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| Type | Commercial Circular |
|---|---|
| Topic | freight |
Corridor (1868 kms) and, (iii) North South Sub Corridor (975 Kms).10 10 Dedicated Freight Corridor of Indian Railways, Press Information Bureau, Ministry of Railways, March 10, 2021,
Anirudh TR [email removed] July, 30, 2024 PRS Legislative Research Institute for Policy Research Studies 3rd Floor, Gandharva Mahavidyalaya 212, Deen Dayal Upadhyaya Marg New Delhi – 110002 Tel: (011) 2323 4801, 4343 4035 www.prsindia.org Demand for Grants 2024-25 Analysis Railways The Railways finances were presented on July 23, 2024, by the Finance Minister Ms. Nirmala Sitharaman along with the Union Budget 2024-25. Indian Railways is a commercial undertaking of the central government. The Ministry of Railways administers Indian Railways and forms policies through the Railway Board. Expenditure of Railways is financed through: (i) its internal resources (mainly freight and passenger revenue), (ii) budgetary support from the central government, and (iii) extra-budgetary resources (primarily borrowings but also includes institutional financing and public-private partnerships). Railways’ working expenses (salaries, pension, and asset maintenance) are met through its internal resources. Railways generate some surplus, which is not enough to cover its capital expenditure plans (such as construction of lines and procurement of wagons). Capital expenditure is supported by the grant from the central government and extra-budgetary resources. This note looks at the proposed expenditure of Railways for 2024-25, and the state of its finances over the last few years. Highlights Revenue: Railways’ internal revenue for 2024-25 is estimated at Rs 2,78,500 crore, an increase of 8% over the revised estimates of 2023-24. Traffic revenue: In 2024-25, traffic revenue is estimated to be Rs 2,78,100 crore, which is an increase of 8% over the revised estimates of 2023-24. 65% of this revenue is estimated to come from freight services (Rs 1,80,000 crore), and 29% from passenger services (Rs 80,000 crore). Revenue Expenditure: The total revenue expenditure in 2024-25 is projected to be Rs 2,75,700 crore, an increase of 7% over the revised estimates of 2023-24. Capital expenditure: In 2024-25, capital expenditure is estimated to be Rs 2,65,200 crore, an increase of 2% over the revised estimates of 2023-24. 95% of this expenditure is estimated to be financed through budgetary support from the central government. 4% will be financed through extra-budgetary resources and 1% through internal revenue. Operating Ratio: Operating Ratio is the ratio of working expenses to the receipts from traffic. A lower ratio implies better profitability and availability of resources for capital spending. In 2024-25, the Railways’ operating ratio is estimated to be 98.2%. This is marginally lower than the operating ratio for 2023-24 as per the revised estimates (98.7%). Trends in Revenue The Indian Railways earns its revenue through its passenger, freight, and sundry receipts (rent, catering receipts, interest and maintenance charges from outside bodies, commercial utilisation of land and air space, commercial publicity on rolling stock and station buildings). Internal revenue of the railways is used for funding its working expenses, which include salaries, pensions, and fuel. Revenue from freight in 2024-25 is estimated at Rs 1,80,000 crore, which is an increase of 7% over the revised estimates of 2023-24. Passenger revenue at Rs 80,000 crore is expected to see a 10% growth from the revised estimate for 2023-24. Sundry earnings for 2024-25 are estimated at Rs 10,500 crore, an increment of 13% from the revised estimate for 2023-24. The figure below shows the growth of passenger and freight revenue over the last ten years. Figure 1: Freight and passenger revenue between 2015-16 and 2024-25 (in Rs crore) Note: Figures for 2023-24 are revised estimates and 2024-25 are budget estimates. In 2020-21, passenger services were suspended in part due to the COVID-19 pandemic. Sources: Expenditure Profile, Railway Statements, Union B
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