However, the minister did not provide any incentive to attract freight loading.
As expected, Mamata Banerjee announced no increase in freight rates. She, however, did not provide any incentives to attract freight loading. Despite this, in line with the formal long-term agenda of winning back freight traffic share from road transport, the rail ministry is hopeful of a major jump in freight earnings during 2011-12.
The railways have projected a 9.8 per cent growth in freight earnings at Rs 68,620 crore during 2011-12, as compared to 6.8 per cent freight growth in the current year ending March 31. They are targeting a 7.4 per cent jump in freight carriage to 993 million tonnes during 2011-12.
Freight carriage grew 4.1 per cent to 924 mt during the current financial year, 20 mt less than last year’s budget estimate of 944 mt. This, Banerjee said, was due to disruption in iron ore loading for export, Naxalite activities and other agitations. Overall traffic earnings during the current financial year grew nine per cent to Rs 94,840 crore.
Revenue from transport of coal, alone around 40 per cent of all freight earnings, increased from Rs 22,400 crore in 2009-10 to Rs 24,127 crore during the current financial year. Earnings from iron ore movement increased marginally from Rs 8,345 crore to Rs 8,423 crore.
A major chunk of the increase in freight revenue for the next financial year is to come from coal movement. Revenue from this is set to increase by 12.4 per cent to Rs 27,126 crore. Freight revenue growth in iron ore is seen increasing at 7.2 per cent to 9,035 crore. The railways expect to earn Rs 14,522 crore from transport of cement, foodgrain and fertilisers, growth of a little over seven per cent.
In a dampener, however, Banerjee has kept the target for wagon procurement static at 18,000. In the earlier budget, too, the ministry had announced procuring of 18,000 wagons; it is likely to procure only 16,500 for carrying freight this year. Overall, the minister has earmarked Rs 13,820 crore for acquisition of rolling stock.
Even while the ministry had to face difficulties last financial year in meeting revenue targets owing to reduction in earnings from iron ore loading, this year’s budget remains mute on new schemes aimed at promoting freight growth, except for a few announcements like setting up a wagon factory in Orissa.
Experts believe the confidence on increasing freight revenue by 10 per cent could be misplaced. “The government seems to be hoping there would be a period of economic and political stability in the next 12 months. This seems to be the underlying theme. There are no tangible reasons for making this assumption. There might be a risk of landing into the need for a mid-term re-assessment of earnings targets,” said Gokul Chaudhri, partner, BMR Advisors.
