The Hindu Business Line : FCI may not feed enough to Rly kitty

IF there is somebody that the Railways should specially thank for helping it boost freight revenues over the last couple of years, it is none other the Food Corporation of India (FCI).

Disposal of foodgrains from the venerable corporation's warehouses at throwaway prices, including for exports, may have made a big hole in the Centre's finances, but it has helped considerably shore up the Railways' topline.

Just to illustrate: Between 2001-02 and 2003-04, the Railways' total freight earnings have gone up by Rs 2,269.60 crore, of which foodgrains have accounted for Rs 1,431.67 crore. In other words, over 63 per cent of the Railways' additional freight earnings during this period have come from movement of foodgrains, which in turn, has been mainly a result of higher offtake from FCI's godowns for exports as well as various drought relief programmes.

During 2002-03 and 2003-04, total offtake of rice and wheat from the Central pool amounted to 49.63 million tonnes (mt) and 47.93 mt respectively, as against 31.30 mt in 2001-02. Correspondingly, movement of grains through Railways rose from 32.82 mt in 2001-02 to 45.60 mt and 47.50 mt in the subsequent two years.

The big question is whether this performance can be repeated in 2004-05 as well? The Railways expects a marginal decline in total grain movement to 44.79 mt and revenues to fall from Rs 3,258 crore in 2003-04 to Rs 3,169.69 crore. But according to authoritative sources, even this target is highly ambitious.

The reason for this, they say, is that stocks in the Central pool were a mere 32.39 mt as on June 1, 2004, as against 62.55 mt on the same date two years back. "There is unlikely to be any large-scale movement of grains this time, especially for exports because the stocks with FCI are just about enough to meet basic requirements of the public distribution system," the sources said, adding that this could obviously undermine the Railways' freight earnings target.

The possible loss of the `foodgrain bonanza' comes in the context of the Railways steadily losing traffic share to the road sector especially in sectors such as cement. The fact that the Railways' total freight earnings went up by a mere 2.3 per cent in 2003-04, despite a general manufacturing recovery, is said to reflect its inability to compete with truck operators in offering flexible logistic solutions and `door-to-door' delivery deals to companies.

The process has been further undermined by the setting up of product pipelines by oil companies, which has led to shrinkage of revenues from petroleum.

For the current fiscal, too, the Railways is targeting a modest freight revenue growth of 6 per cent, with total freight load expected to rise from 550 mt in 2003-04 to 580 mt.

The hope is that the continuing manufacturing buoyancy, coupled with the decision not to raise rates, will make the target achievable.