Railway's freight business up as it faces rising costs and competition

The transport network needs reforms and upgrades to compete in logistics

Before the Indian Railways, caravans of pack bullocks carried goods to places like the Deccan, where "neither navigable rivers nor wheeled traffic could penetrate far into the interior". The caravans, managed by the semi-nomadic Banjara community, connected the country and ensured goods traffic between regions, says Tirthankar Roy in ‘The Economic History of India: 1857-2010.’ The book notes that until the Railways began its dominance, bulk commodities travelled on the Ganges and the Indus and coast-to-coast shipping was used too.

More recently, the Railways has made all-time high investments of more than a trillion rupees in the first four months of 2022-23 even as freight transport reaches record numbers. The April-July 2023 freight figure was 25 per cent higher than the same period in 2019. Annual figures for 2021-22 show that freight trains travelled 481 million km that year, nearly double from the time of economic liberalisation in the nineties. The quantity of goods carried is at a record high too, though a few commodities dominate the traffic as seen in chart 1 (click image for interactive chart).

 

Demand for coal and other key commodities like pig iron and finished steel has resulted in eastern India leading in freight traffic. The East Coast railway zone comprises the mineral-rich state of Odisha and the Bastar and Dantewada districts of Chhattisgarh. The zone has a 16 per cent share in freight, increasing from 13 per cent in 2012-13. The East Central zone, which includes railway stations in Bihar and Jharkhand, has seen its freight share increase from 10 per cent to 12 per cent in the same period. The South East Central zone, which includes Bilaspur station in Chhattisgarh, and South Eastern, which includes Kharagpur in West Bengal, are other major freight contributors (chart 2). 

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The freight numbers mask the Railways' challenges. The transport network handled 85 per cent of India’s logistics in 1951, but the number dropped to 60 per cent by 1991. It was under 25 per cent in 2021-22, the latest year for which estimates are available (chart 3).

 

Roads became a viable alternative amid the Railways' costlier freight charges meant to subsidise passenger fares, and lacklustre spends over the years on upgrades to match modern logistical requirements. Dedicated freight corridors and other investments are among the government’s efforts to encourage more use of rail transport.

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Worldwide, trains are regarded as a more efficient and greener mode of transport. The Railways won’t be replaced like the Banjaras were, but it would need quicker reforms and upgrades if India is to compete globally.