Low railway freight volume reflects weak economy | Mint
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Business News/ Market / Mark-to-market/  Low railway freight volume reflects weak economy
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Low railway freight volume reflects weak economy

Overall price hikes are helping Indian Railways sustain revenue momentum, but underlying volumes still lack vitality

Passenger volume, which generates more than a quarter of Indian Railways’ revenue, is down 2.1%. Photo: Ramesh Pathania/Mint Premium
Passenger volume, which generates more than a quarter of Indian Railways’ revenue, is down 2.1%. Photo: Ramesh Pathania/Mint

Lower passenger volume hasn’t dented Indian Railways’ revenue.

Revenue in the first 11 months of the current fiscal increased 12.9%, slightly better than the 12.5% growth the national carrier registered in the same period of previous fiscal year.

But passenger volume, which generates more than a quarter of Indian Railways’ revenue, is down 2.1%. In the 11 months to February 2014, it fell 1%. Fare hikes in 2013, 2014 and capacity constraints on busy routes mean a portion of the traffic is diverted to other modes of transportation. The ministry of railways said in its white paper released last month that the number of passengers travelling came down mostly in the unreserved travel the 0-15km segments.

Nevertheless, the fare hikes meant that revenue in the passenger segment continued to grow in double digits. Similarly, revenue from the goods business grew in the low teens. But, unlike the passenger segment, the goods business is supported by growth in volume. Freight volume from April till January rose 4.6%.

That, however, can provide little solace. Freight volume growth has been stuck at 4-4.6% for two years now. Also, net tonnage per kilometre—the weight of goods conveyed by a vehicle or a group of trains—grew by 3.8% in January, slower than the 6.9% rise the railways saw in January 2012.

Even though net tonnage increased by a decent 5.6% in the 10 months till January, overall growth this year is expected to remain subdued. “Trends indicate that under tonnage, certain commodities like raw material for steel plants, pig iron and finished steel, iron ore and foodgrain are anticipated to load less than the previous year. Coal, cement, containers and fertilizers are expected to pick up over the previous FY (financial year). Average freight lead has grown nominally this year after registering negative growth in the previous two years," the ministry of railways adds.

Overall price hikes are helping Indian Railways sustain revenue momentum. But underlying volumes still lack vitality.

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Published: 15 Mar 2015, 08:53 PM IST
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