Why SC’s Electricity Ruling Could Worsen Indian Railways’ Finances
For around a decade now, the Indian Railways has operated under the tag of an electricity distribution entity, allowing it to procure electricity at a lower cost. A recent Supreme Court order, however, has cancelled this “deemed licensee” status, setting off alarm bells for the national transporter at a time when its earnings are already under stress. The Railways is the country’s single largest user of electricity, deploying it mainly to run its locomotives as it rapidly electrifies the track network. It spent Rs 32,378 crore to run trains in 2024-25. But the Supreme Court ruling could push up these traction energy costs by over 30%, the Railway Board has warned in a May 15 letter. This would come on top of a 11.6% increase in ordinary working expenses (OWE) and 9.1% rise in pension expenditure in April. Meanwhile, freight operations, which make up 65% of the Railways’ earnings, have declined by 5%. All this could combine to hurt the Railways’ operating ratio — that is, how much it spends to earn every rupee — …
