Indian Railways Delivering the goods dynamically

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The Railways has performed exceedingly well on the freight front, posting impressive growth in the past few years.
The Railways has performed exceedingly well on the freight front, posting impressive growth in the past few years.

Santanu Sanyal

In the first half of the current financial year (April to September 2007-08), Indian Railways (IR) posted 7.28 per cent growth in traffic throughput at 369.66 million tonnes (344.57 mt in the same period of last year), a drop of 3 per cent from the target of 381 mt set for the period. The freight earnings during the period, however, posted 10.43 per cent growth at Rs 21,752.35 crore (Rs 19,698.71 crore).

The traffic target for the current fiscal has been set at 785 mt, though internally, the zones have been urged to step up freight loading to achieve 800 mt by March next year. Whether the revised target will be achieved is, of course, another matter.

But, one thing is certain: Indian Railways has performed exceedingly well on the freight front, posting impressive growth in the past few years.

Impressive, because the growth has been achieved despite limited line capacity, various operational bottlenecks, and the like.

True to his ilk, the Railway Minister, as it is evident from various pronouncements, takes credit for this. He is followed by some of the self-proclaimed “CEOs” of the IR. However, those familiar with the functioning of the IR know what the secret of this achievement is.

The secret is: through notifications outside the Budget, the Railway Board announces a slew of measures from time to time to boost revenue.

Between April and now, there have been more than 60 freight rate circulars, mostly aimed at boosting freight earnings. The circulars are revealing. Since April, there have been three notifications on increase in permissible carrying capacity of wagons on CC+8 and CC+6 routes (Circular 41, 48 and 54) and since January, another five (Cicular10, 15, 16, 22 and 30) on the same subject. Circulars 101 and 102 relate to permissible carrying capacity of BG wagons and BOXNCR and BOXNHA wagons. Adjustments in freight rates have been announced on two occasions, Circulars 46 and 55, and new demurrage rules also twice, Circulars 50 and 95. Under the garb of dynamic pricing policy, busy season surcharge (twice) and congestion surcharge have been imposed (Circular 71, 89 and 91). Circular 92 is on the levy of terminal charge on goods traffic.

New rules have been introduced in regard to payment of terminal charges to port railways (Circular 88), punitive charges for overloading (Circular 67) and levy of development surcharge and terminal charge (Circular 58). Amendment to relevant rules have been undertaken in regard to rounding off of freight charges (Circular 75).

Other Circulars (60, 62,65, 66,69, 76, 77, s.o. 1393, and 85) too are all aimed at augmenting revenue, one way or the other.

Between April and June, new policy guidelines have been issued at least on four occasions.

Revenue loss likely too

But then it will be wrong to presume that all the circulars issued since April are intended to raise revenue.

There are several circulars, such as freight concession for iron ore traffic (Circular 59), discount on movement of gunny bales or manufactured goods, (Cicular. 70), freight concession for timber waste (circular No. 73), rebate in freight rates in respect of bulk cement (Circular 78), freight rebate for LPG transported in jointly owned tank wagons of the Railways and the oil industry (circular No. 83), rebate in freight for ammonia and phosphoric acid transported in privately owned tank wagons (Circular 96), rebate in freight for traffic transported in privately owned wagons (Circular. 97), which might entail revenue loss for the Railways.

It is interesting to note that some of the circulars offering rebates are aimed at benefiting particular industrial consumers, mostly in the private sector.

These include: Circular 64 offering rebates to cement companies on Jaggayapeta-Mellacheruvu and Vishnupuram-Janapahad new lines, Circular 93 offering freight concession on petroleum coke traffic of Reliance Logistics (P) Ltd and Circular 94 proposing rebate in freight rates on caustic soda lye traffic transported in BCTS wagons for Bihar Caustic & Chemicals Ltd.

It also includes Circular 98 on freight concession for loading iron and steel at Wardha to benefit Lloyd Steel under long term special incentive scheme and Circular 99 offering freight concession for loading HR coils to benefit Ispat Industries under the long-term special incentive Scheme.

In some cases, reliefs have been announced in respect of foodgrains movement (Circular 72) and traffic originating from North-Eastern region (Circular 80). However, the loss that might have been caused by the rebate announcements must have been more than compensated by other circulars aimed at mopping up additional revenues.

(This article was published in the Business Line print edition dated November 26, 2007)
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