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Getting back on track PDF Print E-mail
Thursday, 20 April 2017 04:41
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Ishaan edit

Good start on non-fare revenues, but still a way to go

 

Amid the steady worsening of Railways finances—the operating ratio for FY17 collapsed to 97 as against the original target of 92—the news of a 70% hike in non-fare revenue is heartening. This rose to Rs 10,181 crore in FY17, as against Rs 5,928 crore during FY16—as a share of total revenues, this is up from 3.6% to 6.2%. And with tenders to be put out soon for over 2 lakh screens across 2,000 railway stations across the country, this should pick up further, though the fact that the total out-of-home advertisement market is projected to be under `3,000 crore this year, there is a ceiling to just how much the Railways can achieve. Theoretically, a lot more money can be made from station redevelopment—a separate non-fare revenue directorate was set up in the Railway Board last year—but it is best to be cautious and await the results of the first phase of 23 stations chosen for this; in some cases, the Railways is even offering viability gap funding for redevelopment, so how this scheme takes off will depend upon a lot of parameters including the ability to get all relevant permissions in cities like Delhi that are more lucrative. How far the non-fare revenue efforts have to go can be seen from the fact that, five years ago, Dinesh Trivedi had set a 30%-of-revenue target.
The increase in non-fare revenues has to be juxtaposed with other Railway initiatives such as the introduction of Hamsafar trains which, by virtue of offering only 3-AC facilities, are more profitable than others. While other new trains are also being introduced, there is a ceiling to how many can be introduced, eventually, the Railways has to make a dent in its whopping passenger subsidies—`33,000 crore in FY15. Given how the subsidies force Railways to hike fare in the other AC segments and in freight and, in turn, cause it to lose business, fixing this is critical. It is early days on new experiments like allowing private freight trains—right now, the trains are owned and run by Railways for a flat fee—but when the regulator can fix prices for various services as well as lay out conditions for equal access to tracks/services for private trains, it could get a boost. This will have to wait for the account separation exercise that could take two years more—only then can the regulator get a proper idea of costs. At that point, Railways will have to take a call on making the regulator’s recommendations mandatory. Getting the Dedicated Freight Corridor running will also take a couple of years more—that is when Railways efficiency will really get a boost.

 

 

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