Railways extends round-trip freight discounts for six months, say officials

Sources in the ministry say policy not successful so far; extension period kept low as the board may soon have to decide whether to modify the policy further or discontinue it altogether

Two years after Indian Railways launched the round-trip traffic (RTT) policy to compete with road transport, it has extended it for a mere six months amid mediocre outcomes in freight augmentation, officials told Business Standard. The policy incentivises booking goods orders for both to and fro journeys of a goods train, in exchange for discounted rates.

According to a circular by the Railway Board, the policy will now be applicable till 30 April. Sources in the ministry said that the extension period was kept low as the board may soon have to make a decision on whether to modify the policy further or discontinue it altogether.

A railways official said that the policy has failed to accomplish what was envisioned when it was introduced. The railway board had introduced the policy after observing that road transport was a preferred option for private players because of customer-friendly transportation policies such as RTT.

When the policy was first implemented by railways, major commodities such as coal were not exempted from the policy. There were multiple instances of misuse of the policy to avail unfair concessions, after which railways had to cap these concessions at 10 per cent.

“Taking all benchmarks and conditions into account, private players hardly get benefits of a few lakh rupees on the policy, as the restrictions make it difficult for most of them to avail concessions,” the official said. The policy has 14 terms and modalities defining the minimum lot of goods eligible and other restrictions for the policy. Moreover, a majority of raw materials, such as iron ore and containers, which form a bulk of the freight basket, are not covered by the policy.

Another problem with the enforcement of the policy has been the lack of customised rates across zones. The official said that private road transporters have the advantage of a competitive market and focused operations, which allow them to offer different types of discounts and rates, a move Indian Railways cannot undertake as its policies are applicable uniformly across zones.

RTT was the outcome of several measures undertaken by the ministry to boost freight revenue at the peak of the pandemic, when goods traffic had plummeted amid the economic slowdown. Other measures such as discounts and cashbacks for late freight deliveries had also been brought about around the time.