Analysis of impact of station re-development initiatives in IR on non farebox revenue & evaluation of synergy between revenue sources

Abstract

Indian Railways (IR) is one of the world’s largest networks of the world. It is the lifeline of transport for both freight and passenger, and this is their core business. Still, as an organisation the financial metrics of the organisation have been dismal for a long time. Few years back, the officials in IR came to a realisation that as an organisation IR needed to diversify its sources of revenue to have better returns and they thought of capitalising the huge assets in the form of empty lands, unused spaces at stations, etc. to earn non-fare box revenue. For this, entities like IRSDC and a statutory authority like RLDA were created. Although these entities have done good work so far and few of their projects are under progress, the railway officials at the divisional level have also contributed immensely towards this purpose. The divisional team of Sealdah (SDAH) has envisaged the same goal that IRSDC, RITES etc pursue but have implemented it meticulously by themselves without the help of such entities. Their work showcases not only the potential of non-fare revenue as a prominent income stream for the IR stations but also elicit various managerial learnings which can be helpful in carrying out similar projects at other divisions. Non-farebox revenues are closely correlated. For example, the increase in non farebox revenues from an eating joint should ideally be associated with an increase in the non farebox revenues of a general merchant’s shop. Thus, if we can get a quantitative measure of the synergies between various non farebox revenue sources, it will be easier to prioritise them while deciding the scope of works of a station redevelopment project. This report deep dives into this problem statement using the station redevelopment project at Sealdah station. Using adequate analytical methods, the synergies between various revenue sources is calculated, and conclusions drawn. We hope this report provides good insights which ca be helpful for railway administrators.