Railways to set up wing to ramp up non-tariff revenue

Non-Fare Box Revenue Directorate would look at advertisements at stations, commercial exploitation of vacant land and space rights over station buildings

Three months after Rail Minister Suresh Prabhakar Prabhu emphasised upon the need for Indian Railways to shore up earnings from non-traditional areas, including non-tariff revenue sources in his Budget speech, the railway ministry has set up a dedicated wing with the mandate to focus on non-fare box revenue.

“The move is in line with the ministry’s objective to reorganise the Railway Board along business lines and setting up cross-functional directorates in the board to focus on areas for enhancing revenue by 10-20 per cent from non-tariff sources,” said a senior rail ministry official.

The non-fare box revenue (NFR) directorate would look at advertisements at stations, commercial exploitation of vacant land and space rights over station buildings, including station redevelopment, advertisements on coaches and locos, sponsorship of uniforms for railway personnel, hoardings on land alongside tracks, commercial farming along tracks, monetisation of soft assets, including revenue from advertisements on websites and parking of vehicles on railway land, among other things. The directorate will draw officers from engineering, traffic-commercial and finance departments. The wing will be headed by a Director-NFR-Finance and all its officers will report to the chairman of the Railway Board.
 

In his Budget speech, Prabhu had said that Railways will look to increase revenue from non-tariff sources and do away with conventional approach of increasing passenger and freight fares. He had not announced any increase in passenger fares but had hinted at bringing down freight.

NON-FARE BOX REVENUE: AT A GLANCE

• Rail ministry sets up dedicated non-fare box revenue (NFR) directorate to mop up non-tariff revenue
• Move in line with Prabhu’s idea, unveiled in this year’s Budget, of reorganising the Railway Board along business lines
• The ministry has already set up separate wings to focus on environment, and health and safety issues. Another directorate for high speed could be set up soon
• NFR directorate to look at advertisements at stations, coaches and locos, apart from commercial exploitation of vacant land and space rights over station buildings, including station redevelopment
• Other areas in focus of NFR include sponsorship of uniforms for railway personnel, monetisation of soft assets and parking of vehicles on railway land

“We earn less than five per cent of revenue through non-tariff sources. Many of the world railway systems generate 10-20 per cent of their revenue from non-tariff sources. Over a period of next five years, we will strive to reach this world-average by monetising assets and undertaking other revenue yielding activities,” Prabhu had said. Indian Railways had, last month, appointed global consultancy firm Ernst & Young (EY) to help mop up advertising revenue worth over Rs 5,000 crore in the next few years.

“Initiating a large-scale significant exercise to identify and leverage pan-India advertising opportunities at railway stations and trains, Indian Railways has appointed EY as consultant to undertake this job on its behalf,” the ministry had said in a statement.