Indian Railways is finding it tough to cope with passenger and freight demand, and needs to raise capacity to handle traffic in these two segments, Railway Board Chairman Vinod Yadav said on Wednesday.

"Today there is no lack of demand, but lack of capacity, whether it is passenger segment or freight segment. Indian railways has no hesitation accepting that we are not able to cope up with the demand for the passenger segment and even for the freight segment," Yadav said at an event organized by Confederation of Industry (CII).

He said the national transporter is incurring losses in the passenger segment since the fare is subsidised. Rationalisation of freight rates has always been a top industry demand as higher logistics expense adds up to the overall cost of a product.

“Everybody knows that we are cross-subsidising by increasing the freight rates. If we really had the freedom to fix the passenger rates, I am very sure that freight rates can be rationalised. Certain issues have to be sorted out one by one," he said.

Electrification of tracks--key focus area of the state-owned transporter---will be completed in the next three years, in which Yadav said Indian railways has taken a ‘quantum jump’. In the previous financial year ended March, 5,300 km of track had been electrified as compared to 600 km/year electrification done five years ago.

“Infrastructure development that could have taken place in the last 25-30 years, has not happened due to various reasons….We have done good progress in doubling, tripling of line and electrification and that is not enough. We have to create capacity for handling passenger and freight traffic," he said.

As far as infrastructure development is concerned, Yadav said dedicated freight corridor (DFC) project needs to be completed at the earliest and till today land acquisition and forest clearance continues to be a challenge for certain projects, including DFC as a result causing delay in completion.

The national carrier plans to commission more than 60-70% of the lines in the eastern (freight) corridor in the current financial year 2019-20 and the rest in the following year.

“DFC will open a lot of opportunities for everyone," Yadav said.

The DFC project involves constructing half a dozen freight corridors across the entire country for specifically set aside for freight movements. As much of 1,000 km of DFC, including western DFC connecting states such as Haryana , Maharashtra and eastern DFC connecting Punjab, West Bengal, among others will be operational in this year.

Close