New Delhi, Feb 25: The decision to increase freight by 4 per cent across all commodities comes a bit of a surprise. Despite the fact that last year, for the first time in several decades, freight rates had been left untouched, freight targets were have not been met. And at a time when freight managers of the Indian Railways are going all out to recover traffic lost to the road sector, the hike will come as a bit of a blow.The hike in railway fares is expected to help the railways to increase its goods earnings by Rs 1,950.84 crore. Against a target of 450 million tonnes, Indian Railways will close the current year having moved 424 million tonnes a decline of 5.8 per cent. This is reflected in net freight receipts which were Rs 2,016.16 crore, as against a target of Rs 3,061 crore. Just this shortfall of Rs 1,045 crore has contribute to the massive decline in the surplus declared this year. As against a target of Rs 1,655.86 crore, the surplus will be Rs 619.39 crore. This is drastically lower than 1997-98surplus of Rs 1,535.22 crore.
The one commodity responsible for the decline in freight earnings by the railways is steel, essentially raw material for steel plants. Against expected earnings of Rs 1,057 crore, the railway will earn Rs 860.29 crore.
Pig iron and finished steel was another area of under-performance. Against a target of Rs 1,597 crore the railway will manage on Rs 12,280.8 crore. The other major disappointment was the movement of foodgrain, which earned Rs 1,260.96 crore against a target of Rs 1,623 crore. According to experts a lot of this has been accounted for by the sharp increase in coastal shipping and the fact that a lot of foodgrain imports are sent to different port destinations directly, rather than being offloaded at one port.
While POL and other goods registered a slight decline, only in fertilisers did the railways outperform the target. Although there were fears that coal freight had declined very sharply, coal delivered to power plants saved the day. As against expectedearnings of Rs 6,752.40 crore the railways earned Rs 7,095 crore. There was otherwise a decline in other categories of coal transport - those for steel plants, washeries and other public uses.
While the freight rates have gone up at less than the rate of inflation expected during the period, it is expected to negatively affect freight volumes, which are already under severe strain, in the coming year.
According to experts, the decision to increase freight rates is also contrary to the strategy outlined in the status paper.
RITES report picks out the holes
The railway ministry's decision to the increase freight rates may have been based on the finding of a RITES report looking into the reasons why the railways have lost traffic to roads, and if they have really lost as much as is perceived. The following were the findings:
Considering the fact that rail transport is suited only for leads over in excess of 300 kms, the share of the railways is 65 per cent of the total freight traffic inthe country. The railway currently carry a little over 46 per cent. In fact, of the road share, about 69 million tonnes is what should go to railways. The reason why the railway have lost to road relates not to cost or convenience factors, but the fact that the railways do not have additional capacity on the routes on which this traffic lies. This has happened because expansion in the railways has not been related to growth in traffic in high density corridors. Although there have been marginal improvements in productivity these have not been sufficient to absorb the increased demand.Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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