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Indian Railway Revenue problem UPSC NOTE

 Financial challenges

  • Indian Railway(IR)augmenting the funds raised through Gross Budgetary Support (GBS) and Extra Budgetary Resources (EBS) to meets lack of surplus. 

  • The merging of budgets helped this cause as GBS from the central government could be increased without much scrutiny. 

  • With respect to EBS, there is a price to pay. 

  • IR’s spending on repayment of principal and interest is pegged at ₹22,229 crore and ₹23,782 crore respectively.

  •  Which together make it 17% of revenue receipts, a sharp rise from less than 10% till 2015-16. 

Financial challenges

  • It appears that this debt liability was noticed as capex relied almost entirely on GBS in this year’s budget. 

  • The unprecedented rise in capex appears to be predicated on the premise that the IR’s operating and financial performance should not be viewed in isolation.

  • Investment in railways boosts manufacturing and services, tax revenue for the government and allows for more job opportunities. 

  • A key organisation like the IR cannot be allowed to go the Air India way — the investments made should be productive for IR’s revenues.

Operational discrepancies

  • The IR’s freight segment is profitable whereas the passenger segment makes huge losses.

  • The CAG report presented in Parliament on August 8, 2023 states that there was a loss of ₹68,269 crore in all classes of passenger services during 2021-22.

  • The profit from freight traffic nullified in cross subsidising passenger services

  • Any significant increase in passenger fares is unlikely, the IR has no option but to boost its freight volumes and in turn its revenue.

Operational discrepancies

  • The annual growth in freight volume and revenue of the IR in the period April-July 2023 stand at 1% and 3% respectively.

  • The IR’s modal share in India’s freight business has steadily decreased to approx. 27% from upwards of 80% at the time of independence.

  • The movement of cargo by the IR is artificially divided into goods and parcels. 

  • Shippers, are not interested in these differences as their concern is mainly about the safe movement of their cargo from point A to B at the least cost and as fast as possible. 

Need for efficiency improvements in IR.

  • The 11 commodities in the IR’s transport basket account for 90% of tonnage and revenue.

  • Which coal is around 45% and iron ore and cement are around 10% each. 

  • Although these three still account for two thirds of the IR’s total freight volume.

  • IR is the constantly fluctuating key index of Net Tonne Kilometres (NTKM), which fell for two successive years in 2015-16 and 2016-17 by 4% and 5% over the preceding years.

  • Demonetisation perhaps had some effect in fall as NTKM recovered in 2017-18 by 11% registering increase of 1.6% in 3 year period starting 2015-18

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Learnerz IAS | Concept oriented UPSC Classes in Malayalam: Indian Railway Revenue problem UPSC NOTE
Indian Railway Revenue problem UPSC NOTE
Learnerz IAS | Concept oriented UPSC Classes in Malayalam
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