 "Railways expects to surpass Budget target on loading")
Despite a slowdown in the economy and a fall in average lead, Indian Railways expects to surpass the Budget target on loading after five years during the current financial year, Railways Minister Mallikarjun Kharge said today. However, casting shadow on the revenue, freight rates remained unchanged.
The minister has scaled up the loading target to 1052 million tonne from the Budget target of 1047 MT, while the target for FY15 is seen at 1101 MT, the highest in recent times. This is compared to a decline in loading target in the last five years.
The Budget estimate for 2012-13 of 1025 MT came down to 1008 MT by the end of the year. “The average lead of freight traffic is falling, and is likely to be 622 kilo metre against budgeted 644.5 km. Yet, we are confident of surpassing the freight earnings target,” Kharge said in his Budget speech.
On the other hand, operating ratio, in which freight has a 17% weightage, is likely to be 90.8% as against Budget target of 87.8%, showing signs of deteriorating financial health. Meanwhile, the Budget target on operating ratio for 2014-15 is kept at 89.8%, much lower that even this fiscal’s Budget target.
The share of Indian Railways in cargo traffic is expected to go down by 2-3% this year against the current 36%. For the period, the commodities that performed well are food grains and iron ore for export purposes. But fertilisers registered a dip of about 0.48% compared to last year. The coal traffic for public use also came down by about 4%. This is considered to be one of the key reasons for decline in average lead.
“While not going overboard with populist measures, the Budget touched upon financial health too. The fact that railways met the tonnage and earnings target shows that the increase in fuel charges are not entirely passed on to the customers. This led to a rise in operating ration than the Budget target, indicating that the pressure on cost side is increasing,” said Vishwas Udgirkar, Senior Director, Deloitte India.
However, in ratio operating ratio, which is considered to be the measurement of railways efficiency, has recovered from the 95.3% mark in 2009-10 during Mamata Banerjee’s regime.
Interestingly, Indian Railways is considered to be having the highest freight tariffs in the world with one of the lowest passenger tariff levels. However, experts say that additional pressure of dual pricing system of diesel has not been factored in on fares.
Adding further, the vote-on Budget added that an empty flow discount scheme would be implemented soon, which would ensure maximum utilization of assets in the reverse flow direction of trains and would increase rail-borne traffic. The scheme first conceptualized in 2006-07 Budget would be a boost for industries like construction, cement and steel companies.
Kharge also mooted the concept of third-party warehousing in special parcel terminals. Parcel terminals and special parcel trains would also be there with scheduled timings. Interestingly, railways is also coming up with a new policy to encourage transportation of milk.
“For facilitating seamless transport of imported cargo, some of the restrictions on movement of imported commodities have been eased. Further, to increase throughput of container traffic, the permissible carrying capacity of 20 feet containers has been enhanced by 4 tonnes,” Kharge added in his Budget speech.
The minister has scaled up the loading target to 1052 million tonne from the Budget target of 1047 MT, while the target for FY15 is seen at 1101 MT, the highest in recent times. This is compared to a decline in loading target in the last five years.
The Budget estimate for 2012-13 of 1025 MT came down to 1008 MT by the end of the year. “The average lead of freight traffic is falling, and is likely to be 622 kilo metre against budgeted 644.5 km. Yet, we are confident of surpassing the freight earnings target,” Kharge said in his Budget speech.
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The freight earnings target has been revised to Rs 94,000 crore, up Rs 446 crore from the Budget target of Rs 93,554 crore in 2013-14. The Budget target for the next financial year was seen at a Rs 1,05,770 crore, with a 12.5% increase compared to this fiscal’s revised freight earnings.
On the other hand, operating ratio, in which freight has a 17% weightage, is likely to be 90.8% as against Budget target of 87.8%, showing signs of deteriorating financial health. Meanwhile, the Budget target on operating ratio for 2014-15 is kept at 89.8%, much lower that even this fiscal’s Budget target.
The share of Indian Railways in cargo traffic is expected to go down by 2-3% this year against the current 36%. For the period, the commodities that performed well are food grains and iron ore for export purposes. But fertilisers registered a dip of about 0.48% compared to last year. The coal traffic for public use also came down by about 4%. This is considered to be one of the key reasons for decline in average lead.
“While not going overboard with populist measures, the Budget touched upon financial health too. The fact that railways met the tonnage and earnings target shows that the increase in fuel charges are not entirely passed on to the customers. This led to a rise in operating ration than the Budget target, indicating that the pressure on cost side is increasing,” said Vishwas Udgirkar, Senior Director, Deloitte India.
However, in ratio operating ratio, which is considered to be the measurement of railways efficiency, has recovered from the 95.3% mark in 2009-10 during Mamata Banerjee’s regime.
Interestingly, Indian Railways is considered to be having the highest freight tariffs in the world with one of the lowest passenger tariff levels. However, experts say that additional pressure of dual pricing system of diesel has not been factored in on fares.
Adding further, the vote-on Budget added that an empty flow discount scheme would be implemented soon, which would ensure maximum utilization of assets in the reverse flow direction of trains and would increase rail-borne traffic. The scheme first conceptualized in 2006-07 Budget would be a boost for industries like construction, cement and steel companies.
Kharge also mooted the concept of third-party warehousing in special parcel terminals. Parcel terminals and special parcel trains would also be there with scheduled timings. Interestingly, railways is also coming up with a new policy to encourage transportation of milk.
“For facilitating seamless transport of imported cargo, some of the restrictions on movement of imported commodities have been eased. Further, to increase throughput of container traffic, the permissible carrying capacity of 20 feet containers has been enhanced by 4 tonnes,” Kharge added in his Budget speech.