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Indian Railways: Sectoral Presentation & Analysis

February, 2018

India has the world's third-largest railway network under single management. Indian Railways is planning to launch an integrated mobile application for availing all travel-related services such as hiring taxis, pre-ordering a meal, requesting for porter services, lodging at a retiring room etc.

In collaboration with the Government of Japan, a high speed passenger corridor project between Ahmedabad to Mumbai was undertaken in Railway Budget 2016-17. Construction work has already begun and the total cost of the project is estimated at US$ 14.52 billion. The project is estimated to be operational by 2022.

Revenue growth for Indian Railways has been strong over the years. During FY07-17, revenues increased at a Compound Annual Growth Rate (CAGR) of 9.8 per cent to reach US$ 25.62 billion in FY17. Revenues stood at US$ 18.2 billion during April-December 2017 and are expected to expand at a CAGR of 12.12 per cent during FY07–20E. Freight and Passenger earnings are the two largest components of revenues for Indian Railways. In FY17, Indian Railways generated US$16.9 billion in earnings from commodity freight traffic, much higher than passenger earnings of US$7.3 billion. In the last ten years, revenues from the commodity freight and passenger segment have expanded at a CAGR of 9.57 per cent and 10.42 per cent, respectively. Revenue from freight and passenger traffic during April-December 2017 stood at US$ 12.6 billion and US$ 5.6 billion respectively.

With increasing participation expected from private players, both domestic and foreign, due to favourable policy measures, both passenger and freight traffic is expected to grow rapidly over the medium to long term.

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