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With only 2% of passenger trains running, Indian Railways’ July earnings down to a tenth of last year

Railway Board Chairman VK Yadav expects a passenger earnings shortfall of up to Rs 40,000 crore in FY21; transporter shifts focus to freight loading to bridge the deficit.

July 29, 2020 / 01:59 PM IST
Representative image (Image: AP)

Representative image (Image: AP)

Indian Railways (IR) carried a little over 2.17 lakh passengers on Tuesday. At first glance, this appears to be a huge number for a single day; in reality, it is just a fraction of what IR was carrying each day before Covid-19 forced it to halt operations.

The pandemic-induced nationwide lockdown forced IR to halt operations completely for weeks. Even after the resumption of services, only about 230 trains, or less than 2 percent of the total, are currently operational. And even these trains do not have high occupancy, with nearly every fourth seat vacant.

With passenger numbers from July1-28 down by almost 90 percent year on year, IR, not surprisingly, earned just about a tenth of what it earned in the same four weeks of July 2019.

ALSO READ: Foodgrains loading drives freight traffic of Indian Railways

Focus on freight

This precipitous fall in passenger numbers (and consequently, earnings) is expected to worsen IR’s already-precarious finances. The Railways earns a bulk of its total revenue by transporting passengers and freight and has now redoubled efforts to significantly increase freight loading to make up for the loss in passenger earnings.


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It has already launched several initiatives to get a larger share of modal freight transport and is looking to close the current fiscal year with a narrower gap between what could have been earned and what actually is earned.

VK Yadav, Chairman of the Railway Board, said that the transporter expects a passenger earnings shortfall this fiscal of up to Rs 40,000 crore but will likely witness an increase in freight loading by up to 50 percent and make good the shortfall from passenger earnings.

ALSO READ: Railways staring at Rs 35,000-40,000 crore reduction in earnings from passenger segment this fiscal: V K Yadav

Silver linings

The efforts IR has put in, even in the midst of the pandemic, to shore up its freight loading are unprecedented in scale and impact. For one, the absence of passenger trains has freed up crucial track space so that the average speed of freight trains has nearly doubled to 46 kmph.

Yadav said this speed will henceforth be maintained since dedicated corridors will be created for movement of passenger and goods trains. This enhanced speed has a significant impact on freight operations since the time taken to transport goods halves, thus improving earnings.

IR has also set up dedicated Business Development Units at zonal and divisional levels to increase freight traffic besides taking initiatives like launching time-tabled parcel trains. These parcel trains were meant to transport essential commodities and goods in smaller quantities (not bulk) to tide over the pandemic period and a senior Railways official said there was even a consignment worth just Rs 80 that was carried by one such train.

The myriad efforts on the freight business side have led to near uninterrupted supply of essential commodities during the lockdown and some records.

IR has said loading of foodgrain increased by 80 percent year on year and even its dependence on coal was reduced. Until last year, coal accounted for nearly half of IR’s total freight traffic but the commodity has seen demand dwindling across power plants since last year, thus presenting a challenge for IR in maintaining earnings.

By increasing the loading of other bulk commodities such as foodgrain, Indian Railways has reduced its dependence on this single commodity.

Then, the transporter has made sustained efforts to get a larger share of freight traffic from the roads sector and offered targeted incentives such as removing the busy season surcharge of 15 percent, which was earlier levied from October to June.

All these measures have meant that for the first time since the pandemic crippled operations, IR managed to load more freight on July 27 this year than on the same day last year. And earnings from freight are improving — the year on year shortfall has dropped to below 8 percent in the last one week to Rs 2075.47 crore.

Earnings challenge

But even as efforts on the freight front bear fruit, there is no certainty about enhanced freight loading translating into a commensurate increase in earnings. And whether IR manages to reach even the overall earnings figure of 2019-20 remains to be seen.

In the Budget for 2020-21, the target for passenger earnings was Rs 61,000 crore and for freight, Rs 1.47 lakh crore. Coupled with earnings from other heads, gross traffic receipts were kept at Rs 2,25,613 crore, a 9.6 percent increase over 2019-20.

It is pertinent to mention here that IR has been falling short of its budget targets for several years but nearly always managed to earn more each year than the immediately previous year. In 2019-20, however, it not only missed the budget earnings targets but also fell short of the immediately previous fiscal’s earnings by nearly Rs 15,000 crore. Compared to the Budget targets, the shortfall was over Rs 30,000 crore.

(Sindhu Bhattacharya is a journalist based in Delhi who writes on a range of topics in business and economy.)
Sindhu Bhattacharya
first published: Jul 29, 2020 01:55 pm
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