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Last Updated On: 09-04-2011


How does the Indian Railways fare financially?

The Indian Railways is the monopoly national rail transport agency in the country. In FY2003-04,1 it carried 381 (provisional) billion tonne kilometers of freight and 533.65 (provisional) billion passenger kilometers generating gross revenues of Rs 426 billion. It had a net surplus of 9.2% of revenues in fiscal 2003. Indian Railways has consistently shown revenue surpluses. While freight traffic accounts for about 62 per cent of its revenues, passenger traffic accounts for around 29 per cent. The balance is accounted for by a number of miscellaneous items.

 

CRISIL expects the Indian Railways to retain its dominant business position in the medium term given the lack of competition in transporting commodities over long distances. In the long term, its vulnerability to competition from other means of transportation will increase should cross-subsidies between freight and passenger fares remain at their current high levels. This will be particularly true once the highway network improves, roads are upgraded and more fuel pipelines built. Thus, going forward, its profitability and interest coverage will hinge on its ability to implement adequate fare revisions, especially in the loss-making passenger segment, without losing market share to competing modes of freight transportation.