The Railways’ freight earnings are expected to be fall short of the budgeted freight earnings estimates of Rs 68,620 crore for 2011-12 by around Rs 1,300 crore. A loading shortfall of about 21 million tonne was already recorded, from April 1 to October 31. According to an internal assessment by the railways, it would be able to achieve 966 Mt, against the targeted loading of 993 Mt in 2011-12.
The total earnings of Rs 37,392.88 crore from April to October saw a spike of around 8.90 per cent, compared to the same period of the previous year. There was a rise of 4.29 per cent in NTKM (net tonne kilometre) and 0.30 per cent in the average lead in April-October over the same period last year. However, the railways freight loading target for April 1-October 31 has already been missed by around 4.47 per cent. However, there was a rise of around 3.88 per cent over the same period last year.
According to an official, “The parameters to measure freight earnings are loading, the average lead and net tonne kilometre. The commodities primarily hit this year are high-margin commodities like coal and iron ore exports.” All these factors have contributed to the railways missing its budgeted targets of 2011-12.
Since Coal India Limited (CIL) is expected to show a negative rate of growth this year, an hit of almost 10 Mt of coal loading from the budgeted estimates was seen during April-October, primarily due to a ban on iron ore mining in Bellary. Surprisingly, despite oil companies focusing aggressively on pipelines, the railways has been able to grab an additional 0.80 Mt, compared with the budgeted estimates of 22.89 Mt.
According to a railway official, “Iron ore exports decreased to around 44.10 per cent in April-October, compared to the same period last year. As iron ore is charged the most among all railway commodities, the railways won’t be able to realise the budgeted revenues because of this.”
Primarily, the targets missed are in the Southeastern and Southwestern railway zones.
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The container loading targets for April- October in domestic, as well as the export-import segment, were under-realised by around 3.63 Mt, owing to the focus of the container train operators shifting from domestic business because of differential haulage ratings. The export-import business is not doing well, because of downgrades in the US and other western economies. Lesser loading by container train operators converts into less haulage realisations by the railways, though earnings from this account for just three per cent of total railways revenues.
Apart from the loading, the average lead for some high-rated commodities has declined. The lead for a commodity is how far the commodity is carried. Since ratings for the railways is based on the class of the commodity and how far it has travelled, the decline in average lead has also contributed to missing the budgeted estimates targets. Though the average lead for all commodities rose 2.14 per cent, the average lead of some high-rated commodities like iron ore, cement and petroleum and oil products have shown a reasonable decline, leading to lower realisation. The declining lead is partially an outcome of the slow economic activity, better dispersal of the industry or other means of transportation being more favorable.
Earlier, Indian Railways carried around 89 per cent of the freight traffic generated by the economy, and this has now declined to around 40 per cent, leading to a troubled freight position.