In fact, freight loading has been growing at a slow pace in recent years due to the economic slowdown and also because IR has been losing share to the roads sector in areas other than coal, cement, food grain, etc.
By Nivedita Mukherjee
The Indian Railways (IR) is staring at a loss of Rs 6,000 crore in passenger revenue at a rate of about Rs 140 crore a day due to the 43-day national lockdown, according to an official source. Though its freight receipts have somewhat been insulated during the lockdown, even this larger segment that accounts for 70% of the transporter’s traffic receipts and is its principal profit centre, could see a loss of at least Rs 5,000 crore during the 43-day period.
This would mean that the railways’ overall traffic receipts would be less than the revised estimate set for FY20 by over Rs 2,500 crore (amount corresponding to the 10-day lockdown period for the railways in March).
The transporter has already released some Rs 1,500 crore as refunds for passengers who booked tickets for the lockdown period and soon thereafter, the source added. Even if the lockdown is lifted on May 3, it may take a few more days for the railways to start full-scale operations, especially in the passenger segment.
Railways freight revenue is estimated at Rs 1.47 lakh crore in FY21BE, up from Rs 1.35 lakh crore in FY20RE and Rs 1.27 lakh crore in FY19. Receipts from passengers are estimated to be Rs 61,000 crore in FY21BE, up from Rs 56,000 crore in FY20RE and Rs 51,066 crore in FY19.
In the FY21BE, the freight loading of IR is kept at 1,265 MT, which is just 42 MT (3.4%) higher than the RE for FY20. In fact, freight loading has been growing at a slow pace in recent years due to the economic slowdown and also because IR has been losing share to the roads sector in areas other than coal, cement, food grain, etc.
The railways’ operating ratio (OR) for FY20 was pegged at a precarious 97.4% in the Budget. The dip in receipts since then, which seems to have been accentuated by the lockdown, will make the ratio worse. Of course, even the reported OR is doubtful, given that the transporter has under-funded some of the key funds like depreciation reserve and capital funds. Also, it resorts to the practice of seeking big advances from large PSU customers to paint a rosier picture of its finances.
IR just about managed to keep its head above water in FY19 with an operating ratio of 97.3%, but only after NTPC and Concor had paid Rs 10,000 crore and Rs 3,000 crore, respectively, in advance as freight charges. If these advances were not obtained, the national transporter’s OR would have crossed 100% in FY19, indicating an operational deficit. OR is the share of operational expenditure in revenue.
The additional drain on revenue comes at time when IR’s debt servicing costs are set to rise at a much faster clip starting FY21 and might more than double in five years from now as repayment obligations concerning Dedicated Freight Corridor Corporation of India and the proposed high-speed train network will kick in.