Pakistan Railways, once a key element of national unity, is currently struggling with significant structural issues including poor governance, aging infrastructure, and a decline in public confidence. Recent data indicates a notable increase in revenue, rising from about Rs 60 billion in 2021-22 to over Rs 93 billion in 2024-25, showing nearly a 50% growth. This growth is attributed to enhanced operations, outsourcing efforts, and a partial restoration of services.
However, the financial situation remains challenging when considering expenses. Annual costs are estimated at approximately Rs 120 billion, resulting in a deficit of Rs 30-35 billion. Despite reporting a slight surplus of about Rs 2 billion for 2024-25, this figure excludes pension obligations and long-term infrastructure expenses, as highlighted in a report.
The railway system heavily relies on government aid, with federal subsidies reaching Rs 40-50 billion annually. The decline in the railway’s share of freight transportation is indicative of deeper inefficiencies. While in 1970, it handled 75% of the country’s freight, currently, it manages less than 5%, with road transport dominating logistics.
This shift has led to increased logistics costs, estimated at 14-18% of the GDP, significantly higher than the 8-10% seen in more efficient economies. Despite freight being a primary revenue source for railways globally, in Pakistan, it contributes only around Rs 30 billion. Operational hurdles exacerbate the crisis, with passenger trains running at average speeds of 50-65 km/h and freight trains moving even slower due to outdated tracks and manual signaling reliance.
Safety remains a concern, with 95 incidents reported in 2025 and over 3,000 of the country’s 7,000 level crossings lacking supervision. Experts point out that Pakistan Railways lacks a clear institutional model, functioning neither as a fully commercial entity nor an optimized public utility. This contrasts with global systems like the UK, which separates infrastructure from operations for competition and efficiency, and India, which has enhanced its unified public network through electrification and dedicated freight corridors. Pakistan’s hybrid structure has resulted in inefficiencies and policy stagnation, as per the report.
