Despite the record double-digit surge in industrial production, the railways has been unable to realize better freight business, with the first two months averaging a growth of little more than 5%.
This, experts believe, is because the railways is facing a capacity constraint and it will be a while before the massive step-up in investments envisaged in the 2007-08 Railway Budget kick in. The average growth in railway freight traffic in April-May this year, despite a marginal improvement in the latest month, averaged 5.7%, against 9.1% last year.
The railways, which demonstrated a turnaround in the last two years by reporting record revenues, had in fact anticipated, in light of the decelerating trends in freight traffic over most of last year, that its existing capacities would be unable to cope with the growing demand. It had, therefore, initiated a massive investment plan in the budget for this year, to help double its carrying capacity from the current 726 million tonnes (mt) in 2006-07 to 1,500mt by 2015.
According to an estimate by the public-private partnership cell of the ministry, the railways will need to invest close to Rs60,000 crore just in rolling stock—locomotives and coaches—during the 11th Plan, 2007-12. The ministry had invested Rs30,000 crore during the previous five years.
“The demand for carrying more freight is there, but our own capacity to handle the additional load is riddled with bottlenecks,” the then financial commissioner of railways, R. Sivadasan, had told Mint in March. “Capacity limitations have started coming in the way and we are finding it difficult to carry the kind of incremental load that we would like to. However, freight offerings have not tapered off.”
The railways’ loss has been the roads sector’s gain. Truck sales in the last fiscal witnessed a sharp jump, as operators moved swiftly to exploit the opportunity. Heavy trucks make up the fastest-growing segment in the country, with sales increasing at nearly 70% in fiscal 2007 to 146,000 units. The second-fastest segment was the sub-3.5 tonne category. According to Sanjay Kumar Singh, assistant professor at IIT Kanpur, the huge investments made in the highways sector in the last decade has also contributed to the roads sector snatching freight traffic from the railways.
According to Singh, the demand for freight transportation in India is rapidly increasing even as supply is constrained. Projects such as the railway freight corridor will take time. In the short run, the only possible measure that the railways could have taken was to increase loading on the wagons, an alternative that it has all, but exhausted.