Budget 2026: Coal freight, AC 3-tier may throw Rlys' FY26 revenue off track

The budget numbers released on Sunday peg the railways earning at Rs 2.78 trillion in the current financial year, according to the revised estimates (RE), against a BE target of Rs 3.01 trillion

A major shortfall in two key revenue-generating areas — coal freight and the AC 3-tier passenger segment — is expected to drag Indian Railways’ total earnings in 2025-26 (FY26) by ₹23,000 crore against the Budget estimate (BE) set in February 2025. 

Budget numbers released on Sunday peg Railways’ earnings at ₹2.78 trillion for FY26 under the revised estimates (RE), compared with a BE target of ₹3.01 trillion. 

Speaking at a press conference on Monday, Union Rail Minister Ashwini Vaishnaw said actual freight and passenger revenue has been rising steadily each year. Justifying the shortfall against the BE, he said revenue targets are set ambitiously at the start of every financial year. 

Of the overall earnings estimate for FY26, revenue from passenger services is likely to fall short by around ₹12,800 crore, with Railways ferrying nearly 200 million fewer passengers than projected in the previous Budget. 

Railways has maintained its goods-loading target at 1,700 million tonnes in the RE — the same as the BE — but revenue from freight is expected to decline by around ₹10,000 crore. 

Officials aware of the matter said Railways may not necessarily be losing business, but that the network has become more efficient. “Due to initiatives by the coal ministry, such as route rationalisation, the leads (distance per consignment) have become much shorter. This improves logistics efficiency, but it also reduces our revenue,” a senior railways ministry official said. 

According to Lalit Chandra Trivedi, former general manager of East Central Railway, coal demand for thermal power is flattening due to the expansion of renewable energy and pit-head generation. “Iron ore exports are volatile and policy-sensitive. Growth is shifting to cement, fertilisers, containers, and steel inputs, which have longer leads,” he pointed out. 

Revenue from coal traffic — which accounts for over half of the Railways’ freight basket — is likely to drop 12 per cent against the BE target, according to the RE. The revenue target for coal transport in the next financial year (2026-27) has also been set around ₹9,000 crore lower than the FY26 BE. 

Indian Railways is expected to see a 27 per cent shortfall in revenue from the AC 3-tier passenger segment, which contributes the largest share to passenger earnings. The operating ratio is likely to rise from the BE target of 98.43 per cent to 98.82 per cent under the RE.