Indian Railways Sees Profit Growth as Freight Revenue Supports Passenger Service Losses

The latest report by the Comptroller and Auditor General (CAG) reveals that Indian Railways used freight traffic profits to offset losses from passenger and other coaching services in 2022-23. The report highlights a positive trend in net profits for Railway Public Sector Enterprises, which rose from Rs 6,146.29 crore in 2018-19 to Rs 12,056.61 crore in 2022-23.

During the financial year 2022-23, Indian Railways reported a net surplus of Rs 2,517.38 crore, contrasting with a net deficit of Rs 15,024.58 crore the previous year. This improvement was attributed to increased earnings from passengers, other coaching, and freight services. Freight earnings were significantly boosted by coal transportation, which accounted for 50.42% of the total.

Railway PSEs Profit Growth

Among the 45 Railway Public Sector Enterprises (PSEs), 33 recorded profits amounting to Rs 12,145.97 crore in 2022-23. This group included 12 railway companies, 10 subsidiaries, five joint ventures, and six special purpose vehicles (SPVs). The CAG report also noted a decrease in losses from passenger operations compared to the previous year.

The Ministry of Railways' total expenditure reached Rs 4,41,642.66 crore in 2022-23, marking an increase of 11.34% over the prior year. Capital expenditure rose by 7.21% to Rs 2,03,983.08 crore, while revenue expenditure saw a rise of 15.15%, totalling Rs 2,37,659.58 crore.

Operating Ratio and Financial Discrepancies

The Operating Ratio improved to 98.10% in 2022-23 from 107.39% in the previous year. However, the CAG report pointed out discrepancies in financial reporting. While Railways showed a net profit of Rs 2,517.38 crore after adjusting for passenger service losses with freight profits, it actually incurred a net loss of Rs 5,257.07 crore.

The audit revealed that total working expenditure was understated when comparing cross-subsidisation records with operational earnings and expenses. The total working expenditure was reported as Rs 2,37,659.58 crore against earnings of Rs 2,40,176.96 crore.

Passenger Services Losses

Despite generating a surplus on paper, the actual financial records indicated a loss due to cross-subsidisation practices. Total expenses for all train operations amounted to Rs 2,45,393.71 crore while revenue receipts were Rs 2,40,136.64 crore, resulting in a loss of Rs 5,257.07 crore.

Passenger services alone incurred a loss of Rs 60,041.18 crore compared to a profit of Rs 54,784 crore from goods services. The Sleeper Class faced the largest operational loss at Rs 17,819.21 crore followed by Ordinary Class at Rs 17,076.90 crore and Second Class at Rs 16,357.02 crore.

The CAG report underscores the need for accurate financial reporting and effective management strategies within Indian Railways to address these fiscal challenges while maintaining service quality and efficiency.

With inputs from PTI