Rail freight traffic rise lags expectation

However, year's official target looks set to be met; officials say further rise must wait revival in manufacturing and other core sectors

In the first five months of this financial year, Indian Railways (IR) carried 446 million tonnes (mt) of goods across its network, 4.6 per cent more than the 426 mt carried during the same period last year. Freight revenue earned was Rs 40,358 crore, a little over a tenth higher than last year's collection.

However, according to the official position paper and experts, the growth elasticity for railway freight movement in relation to overall change in gross domestic product (GDP) is 1.25. Meaning, IR freight volume should grow by 1.25 per cent for every one per cent growth in GDP. Railway volumes should, therefore, have grown 6.9 per cent so far this financial year, not only by 4.6 per cent.

Senior railway officials say the core sectors could take a while to pick up. “The services sector can hope for nearly recovery but our traffic reflects the core sectors, directly linked to manufacturing and production. It will take time before these sectors pick up. At least for this financial year, we are not expecting any major revival,” said a senior IR official, on condition of anonymity.

A rise in freight rates happened in June, by 6.5 per cent under the Fuel Adjustment Component (FAC). The next FAC rise will happen in December. Coal, which accounts for about 40 per cent of the overall traffic, grew at a mere two per cent, compared to about six per cent growth in the same period last year. In the current financial year, coal carried for washeries showed a sharp decline of about 51 per cent and that for public use declined nine per cent. It was only coal carried for steel plants and thermal power houses that saw a rise, of 4.75 per cent and 6.43 per cent, respectively.

Similarly, owing to the ban on mining in several states the volume of iron ore carried for export had come down by 35 per cent. It was a similar trend last year, when the volume of ore for export dropped 40 per cent. Domestic users had pushed the overall share of iron ore in rail traffic last year with a 20 per cent annual rise but this has been sluggish since. Ore carried for steel plants and domestic users saw a rise in volume by a mere 1.7 per cent and 0.2 per cent, respectively.

Some other commodities showed positive signs. Cement grew 13 per cent. There was 18 per cent growth in export-import container traffic and three per cent in domestic container traffic.

IR’s share in overall freight carried has come down to about 31 per cent, compared to over 90 per cent during the 1950s.

However, the year's official target is likely to be met. Freight traffic growth has been projected at 4.9 per cent for IR, about 1,101 mt this financial year. In 2013-14, they did well, surpassing the revised loading target of 1,052 mt and carried 1,053.5 mt. Earnings had also grown at a healthy 12.5 per cent.