Indian Railways' turnaround story may have become a case study at leading business schools, but the nation's biggest employer still spends more than one third of its earnings on staff wages and pensions, while heavily relying on freight earnings to chug along.
Indian Railways earns 65 per cent of its revenues from freight movement, with passenger fares contributing a meagre 26 per cent, clearly pointing to cross-subsidisation - tariff earnings on goods movements filling in for the discounts being extended on passenger fares.
According to the Explanatory Memorandum for Railway Budget presented in Parliament by Railway Minister Lalu Prasad, the Indian Railways in 2006-07 saw 65 paise out of every rupee earned coming from freight earnings. Passenger earnings accounted for 26 paise, while other coaching earnings, sundry earnings and miscellaneous receipts gave three paise each
When it came to outgo, staff wages and allowances ate up 26 paise out of every rupee earned, while pension fund charged another 11 paise.
Fuel to run the railways took away 17 paise out of every rupee and 13 paise were contributed to Capital Fund. Dividend to the government took seven paise out of every rupee earned and an equal sum went towards Depreciation Reserve Fund.
Special Railway Safety Fund was given one paisa and Development Fund three paise. Lease charges (3 paise), stores (4 paise) and miscellaneous expenditure (8 paise) accounted for spending.