Keeping the momentum of freight rationalization going and riding high on good operating ratio and cash surplus, railway minister Lalu Prasad on Tuesday announced a slew of measures which will enhance freight earnings and maximize freight loads.
“The focus is on increasing yield per train rather than increasing tariff per passenger,” the minister said.
Freight loading in the current year up to December 2007 has increased by more than 8% and Prasad has set a target for loading at 850 million tonnes (mt) for 2008-09. The railway ministry has also mapped a massive capacity expansion project, spanning over seven years with a total cost of Rs75,000 crore.
The railways will start work on the eastern and western dedicated freight corridor, the marquee project that will expedite movement of goods across the country and earn higher revenues, in 2008-09.
In the last four years, the railways has managed to achieve an incremental loading of 233mt and added Rs14,000 crore to its freight earnings. These have largely come through reduced wagon turnaround time and increasing the load factor.
In line with its gradual shift to market-determined practices, Prasad also said in 2008-09, policies dealing with lean and peak seasons will be made according to prevailing market conditions. Currently, while a surcharge is levied in the peak season, discounts are offered during the lean season.
He also extended a 40% discount to incremental traffic in empty-flow direction, or reverse direction, on which railways does not get enough freight traffic.
He announced a reduction in the rate slab that attracts highest freight leading to a reduction in rates of petrol and diesel by 5%. Rationalization of freight structure has already lead to a reduction of rates for these commodities by 17% in last three years.
On the reduction in freight rate on petrol and diesel, S.V. Narasimhan, director, finance, Indian Oil Corp. Ltd, said: “It will not make a big impact. We assume it will not be more than Rs15-20 crore per annum.”
To woo fly ash manufacturers to move their products through rail rather than by road, Prasad has dropped the freight rates by 14%. He also announced that the railways will give a 6% discount for traffic originating from other states for the north-eastern states with the exception of a few commodities. Last year, the same rate of discount was given to goods originating in these states.
Between 2004-05 and 2007-08 the railways earned Rs2,000 crore by adding 3,000 additional coaches. It has also leveraged other earnings such as those through parcels, advertisements, land leases, etc.
Amrit Pandurangi, who heads the infrastructure practice at audit and consulting firm PricewaterhouseCoopers, said the railways is getting more realistic and devising policies according to market demands. “Fortunately, the railways will be able to take back its share which it has been losing to the road sector. In the process, the railways is also preparing itself to make use of the augmented capacities it is going to create through expansion and dedicated freight corridors.”