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The share of Indian Railways in cargo traffic is expected to go down by 2-3% this year against the current 36%. This is in sharp contrast to 2% increase targeted for the 12th Plan period. The key reason has been the lackluster performance of the Railways in setting up dedicated lines and centres for expanding business in commodities like steel and cement.
India is the fourth largest producer of steel in the world. The Railways even with the current growth of loading rate at 8.39% would carry less than half of the steel produced- about 40 million tonnes compared to the overall production of 96 million tonnes annually. India’s steel capacity would treble in the coming years but the Railways seem to be little prepared for the challenge.
Among the steel producers, only Steel Authority of India uses the Railways for transportation. Other major private players have switched to roads because of issues like cost, service, and connectivity. A senior official from the Planning Commission said there was an urgent need to capture the traffic at the Western Coast.
In the case of cement, the Railways' carrying capacity grew by about 1.84%, while the overall cement demand grew by about 8.2% this year, according to a report by ICRA Limited of 2013. Last year, the railway loading fell by 1.63%.
In 2008-09, Lalu Prasad Yadav, the then Railway Minister, had said, "The Railways will receive more than 100 million tonnes traffic every year from the cement industry and we are targeting a loading of 200 million tonne from cement industry in 2011-12." But four years later, the Railways carried only 105.82 MT in 2012-13 and would barely manage the figure this year.
There has been little progress on the construction of new lines that are part of the 10 identified big cement clusters in Nandyal-Yerraguntla, Jaggayyapet-Mallacheruvu and Vishnupuram-Janpahad.
Besides, the Railways has also missed the opportunity to tap automobile traffic. Automobile forms less than 1% of the Railway traffic. Each year, the Railways announces a policy revision for automobile traffic. It hopes for better performance. But the policy for its inherent flaws has never succeeded because of capacity and servicing issue, said Abhay Agarwal, Partner & Advisory, Ernst & Young.
Although the Railways has taken some initiatives for coal connectivity projects, the commodity specific focus is absent. The commodities that performed well this year are food grains and iron ore for export purposes. But fertilisers registered a dip of about -0.48% compared to last year. The coal traffic for public use has come down by about 4%. Experts have argued that less coal traffic is one of the key reasons for decline in average lead.
Senior railway officials do not agree on the loss of market share to roads. “We are only interested in long distance traffic. We might have lost some traffic but most of it is short distance," said a senior Railway official. But even in the long-distance, the performance has not been good with the lead, which gives the total distance on which a tonne of cargo has been carried, falling to just 622 kilometre during April-November 2013 against 642 km achieved during the same period last year and 636 km in 2012-13.
The drop in average lead shows that Railways is loosing traffic even on longer distances, says Agarwal.
Officials said the zonal railways were recently asked to aim at increasing the lead rather than just concentrating on meeting the originating loading targets. Experts, however, said though the Railways might well achieve their budget loading and earning targets, the continuous loss of traffic to the road sector underlines their under-performance.
