Railways looks to get up to Rs 2 trillion from freight operations in FY24

National transporter confident of meeting FY23 revenue target

Ahead of the Budget, the ministry of railways might give a substantial push to its freight revenue projections for next fiscal year, Business Standard has learnt.

The national transporter is aiming to earn Rs 1.8-2 trillion in gross traffic receipts (GTR) as freight.

Senior officials in the ministry said the railways had maintained a freight growth rate of over 10 per cent in the past two fiscal years and was poised to achieve the same figure this fiscal year too.

The ministry had targeted 1,475 million tonnes (mt) of freight in the FY23 Budget. So far, the railways has ferried 1,185 mt, which is 8 per cent more year-on-year (YoY), and is estimated to achieve 1,500-1,550 mt by the end of this fiscal year.

But a sudden dip in the third quarter has become cause for concern, with a meagre 3 per cent growth rate in October-December.

The ministry’s hopes of a revenue bonanza, however, stem from its performance in freight revenue.

 

The national transporter has been able to increase its revenue by 16 per cent against 8 per cent growth in tonnage. This, officials said, was due to getting freight streams in more areas, increasing the average distance travelled by freight trains, and consequently earning the railways more revenue for the same volumes. Moreover, it has procured and commissioned more specialised wagons for specific goods such as automobiles, for which it charges higher rates.

The national transporter typically goes with conservative loading estimates when the revised estimates (RE) for any fiscal year and budget estimates (BE) of the next fiscal year are compared. For example, the BE for FY23 was 5 per cent higher than the RE for FY22, and the BE for FY22 was 3 per cent more than the RE in FY21.

Growth was over 10 per cent in both the years.

Sources said the ministry had kept its revised estimates for freight GTR in FY23 unchanged at Rs 1.65 trillion, despite those being expected to overshoot the loading target. Therefore, the thrust in GTR in FY24 would likely come from higher revenue per million tonnes. So far, the railways has been able to raise its revenue per million tonne to Rs 108 crore this fiscal year as against Rs 101 crore in FY22.

The ministry is reportedly targeting a 95 per cent operating ratio in the Budget — almost 2 percentage points lower than in the last Budget (the lower the ratio, the better is the performance). To achieve this, it will have to optimise its revenue both in the passenger and freight segments.

The railways is also closing in on its peak pre-pandemic passenger volumes — a loss-making area. As it compensates for the losses in passenger transport through freight movement, higher freight revenues will be essential to achieve this operating ratio.

The Railway Board has an infrastructure pipeline for the upcoming fiscal year, with projects of close to Rs 2.7 trillion reportedly in the offing.

Business Standard had reported projects worth Rs 1 trillion were ready for sanction under the “energy corridor” plan of the transporter.

Under Mission 3000, the transporter intends to double its cargo loading from 1,418 mt in 2021-22 to 3,000 mt by 2027.