Trends in Revenue of Indian Railways

The Revenue of Indian Railways was mere Rs. 260 Crore in 1950-51. In the same year, total working expenses were Rs. 210 crore giving a net earnings of Rs. 50 crore. Following table shows some historic data about the revenues of Indian Railways post independence.

It’s worth note that after meeting its all the expenses and also providing the dividend to the general reserve, the Indian Railways had continuous positive surplus almost every year till 1965-66. From 1966-67 onwards, all the years till 1975-76 showed the deficits except two years. In certain years, Railways was even unable to meet its dividend liability. When the Railways was not able to meet the dividend liability to the general exchequer of the country, a separate account was created which was called Differed Dividend Liability Account. This account was used to credit the differed dividend liability of the Railways, so that the railways could pay the dividend in future. This Differed Dividend Liability Account was worth Rs. 500 Crore by 1984-85 and was liquidated only by 1996-97.

However, from the middle of the 1980s , the Railways not only started earning sufficient income but also get a surplus. Again when the NDA Government came into power, the Railway finances deteriorated. But in the UPA-I Regime, the Railways done extremely well and was able to convert large losses in surplus. The railways Minister Lalu Prasad Yadav was credited for this turnaround , though when the next elections finished his political career almost, he was alleged of playing with the revenue numbers.

But still, that time was a turning point in the history of Indian Railways. The reason of this successful turnaround was an approach which focused on “playing on volumes and making the unit cost down”.

• The maximum load permissible per container was increased and this increased the yield per train rather than increasing tariff per passenger or tariff per ton.
• The wagon turnaround time was reduced and incremental loading was achieved. This gave an additional Rs. 14000 Crore in next 4 years.
• The Freight charges were rationalized, increased for some commodities such as iron ore and decreased for others. The discounts for lean season and extra charges for peak season were started.
• Length of the passenger trains was increased, rather than increasing the charges per person.
• A new investment policy was adopted in which the low cost and high return projects were given importance.

The surplus was to be reinvested in several funds that augmented the Railway Capacity.