According to the Ministry of Railways, reduction in passenger traffic is attributed to factors like capacity constraints on major trunk routes, improvement in road infrastructure offering better and faster connectivity, gradual shift of passenger traffic to growth of metro rail services, cancellation of trains due to agitations, natural calamities and so on. While several proactive innovative steps are underway for improving passenger traffic, a positive growth of 0.45 per cent was achieved during the first half of the current 2016-17 fiscal ending September 2016, said a Railway Board source. Railways are taking several measures to retain its passenger base as also to attract more passenger traffic.

Indian Railways are incurring heavy losses of over Rs.30, 000 crore in passenger services this year, which is cross subsidised from freight earnings, because of it’s social responsibility. Simultaneously, railways are getting tougher competition from road traffic and low cost airlines. Presently, out of the total passenger traffic, the suburban segment constitutes 54.2 per cent, and 28.7 per cent are second-class ordinary. About 83 per cent of passenger traffic is from those segments where fares have been kept low consciously to cater to common people. In this context and in view of our system of democratic governance and majority of people being poor, scope for increase in passenger fares is little. Also possibly because of General Elections in 2019.
As for rail freight traffic, it is a matter of concern that while rail freight traffic between 1950-51 and 2013-14 grew 15 times, share of railways in originating tonnage has come down from 89 per cent in 1951 to 30 per cent in 2011-12.

Apart from high freight rates, necessitated by cross subsidization of passenger services, other factors responsible for declining freight traffic include under-investment in augmenting rail transportation capacity over the years, majority of the rail freight basket being confined to a small group of bulk core commodities with coal constituting 50 per cent. Efforts including innovative marketing stragies are underway to increase rail freight traffic basket. At the same time freight rate is prohibitive and uncompetitive. It is also true that road traffic has an edge. With the introduction of 60 ton trucks to 90 ton trucks in the coming times to meet the challenges of globalised Indian economy, competition to the rail freight from roads will still be higher. So options for hike in freight rates are saturated and few.

Ministry of Railways holds that with a package of Rs.8.56 lakh crore of investment over a period of five years, 253 doubling projects covering 21,337 kilometres and 550 traffic facility works together with two upcoming Dedicated Freight Corridors (DFCs) between Delhi-Kolkata (Eastern) and NCR-Mumbai (Western) targeted to be commissioned by December 2019, with proposed three more DFCs covering Delhi-Chennai, Kolkata-Mumbai and Kolkata-Vishakhapatnam-Chennai, Indian Railways will expand its network to improve both passenger and freight traffic as also its revenue to remain financially viable. According to current estimates, freight traffic will increase by 180 million tons.

In the budget 2018-19, the railways have fewer options to increase fares and freight rates. Nevertheless, some innovative out of box measures are expected to be announced, to mop up additional resources like dedicated commercial ads of global corporations in full trains preferably in elite trains like Rajdhani, Shatabdi and Duronto as well as in other mail/express/superfast trains. Some other measures most likely may include use of commercial space utilization to mop up additional revenue.

The much talked about Railways High Speed Authority and Rail Development Authority are likely to be explained, besides the progress of 100 per cent FDI in Indian Railways. Possibility of Germany’s Siemens setting up of their manufacturing of railways equipment under 100 per cent FDI of Make in India, negotiation for which is underway, is likely to be announced. Already the flexi-fare in operation in Rajdhani, Shatabdi and Duronto since September 2016 has come a cropper. The occupancy of these train services has gone down.

With the evolving outsourcing of non-core rail services, the quality of services including passenger amenities has gone down. Some innovative measures are likely to be announced to improve the rail services including passenger amenities with corrective measures to improve quality of catering and packaged drinking water following damning report of the CAG in 2017. Besides, rail safety is expected to be given additional added priority in view of major horrendous train accidents in 2016 and 2017!