How Indian Railways plans to earn more from things usually thrown away

The Indian Railways has been trying to diversify its revenue sources beyond passenger tariffs. In one of the latest attempts to increase non-fare revenue (NFR), the Railways is evaluating several measures, including leasing out surplus space in railway guesthouses to hotel operators, scaling up the sale of waste generated across stations and workshops, and monetising residue materials such as cement and coal left behind in wagons, according to a report by The Economic Times.

 

The report, citing a senior official, said that two Indian Railways divisions have already monetised the wagon cleaning contracts, allowing vendors to sell any remaining coal or cement from the wagons ahead of their next journey. Companies that lease wagons are eying this opportunity to salvage any leftover cement or coal, the official said.

 

Untapped potential

Noting that there remains a substantial untapped potential in this area, the Niti Aayog in July this year commissioned a study to analyse existing NFR sources, identify new areas of revenue generation, and propose actionable strategies for maximising NFR. According to the think tank, an increment in non-fare revenue streams will help the Indian Railways improve its financial sufficiency and reduce reliance on traditional revenue sources. 

 

However, revenue from non-fare sources has been rising in recent years. Indian Railways reported NFR earnings of ₹588.07 crore in the financial year 2023-24 and ₹686.86 crore in FY25. The surge came on the back of initiatives like advertisements on railway overbridges, e-auctioning of monetisable assets, and the New, Innovative Non-Fare Revenue Ideas Scheme (NINFRIS).

3% Railways' revenue comes from NFR

The Indian Railways primarily generates revenue from freight and passenger operations, with only 3 per cent of its total income coming from NFR. However, in developed countries, non-fare revenues are much higher, in the range of 30 per cent.

 

According to Niti Aayog, Germany's Deutsche Bahn generates 34 per cent of its revenue from non-fare sources, while Japan Railways' 30 per cent revenue comes from non-fare sources. Even the France National Railway Company generates 10 per cent of its revenue from such sources.

 

In an attempt to diversify revenue streams, the Indian Railways has also decided to allow single-brand food outlets such as Pizza Hut, Baskin Robbins, KFC, McDonald's, and Haldirams to set up stalls at stations. Space for these outlets at railway stations will be auctioned for five years. The move was aimed at bringing railway stations at par with similar facilities available to airports.