The Telegraph
Thursday , February 13 , 2014
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Steps to up rail revenue
Total income to rise by Rs 20276cr

New Delhi, Feb. 12: Indian Railways plans to increase its total earnings by Rs 20,276 crore to Rs 160,775 crore in 2014-15, eyeing revenues from premium trains and an increase in freight earnings.

While passenger revenue is expected to increase over 20 per cent to Rs 45,255 crore in the next fiscal, freight earning is projected to go up 12.5 per cent to Rs 105,770 crore.

“The budget estimates for goods, passenger, coaching and sundry other earnings have been kept at Rs 1,05,770 crore, Rs 45,255 crore, Rs 4,200 crore and Rs 5,500 crore, respectively, in 2014-15,” railway minister Mallikarjun Kharge said while presenting the interim rail budget for 2014-15.

The minister has set a target to reduce the operating ratio to 89.8 per cent in 2014-15. The ratio had gone up to 90.8 per cent this fiscal from the budgeted 87.8 per cent.

Operating ratio is the amount of money spent for every rupee earned by the railways. The best-ever operating ratio of Indian Railways was 74.7 per cent in 1963-64.

In the current financial year, revenues from freight and passenger services are estimated at Rs 131,500 crore.

The railways also plan to earn more by offering discounts on freight traffic such as on wagons returning empty after delivering goods to ports.

The proposed dynamic pricing model on 17 premium routes is expected to hike earnings from passengers to Rs 45,255 crore in the next financial year, an increase of 20.7 per cent over the revised estimates of the current fiscal.

In the current fiscal, passenger revenues are set to drop around 11 per cent to Rs 37,500 crore from the budget estimates of Rs 42,210 crore made in February 2013.

The railways had raised tariffs this fiscal but a fall in earnings from second-class passengers dragged down earnings.

Passenger earnings in the upper class are projected to go up 10.6 per cent to Rs 11,175.60 crore this financial year over budget estimates of Rs 10,105.53 crore, while revenues from second class are set to decline 18 per cent to Rs 26,324.40 crore.

In freight loading, the target of 1,047 million tonnes for this fiscal will be exceeded only marginally at 1,052 million tonnes.

The target for the next fiscal is higher by 4.6 per cent at 1,101 million tonnes.

The numbers for 2013-14 and the next year show that inflation is eating into the railway’s savings and damaging its ability to invest.

Despite a 14 per cent increase in gross traffic receipts to Rs 160,775 crore in 2014-15, the annual plan is up only a meagre 1.4 per cent over what was estimated last year at Rs 63,363 crore.

Clearly the bulk of the increase is going to be swallowed up by increased running costs in the absence of any fresh investment.

The annual plan shows an increase of 8 per cent over the revised plan outlay of 2013-14 at Rs 59,359 crore — which is still below inflation, which is at the double-digit level. This means the railways is eating up its revenues rather than investing in rolling stock and infrastructure.

Further, the rail budget expects an increased level of support from the general budget at Rs 30,200 crore — up 16 per cent from Rs 26,000 crore in the last budget.

Indian Railways will borrow less at Rs 13,800 crore from the market for capital expenditure during 2014-15.

Ordinary working expenses have been proposed at Rs 110,649 crore in 2014-15, which are Rs 13,589 crore higher than the revised estimate for the current year.

Pension outgo has been budgeted at Rs 27,000 crore against the revised 2013-14 estimate of Rs 24,000 crore.

Total working expenses are budgeted at Rs 144,199 crore compared with Rs 1,27,260 crore in the revised estimate for 2013-14.

“This will leave a net revenue before dividend of Rs 19,655 crore and an operating ratio of 89.8 per cent,” the budget document said.