggling to grow (its traffic receipts up to July were trailing the budget estimate for the period by 13%) and a shift to commercial pricing in the passenger segment easier said than done, the transporter has increased the focus on non-fare receipts.

The transporter has set a target to raise its non-fare revenue, which is currently just 3% of its total receipts, to 10% over a five-year period. For the current year, the non-fare revenue target is set at R9,600 crore, up 68% from last year. (Source: Reuters)The transporter has set a target to raise its non-fare revenue, which is currently just 3% of its total receipts, to 10% over a five-year period. For the current year, the non-fare revenue target is set at R9,600 crore, up 68% from last year. (Source: Reuters)

With Indian Railways’ traffic receipts struggling to grow (its traffic receipts up to July were trailing the budget estimate for the period by 13%) and a shift to commercial pricing in the passenger segment easier said than done, the transporter has increased the focus on non-fare receipts.

As part of this plan, it has launched a clutch of projects to up advertisement revenue; railway display networks (RDNs) under which more than two lakh LED screens will be installed at railway stations, premium trains will be vinyl-wrapped and other assets of the transporter like buildings, factories and foot overbridges will be bundled zone-wise and offered to advertise for long-term (10-year) use.

With all this, the ad revenue is expected to jump from R300 crore last year to R1,700 crore in the current financial year and R10,000 crore by 2019-10.

The transporter has set a target to raise its non-fare revenue, which is currently just 3% of its total receipts, to 10% over a five-year period. For the current year, the non-fare revenue target is set at R9,600 crore, up 68% from last year.

According to sources, the transporter plans to incentivise potential advertisers by clubbing its assets and giving these in a zone to companies or consortiums of firms via competitive bidding route — for example, the whole of northern zone could be given to a single advertiser under a 10-year contract. The winning bidder will have exclusive rights to design, install, manage, operate, market and sell advertising space. To start with, it expects to generate more than R500 crore annually from this project.

The revenue expected to be generated from the RDN project itself is more than R2,000 crore by FY18. The LED screens will display passenger/train information and the Prime Minister and railway minister’s tweets apart from the digital ads. The digital ads will be shown on the LED screens in all stations at the same time ensuring maximum eyeballs.

The transporter has already awarded proof of concept (POC) to four advertisers, including Zee Media Corporation, MIC electronics, Prabhatam Advertising and Direct News, for setting up railway display networks at more than 20 stations by October 15. A POC is awarded to establish if a concept is financially viable and implementable on a large scale.

The transporter is also relying heavily on generating revenue through vinyl-wrapped trains (ads on the exterior of trains). The transporter in the initial phase is looking at tendering out its premium Shatabdi, Rajdhani and Express trains in the central and western zones for a seven-year period with bidding for different packages ranging from R1.8 crore to R8 crore according to the package.

The transporter, with the hope to lure big players in the catering and stall business on its platforms which up to now was only contributing R100 crore annually, will witness a boost with it letting out catering, multi-purpose stalls and ATM machines on all its A1 and A stations.

Besides, it is also looking at leveraging its assets distributed over more than 47,000 hectare and exploiting them to generate ad revenue.

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