There is nothing unusual for the Indian Railways to miss its targets—freight traffic or earnings. Such has been the level of political interference in its functioning that it will need a determined effort to revive its fortunes. A humble beginning has been made of late.
Figures issued on Wednesday showed that railways missed its budgeted estimate of revenue earning freight traffic for 2012-13 by 15 million tonnes (mt). It carried 1,009.7 mt in 2012-13. Though this was higher than the 2011-12 figure by nearly 40 mt. One can always blame ad hoc re-jigging of freight rates and other factors for missing the target.
But this is just a minor blip compared with the structural problems this public sector undertaking faces. Consider the two big issues when it comes to earnings. One, the ratio of passenger and freight earnings to gross traffic receipts (GTR) has remained nearly constant for a decade now. Passenger earnings to GTR have never exceeded 31% since 2002-03. The only reason for this is the freeze on passenger fares. If one adjusts for inflation and running costs, the railways have effectively lost money. The corollary is that goods traffic to GTR (both 2012-13 revised estimates and the budgeted estimates for 2013-14) has been lower than what it was in 2002-13.
The other issue is the composition of the freight traffic. Eight commodities account for the bulk of the freight traffic, with coal alone accounting for more than 40% of the good traffic. In contrast, “newer” kinds of goods traffic, container services for example, account for a rather trifling sum.
It is these two issues that need attention and some strategizing. So far, there are few signs that the ministry is thinking about them. Now this cannot be changed overnight. But equally, unless efforts are made to address them soon, matters may just continue as ever before. What makes matters hard to resolve is that most of these bulk commodities are not of the “last mile” variety. These goods are transported to the last railway bulkhead and not beyond. The nature of demand in the Indian economy has changed over the past decades and roadways are garnering that kind of traffic. That is what the railways needs to address.
What should be done to improve the financial health of the railways? Tell us at firstname.lastname@example.org