Indian Railways is anticipating lower earnings from both passenger and freight traffic, according to recent reports. The Ministry has estimated passenger revenue at ₹87,300 crore for the financial year 2026-27. This is a 9% increase from the revised estimate (RE) of the current fiscal year, spurred by the introduction of new trains like Vande Bharat and Amrit Bharat. However, this revised estimate is lower than the initial Budget Estimate (BE) of ₹92,800 crore for the current year, which is attributed to an expected 10.6% decrease in passenger kilometers traveled by March 2026.

In the freight segment, the Railways projects earnings of approximately ₹1.88 lakh crore for FY27. This figure aligns with the Budget Estimate for FY26 but represents a 6% increase compared to the revised estimate for the current fiscal year. Despite maintaining the freight loading target at 1,700 million tonnes for the current year, the Railways anticipates generating around ₹1.78 lakh crore by March, which is about 5.5% less than the initial target. The shortfall in freight revenue is linked to an approximate 1% reduction in the average distance goods are transported, indicating shorter hauls than initially projected.

Railway Minister Ashwini Vaishnaw addressed concerns about the national transporter's earnings, stating that the Railways has consistently increased revenue from both passenger and freight services. He noted the increase in passenger revenue from ₹70,693 crore in FY24 to ₹1.75 lakh crore in FY25, with a revised estimate of ₹80,000 crore for FY26. Similarly, freight revenue has risen from ₹1.68 lakh crore in FY24 to ₹1.71 lakh crore in FY25, with a revised estimate of ₹1.78 lakh crore for the current fiscal year. The Minister explained that the government typically sets ambitious targets, which accounts for the Railways not meeting the Budget Estimate.

Over the past five years, Indian Railways has adjusted passenger fares three times, which has led to a reduction in freight's share of total revenue. Freight earnings have decreased from 68% in FY23 to 65% in FY25, and are projected to be 62% in FY26. This shift reflects a strategy to reduce the Railways' reliance on freight to subsidize passenger services, despite substantial losses in passenger operations. In FY23, freight earnings accounted for approximately 68% of the Railways' gross traffic receipts. However, the profit from freight traffic was used to offset losses from passenger and other services, resulting in an uncovered loss of ₹5,257 crore from passenger operations.

The Economic Survey for FY26, which was presented in Parliament, highlighted the Railways' reduced dependence on freight revenue due to passenger fare revisions and improved efficiency. While freight loading demonstrates strong momentum supported by core sectors, high freight rates can impact competition and prices. Rationalizing these rates could potentially boost revenue and encourage greater reliance on rail transport.