Advance reservations see Railways post record earnings growth in April

Advance reservations see Railways post record earnings growth in April

Indian Railways logged a record 20% growth in passenger earnings in April because of the doubling of the advance reservation period to 120 days. The move also pushed up total earnings up by a historic 18%, probably paving the way for sustained rise in earnings for the national transporter.

The ministry had informed all zonal railways on 27 February that advance reservation period is being increased from 60 days to 120 days with effect from 1 April. It had also asked Centre for Rail Information Systems (CRIS), its Information Technology arm, to tweak the reservation software accordingly. So, reservation could be booked on all days between 1 April and 30 July for trains leaving on 30 July.

According to data shared by the rail ministry, on 1 April, the first day of the implementation of the new guideline, total ticket bookings through the IRCTC website jumped to 1.34 million from 590,000 the previous day; total number of passengers booked increased to 3.2 million from 1.1 million the previous day; and total ticket revenue collected also jumped to Rs 250 crore from 76 crore the day before.

Also, revenue collection at reservation counters rose over three times to 217 crore as compared to Rs 64 crore on 31 March, indicating how the new trend is likely to lead to higher earnings for Indian Railways. 

“The main reason for the record earnings in passenger segment is the extra money being collected through the advance reservation period,” said a senior rail ministry official.

However, a former railway financial commissioner said the trend reflects only an artificial rise in earnings as the total number of tickets on offer remains the same. 

“The money collected through sale of tickets for the extra two months advance period would allow railways to marginally increase operating ratio at the end of the fiscal as they will get to keep the money longer. But the gains would vanish to a large extent at the end of the year,” he said. 

Indian Railways Earnings in April 2015
	Apr-14	Apr-15	% Change
Freight Volume (MT)	83.68	89.81	7.3
Freight Earnings (Rs Cr)	8174	9,552	16.8
Passenger Volumes (million)	684	658	-3.6
Passenger Earnings (Rs Cr)	3,353	4,013	19.6
Total Earnings (Rs Cr)	14,125	14,125	17.6
Source: rail ministry

He also informed that a similar initiative was taken by the ministry to increase the advance reservation period to 90 days during Lalu Prasad Yadav’s tenure as rail minister between 2004 and 2009 but had to be withdrawn.

The rail ministry’s high passenger earnings in April 2015 came on the back of a 3.8% decline in passenger volumes to 658 million, indicating higher fares have also played a part in jacking up earnings. Passenger fares were hiked by 5% in June 2013, 2% in October 2013 and 14.2% in June 2014.

Indian Railways’ freight earnings also jumped 16.8% to Rs 9,552 crore in April 2015 despite a mere 7% increase in freight volume to 89.8 million tonne. The rail ministry had raised freight rates by 5.8% in April 2013, 1.7% in October 2013 and 6.5% in June 2014. Also, a congestion surcharge of 10% is being levied on all goods traffic including containers originating from ports since November 2014. Rail minister Suresh Prabhakar Prabhu had hiked freight rates by an average 3% across commodities in the rail budget 2015-16.

Source :Business Standard.