Did Indian rail Make loss during lock down? Really?

Recent days, You may have read the following news:-

Railways to take a ₹12,500-cr hit as lockdown stalls passenger and freight services

Indian Railways set to lose Rs 25,000 crore due to coronavirus lockdown

After Rs 8,000 crore loss in lockdown, Railways mull luring freight clients with discounts, cashbacks

I hope You have noticed that there is a huge variation in the figures for the loss by the Raiwlasy due to lockdown. You may ponder over this why such a huge difference in the figures? But here I examined the different question - Do Indian railways really made any loss due to lockdown?

To find out the answer, First of all, We have to understand the Revenue model of the Railways. Railway operates on the Cross subsidize model, Means Railways use the profit of the Freight transport business to compensate for the loss of the Passenger transport business. 

In 2017-18, passenger and other coaching services incurred losses of Rs 37,937 crore, whereas freight operations made a profit of Rs 39,956 crore. Almost 95% of profit earned from freight operations was utilized to compensate for the loss from passenger and other coaching services.  The total passenger revenue during this period was Rs 46,280 crore.   This implies that losses in the passenger business are about 82% of its revenue.  Therefore, in 2017-18, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.82.  These losses are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers. ( Reference - Demand for Grants 2020-21 Analysis : Railways

Now Let's See the Data of the Month of the March, April, May, and June when the lockdown was an imposition.

Year & Month (1)	Freight revenue (2)	Passenger Revenue (3)	Original Expenditure for the Passenger Transport (4)	Net Profit/Loss (5)
Mar-19	19998	4454	8106	11892
Apr-19	9331	4345	7908	1423
May-19	10032	4463	8123	1909
Jun-19	9702	4589	8352	1350
Total Profit/Loss in four months of  2019	49063	17851	32489	16574
Mar-20	9883	1866	3396	6487
Apr-20	5745	531		5745
May-20	7285	145		7285
Jun-20	8706	390		8706
Total Profit/Loss in four months of  2020	31619	3396		28223

Accounting of the Railways is very complex and I am not a student of the Account. Here the calculation is based on the simple data provided by the railways.  Data of Columns 1,2 and 3 is the official data provided by the Railways. Column 4 is the calculation derived from the equation= (Column 3 *1.82.). Railways have to spend the Rs1.82 to Generate Rs.1 Revenue from the passenger fare. That means, In March 2019, Rwailys must have spent Rs.8106 Crore to Earn Rs.4454 Crore. Grey Colour boxes is the data of the Loss incurred by the railways during the Lockdown period as there was no revenue generation from passenger trains during that time.

 If you want to understand in the layman term and with pure logic – Here are the simple calculations without data. These two things are the fundamental things in Railways 

• Rail makes loss In the passenger business
• Rail makes a Profit in the Freight business.

During the lockdown, the Freight business of the railways hit hard. In April 2019, Rail did the business of the 9331 Cr. which reduced to 5745 Cr. in April 2020. But Profit from this business goes to compensate for the loss of the passenger business. During the lockdown, The Profit made from freight business is nearly net profit as there is no passenger traffic due to lockdown.

Let Me link this to the famous debate of May 2020 pertaining to the Fare of the Shrmaik Special train. There was a huge controversy on the question – Who pays for the Shrmaik?

In General, the Fare of the sleeper class train of the Ahmedabad to Lucknow is Rs.560-600 and Railways charged the Same for the shrink Special train. Even though Joint Secretary at the Health Ministry Lav Agarwal said in a press conference that – “85% of the transportation cost is borne by the Railways, while states have to bear 15% of the cost”.  How this is possible? In Month of May, Media analysed the issue and for the first time, the Cross subsidization model of the Railways comes in public debate.

Railways Derived this 85% Subsidy Figure from the following calculations –

• Railways Provide 53% subsidy to sleeper class in normal.
• Railways run trains with 1600 seats but due to Social distancing norms, Railways operate with the 1200 passengers and so 100% loss of 400 tickets born by railways.

Here the Government itself made claim that – Railways provide the subsidy of 53% of the fare in Normal operations. So, Railways also save this 53% subsidy as the Wheels of the Railways locked during lockdown for the passenger traffic.

In the Four months lockdown, Railways Revenue from the Freight transport reduced by the 17,444 cr. in the year 2020 from 2019 but at the same time, Railways Spending for the Subsidy to passenger transport also reduced by 29,093 Crore from year 2019.

So On-net calculation- Railways remain in profit of the Rs.11649 Cr. in the year 2020 from the year 2019. ( For the Four Months) 

Once again I would like to highlight my shortcoming that I am not an expert of the Accounts and So all calculations made by me is basic in nature. So, If there is any additional information, please write in the comment box.