Discuss the extent, issues and possible remedies towards problems of Rail Finances in India

Extent and issues with Rail Finances

  • About 94 percent of the system’s revenues are spent on operating costs leaving little to modernize its creaking infrastructure.
  • Under investment in railways
  • Social service obligations like subsidizing passenger services. As per recent report railways has to carry social service obligation of more than Rs. 20,000 cr
  • Rail connectivity to remote locations which is less profitable
  • Transportation of essential commodities at below cost

Boosting non-fare revenue will help railways to improve its operating ratio. Railway can boost efficiency by improving the utilisation of same assets;  bringing down the journey time of trains, especially freight trains. Encouraging private players to get associated with rail business is also suggested. Shifting regulatory responsibility of railways from the government to an independent regulator to fix and rationalize the fares and setting an Investment Advisory Committee for raising resources for investments consisting of financial experts. Refunding the social service obligation expenditure incurred from low suburban fares and freight rates for some essential commodities and uneconomical branch lines. Implementing Bibek Debroi committee recommendations like commercial accounting, gradual liberalisation of railways and modernizing the railways. Increasing domestic investment as well as FDI in Railways.


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