Swaraat – N S Padmanabhan
Coal – Prime Mover of Railways
Coal is not just energizing us; it is also moving us through the railways.
It is surprising to note that freight earnings sustain the internal revenue of the railways. Of the total estimated earnings of ₹3.02 lakh crore for 2026–27, about ₹1.88 lakh crore comes from freight and ₹87,000 crore from passenger traffic.
It is interesting to note that within freight revenue, about 48 percent comes from coal freight. Out of the total passenger revenue of ₹87,000 crore, AC three-tier contributes about ₹28,000 crore, which is roughly one-third of it.
The total revenue expenditure of the railways is estimated at about ₹2.99 lakh crore, out of which pension appropriation is about ₹71,500 crore.
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Capex
It is heartening to note that the railways are sustaining themselves despite several cross-subsidies. As we are aware, the railways are rolling out huge expansion plans. If they are operating with a near hand-to-mouth existence and a meagre surplus, the question arises: where does the capital expenditure come from?
The estimated annual earnings are about ₹3 lakh crore, and the annual budget allocates almost the same substantial amount.
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Major Allocations
The bullet train corridor between Ahmedabad and Mumbai is being funded through a long-term soft loan from Japan. The loan amounts to approximately ₹82,000 crore and will be repaid over a period of 50 years.
Out of the estimated total capital expenditure of ₹2.93 lakh crore, about ₹65,000 crore goes towards rolling stock and about ₹37,000 crore towards the capital portion of lease payments.
New track renewals, upgradation, and doubling of lines have received an outlay of ₹74,000 crore.
Despite not being able to generate surplus for capex internally, the government has consistently supported railway capital expenditure over the years.
In fact, allocations have steadily increased, and this year the allocation is estimated to be about 11 percent higher than the Revised Estimates of 2025–26. This reflects the government’s vision and commitment towards infrastructure development.
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Operating Ratio – A Matter of Concern
Operating Ratio is the ratio of revenue expenditure to revenue receipts. The lower the ratio, the better the financial position. The Operating Ratio is estimated to be around 98.4%, marginally lower than the preceding year.
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Revenue Expenditure Profile
A significant 41% of total receipts goes towards salaries and 25% towards pensions, totalling 66%, leaving just 34% for other revenue expenditure. This has increased from 52% to 67% due to the impact of the Eighth Pay Commission.
Lease charges on the revenue account amount to ₹35,130 crore. The lease liabilities towards IRFC have grown from ₹1.6 lakh crore to ₹4.3 lakh crore over the last decade.
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AC Three-Tier – The Redeeming Factor
Among all classes, AC three-tier registered profits in 2019–20 and 2022–23.
However, it was not profitable in 2020–21 and 2021–22, probably due to reduced passenger traffic during the COVID period.
Gross revenue from AC three-tier accounts for about 32% of total passenger receipts, whereas sleeper and second-class revenue together constitute about 42%.
Since the bulk of passenger volumes and revenues are from second and sleeper class, the bulk of losses are also incurred here. However, freight receipts offset these losses, resulting in a marginal overall surplus.
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Freight Receipts Profile
Out of total revenue of about ₹3 lakh crore, ₹1.88 lakh crore comes from freight, i.e., about two-thirds. Of this, about ₹90,000 crore comes from coal freight. After coal, almost equal contributions come from cement, iron ore, and steel, each contributing about ₹14,000 crore.
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Safety
Despite a few major accidents in the last couple of years, the safety record has been improving consistently. Allocation for safety-related expenditure has also been growing at an average rate of about 8% over the last decade.
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Conclusion
Next time when we travel by train let us make it a point to choose tier 3 AC as it just not only gives us cool cozy comfort, it also gives railways a boost. By opting for 3 AC we indirectly reduce the cross subsidy of Railways. Let us all give a thumbs up to three Airconditioned class.
Thus, it is evident that the engine of the railways runs not just on electricity, but also on coal.Coal does not just move through the railways — it moves the railways themselves.
No wonder it is called the Black Diamond.