Title: “Indian Railways: On Track to Financial Independence Through Freight”
The Indian Railways, a cornerstone of the nation’s transportation system, is at a crossroads. While it has been successful in expanding its infrastructure and attracting passengers, a critical shift towards financial independence and sustainability is needed. This transformation requires the railways to recognize the untapped potential in freight transportation as the key to its future prosperity. The recent surge in capital investment, combined with strategic reforms, presents a unique opportunity to elevate the Indian Railways to new heights.
The Indian Railways has seen a significant surge in capital investment, with a remarkable increase of two and a half times since 2016-17. However, this surge has not translated into improved financial performance. In fact, the railways’ financial situation has slowed down despite the increased investment.The budget support for the Railways’ capital expenditure for the fiscal year 2023-24 stands at Rs 2.40 lakh crore, a staggering 51 percent increase over the previous year. This represents more than a five-fold increase since the merger of the railway budget into the general budget in 2017-18.
While this budget is decidedly investment-heavy, the impact of this increased investment should be evident in both physical and financial parameters. However, the reality is somewhat different. The quantity of cargo carried by the railways has only increased by 35 percent from 1,106 million tonnes in 2016-17 to 1,500 million tonnes this year. The distance that this cargo has traveled, a crucial factor since freight is charged based on weight and length of travel, has risen by 45 percent from 6.20 million net tonne km (NTKM) to 8.99 million NTKM. While this indicates progress, the railways should aim for greater growth to fully harness the potential of freight transportation.
The revenue earned from the cargo has increased by 58 percent, rising from Rs 1.04 lakh crore to Rs 1.65 lakh crore. This growth is indeed commendable, but it is essential to consider the rate per NTKM. This rate has risen from Rs 1.68 to Rs 1.84, indicating an increase in revenue per kilometer traveled. However, to compete effectively with the road sector, which offers flexibility in terms of route and timing, the railways need to further enhance this rate.
Passenger earnings have witnessed a substantial jump, especially in the current year. This surge comes on the heels of a challenging period in 2020-21 when the COVID-19 pandemic severely impacted passenger travel due to lockdowns and restrictions.Despite the recent growth in passenger earnings, there remains a critical issue. The number of passengers traveling by rail is still below the pre-pandemic levels by a staggering 1.50 billion this year. This drop in passenger numbers is more prominent in suburban passengers, reflecting the ongoing work-from-home trend and reduced migration. Suburban passengers, while an essential part of the railway system, often result in financial losses for the railways. Therefore, it is imperative to look beyond passenger traffic and focus on revenue streams that can make the railways financially self-sufficient.
To secure its financial independence and sustainability, the Indian Railways must prioritize the freight transportation segment. While passenger services have their role and significance, the freight sector has the potential to be the true driver of revenue and economic growth.
The railways should adopt a multifaceted approach to enhance their freight operations: like Streamlining operations, improving scheduling, and enhancing cargo-handling capabilities can make the railways more competitive; Continued investment in infrastructure, including dedicated freight corridors and modern cargo-handling facilities, will enable the railways to handle larger volumes of freight efficiently ; Embracing digital technologies for freight management, tracking, and customer interactions can enhance customer experience and operational efficiency; Offering competitive pricing, especially for long-distance freight, can attract more businesses to opt for rail transportation; Understanding the unique needs of freight customers and providing tailored solutions can foster long-term partnerships.
The Indian Railways’ journey towards financial independence and sustainability is contingent on its ability to harness the vast potential of freight transportation. While passenger traffic remains important, the real game-changer lies in optimizing the freight segment.
The surge in capital investment and recent reforms present a golden opportunity for the railways to elevate its role in the Indian economy. To do so, it must continue to invest in infrastructure, embrace digitalization, and adopt a customer-centric approach in its freight operations.
In conclusion, the Indian Railways is at a pivotal juncture. By shifting its focus towards freight, it can not only achieve financial independence but also play a more substantial role in the nation’s economic growth. The journey ahead may be challenging, but it is a path that leads to self-sustainability and prosperity. The time has come for the Indian Railways to chug along towards a brighter and more sustainable future.
SOCIAL PERSPECTIVES 