The railways have been forced to keep about 5 per cent of wagons idle for want of orders. Around 12,500 of the railways' fleet of 2.5 lakh wagons are idle.
The economy is, for the first time in several years, unable to use the railways' 6.25 lakh tonne freight capacity.
Lowering costs of road transport, which has been increasing capacity by 12 per cent per year, is another reason for the idle rail freight capacity.
"Business is usually slack during monsoon. But wagon idling is usually 1 per cent during monsoon, at most 2 per cent.
This year, there is much less business because so many industries are going through a slowdown," Shanti Narayan, member (traffic), Railway Board, said.
The railways have earned an additional Rs 78 crore in April-July this year from freight. But in real terms, freight earnings have been negative because of the reduction in cross-subsidisation.
The 1998-99 railway budget has reduced cross-subsidisation of passenger fares by freight. Freight rates were not increased this year, fares were.
The budget seeks to reduce cross-subsidisation by Rs 250 crore this year.
This works out to Rs 83 crore in a four-month period.
In that sense, the railways' freight income shrunk by Rs 5 crore in April-July 1998 compared to the same period last year.
Lower loading by steel and cement industries is one of the reasons for idle wagon capacity. The idle capacity would have been much larger but for the sharp growth in the movement of coal to power plants.
The railways faced a similar situation in 1993-94.
They solved the problem then by stopping orders for more wagons.
"We have paid heavily for that decision. As our fleet did not grow, there was a corresponding increase in the capacity of the road transport sector, which has now emerged as a serious challenge. We will continue buying wagons so that we are not faced with a low capacity situation when demand grows," Narayan said.
The railways are particularly focusing on acquiring more tank wagons for transporting petroleum.
It has placed orders for the supply of 500 tank wagons and the oil industry is expected to place orders for another 500 shortly.
The railways and the oil industry share the cost of acquiring the wagons.
