Indian Railways- Economic or People’s lifeline? (A perspective on the rejigging of coach composition of Indian Trains)
Indian Railways (IR) with the tagline "LIFELINE TO THE NATION" is on an "FINANCIAL VENTILATOR"! Let it sink in, a much touted "Lifeline" since our Independence is on "Ventilator"!
Lifeline to the Nation
According to National Rail Plan (NRP) report, IR is the 4th largest railway network in the world by size with 123,542 Km of total tracks over a 67,415 Kms route. In the fiscal year ending March 2019, IR carried 8.4 billion passengers and transported 1.2 billion tons of freight. But then, probably we don't need all this data to understand that IR is truly "Lifeline to the Nation", a mere visit to any of the railway stations of the metropolitan cities of India will make us realize this, beyond doubt.
However, to understand the issue of "financial ventilator" we have to dig a little deeper to understand the financial problem of IR. In spite of the huge demand & perennially overcrowded passenger trains, freight traffic is the primary source of revenue for Indian Railways, accounting for more than 65% of total revenue in FY20. The reason for this is, "highly subsidized" passenger ticket fares of IR (the price of being a lifeline) & probably the failure to generate enough revenue surplus. The net result is, in FY 21-22, IR recorded its worst ever operating ratio of 107.39%. It essentially means during that year IR spent more than Rs 107 to earn Rs 100.
A Knee-Jerk Reaction
No business can survive with this kind of operating ratio & a solution was sought by government by rejigging the composition of trains. Accordingly, sleeper coaches with "highly subsidized" tickets of some trains are progressively being replaced by AC coaches with relatively high-fares to garner additional revenues & provide better facilities to the passengers. The decision was backed by data of 2009-10 to 2019-20 which showed, the share of reserved passengers carried by AC coaches increased by 9.8% points while that of Sleeper Class decreased by 2.8% points and that of Second Class decreased by 6.6% points in the decade considered & financials also improved, though marginally, post implementation of the decision.
However, on ground, this decision had much more negative repercussions than the benefits sought. Sleeper & unreserved coaches carry substantially higher no: of passengers than AC coaches. In fact, according to "The Hindu" report published in July, 2023 South Central Railway carries about 10.5 lakh passengers a day of which 8.5 lakh travel in unreserved coaches. Rejig of coach composition has led to overcrowding not only in reduced no: of Sleeper/General coaches but, also increased illegal travelling in A/c coaches leading to safety issues, reduced overall customer experience & NPS metrics.
An Unaccounted Role
The consequences of migration flows for nature-society interactions including on societal outcomes such as inequality; environmental causes and processes of cultural convergence in sustainability practices in dynamic new populations & formation of new cities is well-documented.
According to World Economic Forum report, well-managed migration is a solution to some of the world’s most important challenges. For centuries, migration has been a major driver of development and prosperity. Further, global demographic shifts and economic transformations underpin the need for migration. The focus on expanding regular pathways for migration is thus quintessential. More than 280 million people 3.6% of world's population today live in countries other than where there are born. The annual economic contribution of migrants could reach $20 trillion by 2050. However, to realize the multitude of benefits of migration, it is important to have enhanced public confidence in migration that is safe, regular and dignified. Indian Railways “the lifeline of Nation” has been cornerstone of this migration in the country.
Given that the mass migration of people across various states of the country is majorly enabled by Indian Railways, any attempt at increasing the profitability at the cost of the no: of people being carried by the National lifeline could have major implications for the economic activity of the country.
An Alternative way-Striking the Balance
Balancing the need, to be relevant as a key service provider to transport maximum people across the country efficiently & at the same time emerge as an economically sustainable service on busy routes is the key to IR staying relevant as "Lifeline to the Nation". A combination of short to medium term, medium to long term & long-term approach is needed to addressed the issue.
Short to Medium-term Potential Solution:
A combination of re-introduction of Antyodaya express (long distance overnight exclusive unreserved coaches-for maximum people transport) + Exclusive economy 3AC coach trains for economically sustainable services on busy routes.
For a sample journey of SBC-KYJ on Kanyakumari Express with the proposed Monotype AC & Monotype Unreserved coach Vs 2 trains with equal no: of Multi-mix coaches of Sleeper/AC/Unreserved class (As-it-is case scenario), it was found railways can make an additional revenue of ₹2.97 Lakh & carry additional 1362 people Vs the equal no: of coaches used in the same journey. (see fig 1)
- The “assumed pricing” of Monotype AC coach seat is kept 13% lower than the current Garib Rath express price for same journey.
- The “assumed pricing” of Monotype unreserved is modestly increased by modest ₹130 to the current unreserved ticket price of ₹220 for same journey.
Find ancillary revenues modes by monetizing existing assets on PPP model + leveraging advertising revenue source with DOOH/OOH/online media solutions.
Indian railway is among the largest land holder of the country, its railway stations & other facilities are near economic hub centers. Railway can use these properties in PPP model to spur economic activities around its premises & generate additional revenues. IR’s online ticketing platform IRCTC had by Nov 23, 66 million registered users & on average.31 Lakh daily tickets are booked online. IR can leverage these digital properties to create additional revenue sources efficiently. Apart from the 24 million daily travelers, million of people crowd throng to railway properties like stations, this focused travel community can be targeted through PPP model & OOH/DOOH. It is important for IR to generate revenue surplus utilizing additional assets to reduce the burden from the passenger fares to serve it social promise as lifeline to nation.
Long-term Potential Solution:
Laying down new additional tracks in PPP model to enable introduction of new trains to run on heavy-traffic routes.
From 1950-2014 there has been a 1642% increase in the rail traffic (Fig 2) of passenger/freight service, however, the corresponding increase in the railway track infrastructure has been only 27%, putting immense pressure on existing network. Infact, according to a data most of the existing tracks are running over-capacity, ferrying 110-115 trains where 100 trains should have been ideally running.
Fig-2
The issue in addition to preventing introduction of new trains to decongest the traffic has cascading effect on punctuality of trains, change in customer preference as modal shift of transportation, safety of travel etc.
Conclusion
A potion of short, medium & long-term policy solution than a magic pill solving the immediate financial crisis addresses the dilemma of Indian Railways. While a combo of Monotype unreserved train (Antyodaya) & Monotype A/C coach trains on busy routes can have multi-fold efficacy in this regard, a long-term focus on the development of additional railway tracks & reducing the burden on passenger train to generate money by finding alternative opportunities of monetization of existing assets with PPP model is important to avoid “forced policy decisions” impacting passenger transport across country by railways in future.
"Lifeline to the Nation" need not bleed to death or require constant "Financial ventilator" while serving its purpose.
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