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Data available with the railways indicates that for an average rack size of 1600 passengers, every train carries about 1000 people on an average on a single journey one way. This means, that the total downstream spend for a train load of passengers taking a return journey would be in the range of Rs 28-30 lakh. If one assumes that a coach runs for the entire year, this would amount to a total annual downstream business generation of Rs 50 crore from just one train on a return journey. In practice, however, a railway passenger coach runs on an average only for 22 days in a month. Adjusting for this turnaround time and for the average business generated per train by other categories of passengers thus far discounted, it would translate into an average annual potential business opportunity of Rs. 32-35 crore from the addition of each new train.
Every year, a variety of reasons, ranging from political expediency to an arising need for capacity enhancement, force the government to announce a large number of long and short distance trains. In the Railway Budget of 2009-2010, the Union Railways Minister Mamata Banerjee has proposed the introduction of 70 new trains of varying frequencies and catering to the entire gamut of travelers from the upper middle class passenger to the migrant laborer. Often, not all the proposed trains take off, as many proposals, included primarily out of political compulsions, are not economically viable and hence have to be shelved.
| The numbers and how they stack up | |
| Average downstream expenditure for one person on a return journey | Rs 2,800 |
| Average rack size: 20 coaches x 80 seats per coach | 1600 |
| Average number of people travelling on a single train one way | 1000 |
| Average expenditure for 1000 people on a two way journey | Rs 28 lakhs |
| No of return journeys per train per year | 180 |
| Downstream spends per train per year (discounting turnaround times of coaches) = 180 x 28 | 50 Cr. |
| Average operational days per coach | 22 days/month |
| Actual annual downstream spends per train | 35 Cr/year |
| For 30 trains | Rs 1,000 Cr |
| For 5 years = 1000 x 15 | Rs 15,000 Cr |
Assuming that at least 30 out of the 70 proposed trains do take off, it would straightaway translate into an additional annual downstream business potential of Rs 1,000-1,050 crore. The total additional potential downstream business generated would tantamount to a whopping Rs 15,000 crore.
The meaning behind the numbers
What does this mean for the industry beyond mere numbers? As pointed out earlier, 85 percent of the travel and tourism industry in India is unorganized. It comprises a wide variety of business establishments ranging from the humble roadside tea stalls and dhabhas to hotels and restaurants catering to the relatively well-heeled. A majority of such establishments, as is the case with all unorganized sectors in the country, are owned and operated by the middle and the lower middle classes all over the mofussil towns and qasbas that dot the country’s hinterland. It is these establishments that will stand to rake in the lion’s share of the moolah if only they were to make serious and sustained efforts towards upping their capacities and reaching out to their customers.
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