Railways’ earnings hit by unrealistic targets

Indian Railways (IR) failed to hit the targeted revenue earning in July. One major reason for this had been the poor show by the zonal railways on passenger earning front.

None of the 16 zonal railways could achieve the passenger traffic revenue targeted for the month, the shortfall from the target being more than 20 per cent.

Further inquiries revealed that the picture is not very different for first four months of the current fiscal, that is from April to July.

During the period, IR’s total earning amounted Rs 44,221.96 crore against the targeted Rs 45,463.03 crore. In terms of percentage, the drop might not appear as significant, around 2.73 per cent, but in terms of actual amount, it was Rs 1,241.07 crore — not too small a figure. This, it is feared, might impact some of the railway projects as the investment decisions are often taken on the basis of projected earnings.

Again, none of the 16 zonal railways could achieve the passenger earning target set for the four-month period, when the actual total earning from passenger traffic was Rs 11,596.77 crore as compared to the target of Rs 13,684.18 crore, which is a drop of 15.25 per cent.

The shortfall, thus, was more than Rs 2,000 crore. In other words, the shortfall from the passenger earning target was made up by earnings on other heads, particularly freight earning.

Freight earnings rise

In fact, the earnings from goods (freight) during first four months of the current fiscal amounted to Rs 30,492.06 crore, registering an increase of Rs 676.67 crore or a 2.27 per cent growth over Rs 29,815.39 crore targeted for the period.

Similarly, IR’s other coaching earnings (earnings from parcels and luggage carried on passenger trains), too, posted 18.07 per cent growth at Rs 1,307.83 crore (from Rs 1107.63 crore) or an increase of Rs 200.20 crore. But sundry earnings during the period posted a shortfall of 3.57 per cent (Rs 30.53 crore) at Rs 825.30 crore against the target of Rs 855.83 crore.

This has raised eyebrows in various quarters.

At a time when it is almost impossible to get instant reservation in any long-distance train across the country at any time of the year, IR’s failure to achieve the targeted passenger earnings surprises many.

One explanation being given is the impact of current economic slowdown. In other words, during the period fewer people travelled by train than targeted because of the economic downturn. However, the argument does not appear convincing. There has been no drop in the long list of waitlisted passengers for long-distance trains.

More importantly, the growth in freight earnings, no matter however small, only confirms that the impact of economic slowdown may not be as serious as it is made out to be. Nine out of the 16 zonal railways exceeded their respective freight earning targets set for the period.

Northern Railway exceeded the target by Rs 440.71 crore, followed by East Coast Railway (exceeded by Rs 387.79 crore), South Eastern Railway (Rs 175.49 crore), East Central Railway (Rs 153.98 crore), Southern Railway (Rs 101.09 crore), North Central Railway (Rs 75.94 crore), Western Railway (Rs 42.65 crore), North Eastern Railway (Rs 12.34 crore) and West Central Railway (Rs 9.66 crore).

Ambitious targets

The real reasons may be different. Railway sources say it could be the setting of targets for passenger earnings at unrealistically high levels which are difficult to achieve but good enough to satisfy the politicians and others who, the mandarins in the Rail Board felt, must be kept happy with ambitious figures. They say the targets are fixed unilaterally by the Board without any prior discussion with the zonal railways.

This year many of these railways did draw the attention of the Board as early as in March, soon after the Rail Budget was announced and the targets were fixed. The zonal railways, it is pointed out, might not have achieved the targets but, in most cases, exceeded the performance in the corresponding period of last year.

Second, which is important, is the prevalence of suburban traffic and poor earnings from it. The number of passengers using suburban services, particularly in metros, is many times more than those travelling in long-distance trains and yet the suburban services leave a big hole in railway coffers. The services are heavily subsidised and used by daily commuters many of whom, it is feared, travel without tickets. There have been attempts to make these passengers pay through the introduction of several attractive schemes but not with much success. There may be various other sources of leakages. For example, the jurisdiction of suburban service often extends much beyond the suburban area.

santanu.sanyal@thehindu.co.in

http://www.thehindubusinessline.com/todays-paper/tp-logistics/railways-earnings-hit-by-unrealistic-targets/article5059548.ece

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