Indian Railways faces cash crunch! Innovative steps being taken to fight revenue shortfall; details here

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Published: September 30, 2019 4:07:58 PM

Indian Railways' earnings and expenditure numbers till the month of July were fine. However, the earnings dropped in August as the coal loading took a hit because of the unprecedented floods.

railwaysThe earnings have grown by nearly 3.4% while the expenses of Indian Railways have grown by nearly 9% this financial year.

Indian Railways is facing a shortfall of around Rs 30,000 crore by year-end, due to a slowdown in earnings and mounting expenditure. To counter this, the Railway Board has suggested some short-term measures such as getting sponsors to clean railway stations and trains and discontinuing trains with below 50% occupancy. According to an IE report, the August-end figures indicate that the national transporter has already overshot its spending. The earnings have grown by nearly 3.4% while the expenses of Indian Railways have grown by nearly 9% this financial year. Railway Board Chairman V K Yadav was quoted in the report saying that Indian Railways’ earnings and expenditure numbers till the month of July were fine. However, the earnings dropped in August as the coal loading took a hit because of the unprecedented floods.

Some of the key measures proposed by the Railway Board are to get cleaning of railway stations and trains done through sponsorship and Corporate Social Responsibility (CSR); review trains with below 50% occupancy and decrease their frequency or merge them; eliminate diesel engines which are more than 30 years old to save fuel; get repair of staff quarters done by monetising Indian Railways’ land; save cost of fuel by implementing better practices; optimise maintenance practices as well as rework operations for better earnings. According to Yadav, the Railway Board had strategized to reduce the cost of inventory and fuel consumption, and also increase earnings. All the zones of Indian Railways have been given a free hand to raise non-fare revenue. The immediate focus is to raise savings of around Rs 5,000 crore, as that is the sum that has been already spent off-budget.

This year from April to August, Indian Railways faced a shortfall in earnings, while its expenditure rose. The shortfall in earnings from passengers against the budgeted target is around Rs 11,852 crore. While the national transporter factored in growth in passenger traffic of around 1.8%, an overall drop of 1.3% has been witnessed. According to sources quoted in the report, the freight loading fell short by 10 million tonnes as per the budgeted target. They claimed that the last year’s adjustments by taking advance freight in order to show better earnings are now hitting the department. The shortfall in freight earnings against the budgeted target is about Rs 8,600 crore.

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According to sources quoted in the report, while the official calculations show that there is a surplus of just Rs 2,000 crore in net earnings by the end of August, Indian Railways’ books are brought down by an amount of Rs 20,000 crore after it discharges its pension liabilities.

On the expenditure front, the national transporter had budgeted ordinary working expenses at around Rs 1,55,000 crore this financial year, leading to a growth of around 10% over the last year. However, by the end of August, Indian Railways had spent Rs 68,000 crore which is about Rs 1,800 crore more than what was expected. Meanwhile, with earnings not picking up, the “busy season” surcharge was waved by Indian Railways, which is levied on freight customers from the month of October to June, hoping to turn away traffic from the road sector, the report said.

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