Why the Indian Railways is on the brink

On June 3, Prime Minister Narendra Modi was to virtually flag off a Goa-Mumbai Vande Bharat Express train. The event was postponed after one of the worst train accidents in India’s history took place the previous night. More than 290 persons were killed and over 900 injured as three trains collided with each other in Odisha’s Balasore city.

The Goa-Mumbai train was eventually flagged off towards the end of June with fanfare on official social media handles, which has been a regular feature for Vande Bharat trains, much touted by the government for their high speed. However, social media users pointed out that tickets for flights on the same route were available for cheaper prices.

The horrific accident in Balasore and the unaffordability of Vande Bharat trains are examples of misplaced priorities in the railways under the Modi government. Initiatives like the Vande Bharat trains have been promoted to make a case for modernisation of the railways. But this has happened at the cost of ignoring matters of fundamental importance like safety, punctuality, availability of seats and revenue generation.

The concerns came to the fore over the last week as many headed back to their homes during the festive season. There were reports of violence due to trains being cancelled and several passengers complained of overcrowding. One person died and three were injured in a stampede while boarding a train at the Surat station.

Finances in poor shape

In a report tabled in Parliament in August, the Comptroller and Auditor General flagged that finances of the Indian Railways had slipped into “concern zone” in 2021-’22 as its operating ratio stood at 107.39% – the worst ever. This means that during that year, the Railways spent more than Rs 107 to earn Rs 100.

The government said that poor revenues due to the Covid-19 pandemic had an adverse impact on the operating ratio. However, data shows that the ratio worsened sharply in 2016-’17 and has consistently stayed close to 100% since then.

In fact, the national auditor’s report said that if accounting adjustments like considering advances for the next financial year as receipts are ignored, the ratio has stayed above 100% since 2018-’19.

A closer look at the railways books shows that the failure to generate enough revenue surplus is the reason behind the poor shape of its financials.

Earnings from passenger and freight services are the primary source of the railways’ income. In 2023-’24, the railways expects to earn 94% of its revenue receipts from these services, according to the Union Budget.

However, an analysis by the PRS Legislative Research shows that profits from earnings in freight services have sharply declined between 2016-’17 and 2020-’21 and losses from passenger services have consistently worsened during the period. The Railways uses its profits from the freight services to subsidise passenger services. The two simultaneous trends have widened the deficit it needs to bridge.

The impact of poor finances

The failure to generate revenue surplus has translated in the Indian Railways being unable to make crucial investments.

Take for example, the Rashtriya Rail Sanraksha Kosh, a corpus fund dedicated to railway safety, set up in 2017-’18. The aim was to allocate Rs 20,000 crore annually to the fund for five years, of which Rs 15,000 crore would come as budgetary support from the government and Rs 5,000 crore from the internal resources of the railways – freight and passenger revenues. But the target could not be achieved as the Railways failed to provide its share. Between 2017-’18 and 2022-’23, the Railways provided only Rs 4,225 crore, shows data collated by PRS Legislative Research.

Moreover, according to a Comptroller and Auditor General report from 2022, the scrutiny of vouchers showed that Rs 48.21 crore from the fund was used to buy foot massagers, crockery, electrical appliances, furniture, winter jackets, computers and escalators, develop gardens, build toilets, pay salaries and bonuses and erect a flag.

Like the Rashtriya Rail Sanraksha Kosh, the Depreciation Reserve Fund used for replacement and renewal of assets has also borne the brunt of poor revenues. Between 2017-’18 and 2022-’23, the fund received Rs 3,440 crore from internal resources of the Railways, which is less than half of the Rs 7,900 crore allocated in 2013-’14 alone.

In another report released in 2022, the national auditor said that at the end of 2020-’21, the Railways needed to replace old assets worth Rs 94,873 crore from the Depreciation Reserve Fund. Of this, Rs 58,459 crore was to be spent on renewal of tracks, but only Rs 671.92 crore was taken from the fund, the report said.

The auditor also noted that Rs 13,523 crore from the Rashtriya Rail Sanraksha Kosh was spent on track renewals, but the amount was insufficient.

To be sure, a 2015 white paper by the government said that 4,500 km of track should be renewed annually. Since then, this has not happened in a single year till at least 2021-’22. Not meeting the target for track renewals is significant because derailments comprised 70% of all train accidents, the railway ministry’s 2019-’20 safety report showed. More than a quarter of the 1,129 derailments that took place between 2017-’18 and 2020-’21 were linked to track renewals, according to the Comptroller and Auditor General.

Non-AC coaches reduced to meet revenue deficit?

Over the last week, as several social media users complained about overcrowding in trains and unavailability of seats, one of them claimed that the Indian Railways had reduced the number of sleeper and unreserved coaches and added air-conditioned coaches to increase its revenues.

On Thursday, Railway Minister Ashwini Vaishnaw refuted the claims, saying that there existed a standard composition of coaches in trains. However, over at least the last couple of years, there have been many news reports about the Railways slashing the number of non-AC coaches. Passengers having to shell out more money for seats in AC coaches even took up the matter with Union minister Nitin Gadkari and other leaders of the Bharatiya Janata Party, The Times of India reported in June. The social media user who tweeted about the reduction in non-AC coaches also posted specific details about 12 such trains.

Even if Vaishnaw’s claim was accurate, overcrowding in trains remains a matter of concern for the railways. In August, the Indian Railways had asked zonal authorities to convert reserved sleeper coaches with low occupancy into unreserved bogies to meet the rush in general compartments. In July, senior officials of the railways told The Hindu that besides the reduction in non-AC coaches, another reason for overcrowding was because the fully unreserved Jan Sadharan trains were discontinued after the pandemic as they were considered to be loss making.

The officials also said that the Railways had converted many passenger trains into express trains despite being aware that it would be difficult to run them at higher speeds and maintain punctuality on routes that were already clogged.

The Comptroller and Auditor General also found timeliness to be an ailment in the Indian Railways as its audit placed in Parliament in April last year found that the number of mail and express trains that were punctual declined from 79% in 2012-’13 to 69.23% in 2018-’19. This was even though a train in India is considered to be running late after a 15-minute delay at the terminating station – a more relaxed threshold than what prevails in countries like the United Kingdom, Germany, Russia and Japan, the auditor noted.

More recently, The Times of India reported that the average speed of passenger trains in India had declined by more than 5 km per hour as compared to last year. For freight trains, the average speed fell by almost 6 km per hour.

Even the government’s flagship Vande Bharat trains, designed to run at speeds of 110 km per hour to 130 km per hour, have failed to touch the average speed of even 100 km per hour. Officials told The Hindu that it was not safe for trains to run beyond a particular speed if the tracks were not in proper condition.

The Indian Railways seems to be learning the hard way that it is easier to build high-speed trains than run them, particularly if they have come at the cost of the rest of the network.