The pattern in one line: Railways' near-100% operating ratio isn't a mystery — freight overpays to cover passenger losses that are formally classified as a social obligation, not a business failure — but the accounting system needed to manage that trade-off deliberately, train by train, is the exact reform a 2015 government committee recommended and a 2024 RTI reply shows still hasn't happened.

Indian Railways' operating ratio — working expenses as a share of traffic receipts — is estimated at 98.43% for FY2025-26, per PRS Legislative Research's analysis of the Railways' Demand for Grants, marginally better than the FY2024-25 revised estimate of 98.9%. A lower ratio means better profitability; Railways' ratio has stayed above 96% every year since 2016-17, and hit 107% in 2021-22 — meaning it spent ₹107 to earn every ₹100 that year. The Comptroller and Auditor General has noted that without certain one-off adjustments (advance receipts booked in 2018-19, deferred pension costs in 2019-20 and 2020-21), the ratio would have crossed 100% in those years too.

The resulting net revenue is thin and volatile: FY2025-26's budget estimate of ₹3,041 crore is actually a 126.7% jump over the FY2024-25 revised estimate of just ₹1,341 crore — itself a 52.1% shortfall against that year's original budget estimate of ₹2,800 crore. Against total expenditure of roughly ₹5.61 lakh crore budgeted for FY2025-26, that surplus is a rounding error. It's nowhere near enough to fund capital spending: Railways budgeted ₹2,65,200 crore in capital expenditure for FY2025-26, and central government budgetary support covers 95% of it. Railways' own internal revenue, forecast at ₹3,02,100 crore for the year, funds working expenses and little else.

The mechanism is explicit, not accidental. PRS's analysis states plainly that "freight services cross-subsidise passenger services," and cites NITI Aayog's 2023 finding that freight charges ran almost three times passenger charges as of 2018-19; between 2009 and 2019, freight rates rose 91% while passenger fares rose just 28%. Revenue from passenger services, across most travel classes, doesn't cover the cost of running them — CAG data shows losses concentrated in Second Class and Ordinary (general/unreserved) class, and in suburban services. These losses are formally classified as "social service obligations" of the Railways, not commercial failures, which is precisely why NITI Aayog has flagged a lack of clarity on whether Railways is meant to be run as a commercial undertaking or a subsidised public service — it is legally the former while behaving, by design, as a mix of both.

The scale of the underlying loss has been substantial in specific years: CAG reported a loss of about ₹26,388 crore for 2019-20, with the operating ratio that year at 98.36%, up from 97.29% the year before. Two retired Indian Railway Traffic Service officers — R. Badri Narayan (former Chief Administrative Officer, Traffic Transportation and Business Research Unit, Northern Railway) and A. Madhukumar Reddy (former Principal Executive Director, Railway Board) — put a precise figure on the passenger side in a January 2025 analysis for The Hindu Centre: "on average only 57 per cent of travel cost is recovered" from passenger fares. They frame the distortion as structurally hard to fix rather than a simple pricing oversight, since raising fares is politically sensitive and rail is already losing modal share to road — rail's share of India's passenger inter-modal mix is just 6%, against roughly 94% for buses.

The Committee for Restructuring of Railway Ministry and Railway Board, chaired by Bibek Debroy and constituted in September 2014, submitted its final report in June 2015. Among its core findings: policy-making, regulation, and day-to-day operations all sit inside the same organisation (the Ministry of Railways itself), which the committee identified as a central reason private capital has stayed away, alongside Railways' monopoly position and financing structures that push most project risk onto private partners. It recommended splitting those three roles apart and creating an independent, statutory Railways Regulatory Authority to monitor whether tariffs are market-determined, without itself setting them. A decade later, Narayan and Reddy's 2025 Hindu Centre analysis arrives at the same prescription from the operator's side rather than a committee's: in the context of private participants now entering freight movement, they stress "the importance of an independent regulator to ensure a level playing field between IR and private participants" — alongside recommending differential and dynamic passenger pricing, and rationalising freight rates through direct budgetary support rather than continued cross-subsidy. Two working railway professionals, writing in 2025, are still asking for the regulatory fix a government committee proposed in 2015.

The recommendation most relevant to the accounting question above is this one, stated directly in the committee's own summary: "the current accounting system does not provide details of the cost of various activities and services, such as introduction of new trains and scheduling of stops. It neither tracks assets nor assesses liabilities." The fix the committee proposed was switching to a commercial, accrual-based double-entry accounting system that would "determine how much it costs to run a train and whether it is viable to run it" — separating revenue and capital expenditure clearly enough to know, train by train, what's actually profitable.

In response to an RTI application filed by a Madhya Pradesh-based applicant asking how much revenue Vande Bharat trains had generated over two years and whether they were profitable, the Railway Ministry's reply, reported in April 2024, was direct: "train-wise portability is not maintained." At the time, 102 Vande Bharat trains ran on 100 routes across 24 states and union territories, with over 2 crore cumulative passengers and an overall utilisation rate above 92% — Railways could state precisely how far the trains had travelled in FY2023-24 (equivalent, officials noted, to 310 trips around the Earth) but not what they earned or cost to run as a discrete service. The applicant's own reaction captured the gap exactly: Railways can calculate distance travelled to a symbolic precision, but not the "most crucial information regarding revenue generation."

This is not really a story about Vande Bharat specifically. It is the Debroy Committee's 2015 diagnosis, confirmed empirically nine years on, for the single highest-profile train product Indian Railways has launched since that report was written. Whatever progress Railways has made on accrual accounting elsewhere in its books, it evidently has not reached the point of being able to answer the most basic profitability question about its own flagship service.

Two revenue lines have grown in ways worth noting, though on a scale still small against total expenditure. Reported figures for FY2025-26 put scrap-sales revenue at ₹6,813.86 crore, exceeding Railways' own internal target of ₹6,000 crore, driven by systematic disposal of obsolete coaches, wagons, rails and metal stock. Separately, non-fare revenue — station and train advertising, commercial use of railway land, asset monetisation such as retail kiosks and co-working spaces — is reported at ₹777 crore, roughly 168% higher than five years earlier, an area NITI Aayog has specifically recommended Railways expand. Both figures come from news-aggregator reporting without a primary Railways or PRS citation this piece could independently confirm, and both remain small relative to the roughly ₹5.61 lakh crore FY2025-26 expenditure budget — real diversification, but not yet a structural answer to the operating-ratio problem.

The more substantial change is on the freight-capacity side rather than the revenue-recognition side: the Eastern Dedicated Freight Corridor (1,337 km, Ludhiana to Dankuni) is already operational, and the Western Dedicated Freight Corridor (1,506 km, Dadri to Mumbai's port cluster) was reported at 93% complete as of late 2025, per PSA India's account of the project. Both corridors run 25-tonne axle loads and double-stack container trains on dedicated freight-only track, cutting transit time on some western routes by roughly half and enabling higher-capacity, more reliable freight movement independent of passenger scheduling. That's a genuine capacity upgrade to the side of the business that already turns a margin — it doesn't touch the passenger cross-subsidy or the accounting-transparency gap, but it does mean the freight segment funding that cross-subsidy is getting materially more efficient at the same time the passenger side isn't.