While the
overall revenues of Railways have increased in the last 10 years barring
2016-17, the growth rate of revenues has fallen in the last few years. Here is
a look at the numbers for the last 10 years.

Railways
are the lifeline of India’s public transport and also contribute significantly
to the economy. A major share of the passenger traffic as well as
transportation of goods & freight across the country is of the Railways.

The
revenue earned by Indian railways is a key component of non-tax
revenue of India
and is used to meet the revenue expenditure of the
railways along with funding infrastructure development and other capital
investments of the Railways.

Therefore,
a continuous increase in revenue of railways is important to ensure that the growing
expenditure & investment needs are met. That will also ensure that these
investment needs do not become a burden on India’s budget.  In this story we explore the trends in railway
revenue over the past decade.

The
growth rate of overall Railway Revenue has slowed down

Factly
had filed an RTI application and received information in regard to the various
sources of railway revenue for the last 10 years.  As per this information, the provisional
revenue for 2018-19 is ₹
190.57 thousand crores (1.9 lakh crores). This is an increase over the previous
year where the actual total revenue as per the RTI information was ₹178.9 thousand crores.

At
the beginning of the decade i.e. 2009-10, the revenue of the railways was ₹ 89.36 thousand crores. The overall annual revenue has
increased every year barring 2016-17, when it was less than the revenue of
2015-16 by about ₹
2400 crores.

Railway revenues_total annual Railway revenues of India

Rate
of growth of Railway revenues has slowed down over recent years

While,
the annual revenues have increased during 9 of the last 10 years, the rate of
growth has reduced over the past few years. For the year 2010-11, the annual
revenue of railways has increased by 8.17% over the previous year. In the
subsequent years the rate of growth was more than the earlier years with
2012-13 recording an annual growth rate of 18.87%.

The
next two years, all though the annual growth rate was less, it was still in
double digit figures.  In the last four
years, however, the annual growth rate of railway revenues has only been in
single digit. As highlighted earlier, there was a negative growth in 2016-17
when the revenues shrunk by 1.46%.

The
provisional annual growth rate for 2018-19 is estimated at 6.52% which is less
than the previous year (2017-18)’s growth rate of 8.17%.

Railway annual growth rate of Railway revenues of India

Revenues
from Goods forms the largest share of Railway revenues

The
revenue from transportation of goods average out to around 65% of the total railway
revenue, for the last decade.  With such
a sizeable chunk of the total revenue, any variance in the revenue earned from
goods had a direct impact on the trends of overall revenue.

For
the year 2018-19, the provisional revenue for Goods was ₹127.43 thousand crores, which makes up to 66.87% of
the total revenue. At the beginning of the decade in 2009-10, the revenue from
goods was ₹
58.5 thousand crores.

Apart
from the blip in 2016-17, where the revenue earned was ₹ 4.87 thousand crores less than the previous year, the
annual revenue from goods did increase every year over the last decade.

Income
from passengers forms the second highest source of revenue for the railways.  In 2009-10, the revenue earned from passengers
traveling by Indian Railways was ₹ 23.48 thousand crores. The annual revenues from this
segment witnesses an incremental increase every year and by 2018-19, the
provisional revenue earned through passenger traffic is ₹ 51.06 thousand crores.

The
revenues earned through other sources like sundry services, miscellaneous receipts
and other coaching services are marginal compared to the earlier two sources. The
total revenue earned from these three services in 2018-19 is ₹ 12.07 thousand crores.  There is a whole
list
of heads that are classified as sundry services.
These include rents, lease amounts of railway property, parking charges in railway
stations, sale proceeds of unclaimed or damaged goods etc.

While
the revenue earned from other coaching services and sundry services has been
largely incremental every year, the revenue from Misc. receipts have tapered
off over recent years.

The
year 2016-17, marks a standout year fir sundry services, wherein Indian
railways earned ₹
10.37 thousand crores.

Railway revenues_total annual Railway revenues of India by service

Growth
rate of revenue from goods largely influences the overall revenue growth

As
highlighted earlier, revenue from goods forms a major portion of the overall revenue
earned by Indian Railways. The inconsistency in the growth rates observed over
the decade in the overall revenues is largely contributed by the
inconsistencies in the growth rates of revenue earned from goods.  

The
four-year period during 2011-15 has recorded growth rates in revenue through goods
services in double digits with 10.67%, 22.60%, 10.14% and 12.66% for 2011-12, 2012-13,
2013-14 and 2014-15 respectively.

This
period was followed by low growth rate of 3.23% and negative growth of -4.46%
in subsequent years. The growth rate in revenues through Goods services has
fared better over the last two years with 12.9% and 8.87% in 2017-18 and
2018-19 respectively.

Railway revenues_total annual Railway growth rates through Goods services

Lower
growth rates in revenue through Passenger services over past 4 years

Unlike
revenue earned through Goods services, the annual revenue earned through
Passenger services increased every year.  However, the rate of growth has slowed down in
the last four years.

During
the initial years of this decade the growth rate was 9.81% and 9.51% for
2010-11 and 2011-12 respectively. During the next three years, the revenues
earned through passenger services have recorded a double-digit growth year on
year with 10.89%, 16.63% and 15.49% respectively. However, after these high
growth years for revenues earned through passenger services, the growth rates
have fallen to single digit numbers over the last few years.  The growth rates for the last four years i.e.
during the period 2015-19 were 4.96%, 4.51%, 5.11% and 4.98% respectively as
noted in the chart below.

Railway revenues_total annual Railway growth rates through Passenger services

Meeting
increased expenditure year on year is a challenge

A
look at railway
budget
over the years reveals that a major portion of the
revenue earned by the railways goes into meeting the working expenses.

The
Railway budget for 2019-20 estimates the total revenues at ₹ 216.93 thousand crores. Of this, the amount to be
spent on working expenses is estimated at ₹ 205.5 thousand crores. A further 2.4 thousand crores are
estimated for miscellaneous expenditure.

Furthermore,
in her budget
speech
for 2019-20, the Minister of Finance, Mrs. Nirmala
Seetharaman has estimated that around ₹ 50 Lakh crores would need to be invested in Railway
infrastructure between 2018-2030.  It is
further estimated that the capital expenditure every year is going to be around
₹ 1.5 to ₹ 1.6 lakh crores

Railway revenues_capital expenditure every year estimate

Although a Public-Private partnership is proposed, currently a major burden of this capital outlay falls on the government. In this context, the lower growth rate in railway revenues is a cause of concern as it may lead to additional burden with government having to cough up money for railway infrastructure development.  With a high operational ratio of around 95%, Indian railways is treading a very fine line in managing its operational expenses with the revenues earned, let alone funding capital investments with its revenues. Hence, the need to increase the revenues and reduce the operational ratio are imperative.

Featured Image: Growth of Railway revenues in India

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