30th October 2023 (11 Topics)
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The Indian Railways’ revenue problem
Context:
This is the first of a three-part series of articles on the Indian railways, its capital expenditure and freight business.
Rising Expenditure
- Present scenario: Indian Railways intensifies capital expenditure post-budget merger.
- Hurdles in generating capital: Operating ratio stagnates, hindering profitability and capital surplus.
- Over-reliance on Gross Budgetary Support (GBS) and Extra Budgetary Resources (EBS) leads to growing debt.
Concerns
- Sources of Loss: Passenger services incur significant losses, necessitating cross-subsidization from profitable freight segment.
- Report by CAG: Comptroller and Auditor General highlight Rs. 68,269 crore passenger service losses in 2021-22.
- Increasing Freight Volume: Emphasis on boosting freight volumes to improve revenue, but current growth lags behind national economic growth.
Suggestive Measures
- Optimizing Freight Business: Artificial division of cargo into goods and parcels hampers efficient handling and transportation.
- Bifurcation of cargo: Proposal to categorize cargo based on characteristics, bulk and non-bulk.
- Need for reforms: Declining rail share in crucial commodities like coal, iron ore, and cement underscores need for strategic reforms.
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