Indian Railways Faces Scrutiny Over Non-Fare Revenue and Dues Recovery
Indian Railways is under increased scrutiny following a recent report by the Comptroller and Auditor General of India (CAG). The report highlights significant shortcomings in the national transporter's ability to generate non-fare revenue and recover outstanding dues, impacting its financial health and operational efficiency.
Lacking Non-Fare Revenue
The CAG report underscores the Indian Railways' struggle to boost its earnings beyond traditional passenger and freight services. Non-fare revenue (NFR) constitutes a small percentage of the total revenue of Indian Railways. As of fiscal year 2024-25, NFR stood at ₹686.86 crore, a mere 3% of the total revenue. This figure pales in comparison to global benchmarks, such as Deutsche Bahn in Germany (34%) and Japan Railways (30%).
To address this gap, NITI Aayog has launched an initiative to identify strategies for maximizing non-fare revenue through asset monetization and public-private partnerships in station redevelopment. The objective is to reduce the reliance on traditional revenue streams and improve financial sustainability.
One area of concern is the monetization of land assets. As of March 2023, Indian Railways possessed approximately 4.88 lakh hectares of land, but only 13% was identified as vacant. Alarmingly, only a negligible 0.14% of the vacant land was awarded to developers, and none of the awarded commercial sites had been developed. The Rail Land Development Authority (RLDA), established in 2006 to develop and monetize surplus railway land, has reportedly failed to achieve the desired outcomes.
Despite these challenges, Indian Railways has seen some success in non-fare revenue generation through advertisements. Over the past five years, it has generated ₹1,313 crore from advertisements at railway stations and on trains. This revenue is generated through station-level and train-level advertising, including displays across station premises, platforms, foot-overbridges, and the interior and exterior surfaces of trains.
Failure to Recover Dues
The CAG report also reveals that Indian Railways has failed to recover substantial dues from private entities. As of March 2023, outstanding dues of ₹4,087.33 crore remained unrealized from 269 private siding owners. These dues include land license fees and charges related to the construction and maintenance of sidings. A siding is an extension track that connects the main railway line with a company's premises.
The audit further revealed discrepancies in agreements and billing processes. Agreements were not executed with 22 private siding owners, 14 siding agreements were not available for audit, and 147 siding agreements were not renewed by March 2023. In many cases, the Railways did not even bill the owners for the services provided.
The Railway Board had instructed all zones in 2017 to ensure the recovery of dues from private siding owners. However, the CAG report indicates that these instructions were not effectively implemented. The CAG has recommended that Indian Railways implement a time-bound recovery plan, including an integrated system, IT app usage, regular monitoring, and internal audits.
Financial Lapses and Operational Inefficiencies
In addition to the issues of non-fare revenue and dues recovery, the CAG has identified other financial lapses and operational inefficiencies within Indian Railways. A previous audit report highlighted over ₹573 crore in financial lapses and operational inefficiencies across the Ministry of Railways. These lapses include short recovery of land license fees, failure to recover contributions to District Mineral Foundations, and non-realization of shunting charges.
These findings underscore the need for Indian Railways to strengthen its financial management, improve contract enforcement, and enhance planning processes. Addressing these systemic weaknesses is crucial for ensuring the long-term financial health and operational efficiency of the national transporter.
