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Railways struggles to meet targets amid financial stress

By Anisha Dutta
PUBLISHED ON JAN 30, 2020 11:19 PM IST

New Delhi: The Indian railways is struggling to meet its freight and passenger earning targets for the financial year 2019-20 amid dwindling finances. The 2019-20 budget pegged its freight and passenger targets for the fiscal year at Rs 1.43 trillion, up by 12.2 % from Rs 1.27 trillion the previous year. The passenger fare earning targets were pegged at Rs 56,000 crore, up 9.7% from Rs 51, 066 crore.

According to railway ministry’s cumulative data till November, freight earnings stood at Rs 71,800 crore, 4.32 % less than the same period a year earlier and 19.72 % lower than its target. Freight earnings have been affected due to fall in coal and cement movement amid an economic slowdown.

The passenger earnings till the same period stood at Rs 35,254.05 crore, up by 3.99% from last year and 5.33% less than its target. This comes when the railways is focussing an operating ratio of 95% in the current fiscal, down from 97.3% in 2018-19.

Operating ratio measures expenses as a proportion of revenue or the amount spent on every rupee earned.

Railway board chairman V K Yadav on Wednesday said the railways is reeling under financial stress and would struggle to meet its operating ratio target this financial year ahead of the Union budget.

The 2019-20 Union budget proposed a capital expenditure of Rs 1,60,175.64 crore for the railway ministry, the highest-ever surpassing previous year’s Rs 1,48,528 crore. The Union finance minster Nirmala Sitharaman had said the railway network will require an investment of about Rs 50 lakh crore till 2030.

The railways has announced a slew of reforms for increasing passenger fares, redevelopment of stations and privatisation of 150 trains.

Arindam Guha, Deloitte India’s partner, said to mobilise resources, the railways will need to look at a combination of monetisation of non-core resources like surplus land and property, which can either be sold directly or used for innovative financing mechanisms leveraging value capture principles during station redevelopment. He added it could also go for revenue augmentation through value added services like app based booking, dynamic pricing, in-train amenities, advertising etc.

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