Impact of COVID-19 on Railway’s finances
Distilled Policy Brief
- In 2018-19, freight and passenger traffic contributed about 67% and 27% of internal revenue respectively, and in 2020-21 Railways expects 65% from freight and 27% from passenger traffic.
- Railways cross-subsidizes passenger traffic losses using freight profits, with passenger business losses reaching about 82% of its revenue in 2017-18.
- Staff wages and pensions comprise 66% of Railways' revenue expenditure, while fuel expenses account for about 18%.
🎯 Prelims High-Yield Examination Points
In Indian Railways' financial structure, freight traffic consistently contributes a larger share (around 65-67%) of internal revenue compared to passenger traffic (around 27%), and freight earnings are traditionally used to cross-subsidize passenger operations.
⚖️ Mains Analytical & Syllabus Linkages
Analyze the structural financial challenges of Indian Railways, particularly the persistent cross-subsidization of passenger fares by freight revenues and the impact of external shocks like the COVID-19 pandemic on operating ratios and internal resource generation.
🎯 UPSC Prelims Practice Drill
With reference to the finances of Indian Railways, consider the following statements: 1. Freight traffic contributes a significantly higher share of internal revenue compared to passenger traffic. 2. Passenger business losses are typically cross-subsidized by freight profits. 3. Staff wages and pensions constitute the largest share of the Railways' revenue expenditure. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
All statements are correct based on the provided facts. Freight traffic contributes about 65-67% of internal revenue while passenger traffic contributes about 27%. Railways cross-subsidizes passenger traffic losses using freight profits, and staff wages and pensions comprise 66% of Railways' revenue expenditure, making it the largest share.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.