Lucknow-Delhi Tejas, India’s first privately run train, earned an operational profit of only Rs 7.73 lakh in its first month of operation, and not Rs 70 lakh as reported by the media, according to Railway Minister Piyush Goyal.
The train had been widely reported in the media to have earned a whopping 70 lakh in its first month of operation and was held up as a shining example of what privatization could achieve.
Lucknow-Delhi Tejas is the only one among the three Tejas trains running in the country to be operated by IRCTC, which a semi-independent and publicly listed company whose main function is to supply catering services to the Indian Railways.
Last month, media reports quoting Press Trust of India, one of India’s top news agencies, reported that the Delhi-Lucknow Tejas earned Rs 70 lakh in profit in its first month of operation.
“IRCTC’s Tejas Express has made a profit of around Rs 70 lakh till October this year while earning a revenue of nearly Rs 3.70 crore through sale of tickets, sources said, signalling a steady start for the Railways’ first “privately” run train,” said a report by Economic Times on Nov 11.
The article said the train — which was apparently seeing average occupancy of 80-85% — was earning a profit of Rs 3.5 lakh per day.
THIN MARGINS
However, the numbers disclosed by Piyush Goyal today reveal a very different picture. According to the minister, Tejas was able to generate a total of Rs 4.47 cr in revenue in the month of October.
However, it also had to shell out 98.3% of the amount — or Rs 4.39 cr — by way of payment made to Indian Railways, rentals and other service and material charges.
The ‘engine’ of Tejas is not managed by IRCTC, but by Indian Railways, and IRCTC has to pay a fixed amount per trip to Indian Railways as ‘haulage charges’. It also has to pay ‘rental’ on the train itself, as it is owned by Indian Railways.
In the end, IRCTC was able to generate an operating profit of just Rs 7.73 lakh, or 1.7% of its revenue, from the train.
It is possible that the PTI report did not take into account certain payments and charges that may have been levied on a monthly basis, and was based on the daily collection and expenditure figures of the train.
Piyush Goyal also revealed that the IRCTC Tejas Express — whose ticket rates are higher than that of most trains — had recorded an occupancy of only 62% for the month of October. In comparison, he pointed out, the Delhi-Lucknow Shatabdi Express, which offers a comparable service on the same route, had a 100% occupancy level during the same period.
Besides Delhi-Lucknow, Indian railways has two other Tejas trains, which are targeted at short-haul air travelers. These trains, on Mumbai-Goa and Chennai-Madurai routes, are not operated by IRCTC, but by Indian Railways.
The upcoming Mumbai-Ahmedabad Tejas Express — expected to start operations this month — will however be operated by IRCTC on the lines of the Lucknow Tejas Express.
EFFICIENCY ISSUES
The efficiency levels of Indian Railways, the biggest ‘company’ in the world with nearly 12.5 lakh employees, has always been a matter of hot debate.
Despite having a monopoly over rail travel, Indian Railways racks up huge losses on its passenger operations.
According to the most updated numbers, Indian Railways manages to get only 57% of its expenses from selling tickets, despite nearly all its major trains being sell outs. On some routes such as Mumbai-Chennai, trains get fully booked on the day the booking is opened.
There have been calls to make the organization — which carries 2.3 cr passengers per day — more efficient by bringing in more accountability.
In response, the Narendra Modi government set up a committee two months ago to draw up a road-map for introducing 150 trains and 50 railway stations under private management.
The committee comprises senior government officials, including the CEO of Niti Ayog (Planning Commission), Chairman of Railway Board and secretaries to the departments of economic affairs and urban affairs.
Goyal today said part of the reason for the low profitability of Indian Railways may be concessions given to older passengers, government officials, those with physical disabilities and so on.
“The scope and scale of trains operated over Indian Railways cannot currently be compared with the New Delhi-Lucknow Tejas Express being operated by IRCTC, in which fare is generally higher as compared to similar services on Indian Railways and no concession is admissible,” he said.