The Hindu Business Line : Railways faces slippage on freight front

AS the Railways finalises its Budget estimates, there are warning signs from petroleum, steel and foodgrain movement trends, which form vital sectors of its freight business.

For the first two months of the current financial year, the Railways has just about managed to meet the proportionate target of carrying 94 million tonnes of freight. While the target for the first two months was 94.17 million tonnes, the Railways carried 94.38 million tonnes of revenue earning goods traffic.

But the continued sluggish demand from the coal, steel and petroleum sectors is worrying the Rail Bhawan officials.

While the Railways Minister, Mr Laloo Prasad Yadav, is likely to retain the annual freight loading target at 577 million tonnes, senior Railway officials said the different zones are being forced to accept less remunerative commodities in order to meet the targets.

"Last year, we noticed that there was a tendency to accept lesser-rated commodities that merely bloat the loading figures but do not translate into revenues. The early signs that we are getting for the current year indicate that the trend still continues," a senior Railway official told Business Line. The Railways follows a highly complex system of rating different commodities and charges different rates depending on the classification. So, the same quantity of petroleum would fetch much better revenues for the Railways compared with a lower-rated commodity, such as fodder or salt.

In the first two months, the Railways carried 5.24 million tonnes of petroleum, oil and lubricants, which is marginally lower than the proportionate target for the period. Although the average leads (average distance for which the commodity was carried) improved from 547 km to 622 km, the unit realisation for the Railways, measured in earnings per net tonne km, was about 1 per cent lesser than last year, indicating higher discounts, he said.

The figures for raw materials for steel plants, another major revenue spinner, were further off the expectations.

The Railways carried 6.52 million tonnes of raw materials for steel plants, which is 8.56 per cent lower than the corresponding period last year and 7.78 per cent below the target.

Coal for steel plants also fell short 8.99 per cent over last year and was marginally lower than the proportionate target for the period.

In foodgrain movement, the Railways managed to stay exactly on target in the first two months of the current year. But the Food and Civil Supplies Ministry indicated that the movement of food items would decline during the year, the official said.

During the period, the earnings from freight operations went up by about 10 per cent from Rs 4,364 crore in the first two months of 2003-04 to Rs 4,809 crore in the corresponding period of the current year.

The increase has come about on a 6.24 increase in loading in the same period.