 "Freight factor: Increased load brings relief")
Despite a slowing in the economy and a fall in the average lead (the average distance covered by a passenger or a tonne of goods), Indian Railways (IR) expected to exceed the Budget loading target for this financial year, a first in five years, Railway Minister Mallikarjun Kharge said while presenting the interim Railway Budget 2014-15 on Wednesday.
He said this financial year, loading would be at 1,052 million tonnes (mt), against the Budget target of 1,047 mt. The target for 2014-15 has been set at 1,101 mt, the highest in recent times.
In 2012-13, loading was at 1,008 million tonnes (mt), against the Budget estimate of 1,025 mt.
Kharge, however, kept freight rates unchanged. Experts said the additional pressure of the dual pricing system for diesel hadn't been factored in on fares. It is considered IR has one of the highest freight rates globally, though its passenger fares are among the lowest.
"The average lead of freight traffic is falling, and is likely to be 622 km, against the budgeted 644.5 km. Yet, we are confident of surpassing the freight earnings target," Kharge said in his speech.
He said this financial year, loading would be at 1,052 million tonnes (mt), against the Budget target of 1,047 mt. The target for 2014-15 has been set at 1,101 mt, the highest in recent times.
In 2012-13, loading was at 1,008 million tonnes (mt), against the Budget estimate of 1,025 mt.
Kharge, however, kept freight rates unchanged. Experts said the additional pressure of the dual pricing system for diesel hadn't been factored in on fares. It is considered IR has one of the highest freight rates globally, though its passenger fares are among the lowest.
"The average lead of freight traffic is falling, and is likely to be 622 km, against the budgeted 644.5 km. Yet, we are confident of surpassing the freight earnings target," Kharge said in his speech.
In 2013-14, freight earnings will stand at Rs 94,000 crore, against the target of Rs 93,554 crore. The target for the next financial year was set at Rs 1,05,770 crore, 12.5 per cent more than the revised freight earnings for 2013-14.
The railways' operating ratio, the ratio of administrative expenses to net sales, of which freight accounts for 17 per cent, is likely to be 90.8 per cent, compared with the Budget target of 87.8 per cent, a sign of the railways' deteriorating financial health. The ratio has, however, improved from 95.3 per cent in 2009-10, when Mamata Banerjee was the minister.
The 2014-15 Budget target for operating ratio has been kept at 89.8 per cent.
For 2013-14, the share of Indian Railways in India's overall cargo traffic is expected to decline two-three per cent from the current 36 per cent. This financial year, the commodities that have fared well, in terms of cargo, are foodgrain and iron ore. Fertiliser cargo, however, recorded a fall of 0.5 per cent compared to last year, while coal traffic for public use fell about four per cent. This is considered a key factor behind the decline in average lead.
"While not going overboard with populist measures, the Budget touched upon financial health, too. The fact that the railways met the tonnage and earnings targets showed the increase in fuel charges were not entirely passed on to customers. This led to a rise in operating ration compared to the Budget target, indicating the pressure on the cost side is increasing," said Vishwas Udgirkar, senior director, Deloitte India.
According to the interim Budget, an empty-flow discount scheme will be implemented soon. This will ensure optimum utilisation of assets in the reverse-flow direction of trains and increase rail-borne traffic. The scheme, conceptualised in the 2006-07 Budget, will be a boost for sectors such as construction, cement and steel.
Kharge also proposed third-party warehousing at special parcel terminals as well as parcel terminals and special parcel trains with scheduled timings. Indian Railways is also coming up with a new policy for transportation of milk.
"To facilitate seamless transport of imported cargo, some restrictions on the movement of imported commodities have been eased. Further, to increase throughput of container traffic, the permissible carrying capacity of 20-ft containers has been enhanced by four tonnes," Kharge said.
The railways' operating ratio, the ratio of administrative expenses to net sales, of which freight accounts for 17 per cent, is likely to be 90.8 per cent, compared with the Budget target of 87.8 per cent, a sign of the railways' deteriorating financial health. The ratio has, however, improved from 95.3 per cent in 2009-10, when Mamata Banerjee was the minister.
The 2014-15 Budget target for operating ratio has been kept at 89.8 per cent.
For 2013-14, the share of Indian Railways in India's overall cargo traffic is expected to decline two-three per cent from the current 36 per cent. This financial year, the commodities that have fared well, in terms of cargo, are foodgrain and iron ore. Fertiliser cargo, however, recorded a fall of 0.5 per cent compared to last year, while coal traffic for public use fell about four per cent. This is considered a key factor behind the decline in average lead.
"While not going overboard with populist measures, the Budget touched upon financial health, too. The fact that the railways met the tonnage and earnings targets showed the increase in fuel charges were not entirely passed on to customers. This led to a rise in operating ration compared to the Budget target, indicating the pressure on the cost side is increasing," said Vishwas Udgirkar, senior director, Deloitte India.
According to the interim Budget, an empty-flow discount scheme will be implemented soon. This will ensure optimum utilisation of assets in the reverse-flow direction of trains and increase rail-borne traffic. The scheme, conceptualised in the 2006-07 Budget, will be a boost for sectors such as construction, cement and steel.
Kharge also proposed third-party warehousing at special parcel terminals as well as parcel terminals and special parcel trains with scheduled timings. Indian Railways is also coming up with a new policy for transportation of milk.
"To facilitate seamless transport of imported cargo, some restrictions on the movement of imported commodities have been eased. Further, to increase throughput of container traffic, the permissible carrying capacity of 20-ft containers has been enhanced by four tonnes," Kharge said.
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