Slowdown hits volume growth for cement, pig iron and finished steel
About 300 freight trains are parked in sheds because they have no cargo to carry. This is despite the over 20 per cent growth in freight earnings in the first five months of this fiscal. Usually, only 150 rakes are parked during the July-September quarter, the “lean season”.
Hit by slowdown, the growth rate of cargo volume has dipped or fallen sharply for items such as cement, pig iron and finished steel, and petroleum products. In August, cement loading saw a 12 per cent fall, while pig iron and finished steel movement dipped over 2 per cent. Fertiliser movement slid by over 3 per cent.
Even coal availability at railway terminals has declined following the poor monsoon. “Delayed and prolonged rains damage the roads. As a result, many truckers are unwilling to load coal from the pit-head to railhead. So, there is no coal to be carried,” said a source.
Parked rakes are bad news for Railway finances, though this is not yet reflected in the freight earnings data. This is because a significant share of freight earnings is due to an across-the-board 20-28 per cent rate hike from March. Freight earnings for the first five months of the current fiscal grew over 21 per cent compared with the same period last year.
“Not that we are not loading more. The cargo loading volume is still up on a year-on-year basis — 3.48 per cent in August. But, simultaneously, the average distance for which goods are moved has seen an over 3 per cent reduction, not just in August, but in the previous months as well,” a Rail traffic official said.
So, the earnings projection of the Railways, as suggested in the Budget, may have to be revised downwards if the economy does not grow at a faster pace for the rest of the year.
Already, passenger earnings are expected to be lower by over Rs 4,000 crore than the figure presented in the original Budget — on account of Mukul Roy rolling back the proposed fare hike. Further, fuel expenditure is expected to bloat by Rs 600 crore this fiscal, following the diesel price hike.
And if the excess wagon capacity continues after October, when the busy season starts, the Railways may even have to reconsider its pace of wagon procurement.