Railway freight earnings down 13% in April-May

With key reforms just announced by the rail ministry to boost freight traffic yet to show any impact, Indian Railways seems set to continue with the last financial year's dismal performance on freight transportation this financial year as well.

Total freight earnings declined 13 per cent to Rs 16,836 crore in the first two months of the current financial year from Rs 19,286 crore in the corresponding year-ago period.

Major commodities that have witnessed drop include coal, which alone accounts for 50 per cent of Railways' total loading, cement and fertiliser, even as iron ore and food grains traffic registered improvement in April.

Fresh data released by the rail ministry show that the total coal traffic dropped 6.3 per cent to 43 million tonnes (mt) in April, while earnings from coal dropped sharply by 22 per cent to Rs 3,612 crore from Rs 4,624 crore in the corresponding month in the previous financial year. Cement loading declined 14 per cent to 8.1 million tonnes, while earnings from the commodity dipped 20 per cent to Rs 701 crore.

The drop in volumes came despite the fact that no freight hike was announced by the rail ministry in this year's Budget. Total iron ore traffic jumped 16 per cent to 10.3 mt during April with earnings of Rs 642 crore, an increase of 13 per cent over the same period in the previous year.

Foodgrains' traffic increased 2.4 per cent to 3.3 mt leading to a 14 per cent increase in earnings to Rs 652 crore. For May, total freight earnings for railways dropped 12.4 per cent to Rs 8,601 crore, data show. In FY16, the railways had budgeted for an incremental freight loading of 85 mt, but managed to achieve only 10 mt.

Mohammed Jamshed, member (traffic) Railway Board, had last month attributed the dismal performance to the global economic slowdown, the slow growth in India's core sector, adding that the ministry was reviewing the policies governing all the commodities to boost traffic.

"We realised 8-9 commodities enjoy a certain monopoly in the basket. Also, there were capacity constraints. We had inventory of around 100 mt in power plants and coal pitheads. This was due to issues of state power utilities in purchase of power. We had meetings with coal secretary. Now, with schemes like UDAY (Ujwal Discom Assurance Yojana), there are green shoots and some pick-up in consumption has started," he had told reporters.

Coal accounts for around 550 mt, or half, of 1,100 mt of total annual freight traffic. Indian Railways supplies 104 power plants every day from mines located mostly in the east and central India with an average lead of around 600 km.

These plants receive 4-6-8 rakes of coal daily. In the non-coal segment, the ministry held meetings with stakeholders operating in the cement, steel, iron ore and fertilisers sectors.

"The suggestions have been compiled into policy reforms for action," said Jamshed.

The steps taken to boost freight growth include allowing reduction in parcel size for cement companies from 3,600 tonnes to 1,200 tonnes, doing away with 10 per cent port congestion surcharge levied on cargo moving to inland distribution points and appointment of key customer managers, officials responsible for looking at specific issues of large customers across sectors.

The rail ministry has budgeted for freight traffic to grow to 1,157 mt in the current financial year from 1,107 mt achieved in 2015-16.

Railways is targeting total freight earnings to grow 5.4 per cent to Rs 1,17,000 crore in 2016-17 from Rs 1,11,000 crore in FY16.

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