Railways Have to Diversify Revenue Sources

Chennai: Indian Railways needs to diversify its revenue sources by leveraging real-time data for operational efficiency, introducing premium services and focusing on commercial development around railway stations to sustain its pace of development.

Railways have plans to construct 100,000 km of new railway tracks over the next 20 years, expand the Kavach safety system to cover 44,000 km within five years and equip 50,000 locomotives with this technology. However, these ambitious initiatives, including the production of 400 new Vande Bharat trains in the next three years necessitate additional revenue sources. Budgetary allocation growth has been a muted 2.8 per cent this fiscal over the previous one.

To support expansion and address funding demands, Railways can adopt several strategies to diversify revenue streams, including leveraging real-time data for operational efficiency, introducing premium services and focusing on commercial development around railway stations, finds Crisil.

Railways can transform the surroundings of railway stations into office space, shopping centres, retail stores and residential societies. This could be implemented around tier 2 city stations. The mixed bag of hospitality, entertainment and other services could act as a catalyst for developing these areas even as it provides revenue to the Railways.

It can introduce premium services such as business lounges, door-to-door baggage delivery and exclusive seating options for long-distance. All these services could be linked to a loyalty programme that rewards travellers with discounts, upgrades and exclusive services.

Indian Railways can also drive growth by leveraging its passenger and train operation data. It can sell the data to various companies that are into logistics, technology and advertisements. The Railways could partner with e-commerce or quick commerce and service platforms to integrate the same for in-train services, commerce or shopping.