 "Rail freight revenue short by Rs 7,000 cr")
Indian Railways’ (IR) freight revenue has lost an estimated Rs 7,000 crore in the financial year thus far, mainly due to a 50 million tonne (mt) shortfall in expected coal traffic, besides a drop in cement movement due to demonetisation.
The total loading of coal on the railways in April-December, first nine months of this financial year, was 390 mt, compared to last year’s 409 mt for the same period. Coal India (CIL), the government-owned near-monopoly, had agreed with IR to load 437 mt in this time. The railways’ estimated loss of revenue on this count is Rs 5,000 crore.
Due to this drop in traffic, IR’s operating ratio (operating expenses to revenue) is likely to drop to 94%, compared to 92% last year.
CIL had to cut on rail loading since its output target was not met. Its earlier aim was to produce 417.5 mt in April-December; it managed 377.7 mt. It had said it would use 253 railway rakes a day but was limited to 205-210 a day. Contributory factors were less of imports from last year and some captive mines failing to start operations in Maharashtra and West Bengal. All this has meant a shortfall of 70-80 rakes a day that IR was prepared for.
“The drop is despite the fact that we offered discounts on freight rates. However, the discounts helped us generate 20 mt of additional traffic from steel, iron ore, containers, other commodities and foodgrain,” said a source.
With the demonetisation, from November 9, of Rs 500 and Rs 1,000 currency notes, demand in the cement sector dropped considerably. According to sources, against a target of 110 mt for the financial year, cement traffic will conclude at 80-85 mt.
Presenting the railways’ Budget last February, minister Suresh Prabhu had pegged freight traffic receipts at Rs 1,17,933 crore, now unlikely, and passenger traffic at Rs 51,012 crore. The drop in freight comes despite withdrawal of the dual freight policy on iron ore, port congestion charges and busy season charges by the railways.
However, passenger traffic has a brighter side. It had dropped in each of the earlier three financial years - by three% in FY16, 2.5% in FY15 and three% in FY14. In these first nine months of FY17, the rise has been one%, translating to a revenue increase of 4.6%, from ~30,100 crore during the first nine months of 2015-16 to Rs 31,493 crore this year.
Over 60 years, the share of the railways in total freight traffic has declined from 89% to 30%, the majority now sent via roads. While coal is 44% of IR’s share, cement is eight% and foodgrain is seven%. During the past financial year, compared to the Budget Estimates, freight traffic had declined by 10% and freight earnings by 5%.
RAKE OVER OLD COALS
* Rs 5,000 crore: Revenue shortfall in coal till Q3FY17
* 50 million tonne: Shortfall in coal traffic till Q3FY17
* 437 million tonne: Coal transportation target set by Coal India (CIL) and railways till Q3FY17
* 390 million tonne: Coal loading achieved till Q3FY17
* 409 million tonne: Coal loading till Q3FY16
* While CIL only agreed to use 253 rakes per day, it got limited to 205-210 rakes per day due to demand shortage on coal
