The Indian Railways need to improve its competitiveness if it needs to compete with the growing aviation sector. Discuss.
The Railways inability to incrementally raise passenger fares is the biggest impediment to its revenue growth. The railways has officially recorded its worst financial performance in 2017-18, since 2000-01. It is a result of the transporter’s ability to match revenues with its ballooning expenses.
According to CAG, the railway operating ratio for 2017-18 stands at 98.4 percent which implies that the Railways spent ₹98.40 to earn ₹100 in revenues. Inability to railways to raise passenger fares over long routes as well as suburban service is the biggest impediment to growth of its revenues. The result is loss of money on all classes of passenger services offered other than AC chair car and AC-3 tier. Losses are highest for classes which are used by the masses as well ordinary trains (which are not express/ superfast).
The combined operation loss has been estimated at Rs. 19300 crore for sleeper and second class, for ordinary trains, it stands at Rs. 14,650 crore. Suburban trains carry about 4.6 billion passengers, while long distance carry 3.6 billion passengers a year with an average earning per passenger per kilometre stands at 44 paise. Misuse of the concessional tickets, privilege passes and ticket orders (PTOs) act as a drain on revenues. The Railways need to put such practices to check and improve its speed and efficiency at a time when air travel has emerged as a serious competitor.
Railways need to invest in the modernisation and maintenance of rolling stock, address manpower shortages. Leasing and Developing Railways land in prime locations can help raise revenues.