Financial Daily from THE HINDU group of publications
Friday, Jun 11, 2004
Railway Board in a fix over freight target Key user ministries project cut in demand
New Delhi , June 10
RAIL Bhawan mandarins are a troubled lot with freight projections in 2004-05 threatening to run on a slow track. Several key user ministries have projected a cut in the demand for freight services from the Railways, making it difficult for the Railway Board to finalise the targets for loading of rakes in the current financial year.
"The demand for foodgrains has already been reduced by four million tonnes (mt) for 2004-05. The petroleum and steel ministries have also indicated that their requirement for wagons will be lesser than last year," a senior Railway Board official told Business Line.
Ahead of preparing the Railway Budget 2004-05, the Railways has started consultations with their important customers to fix the targets for the year.
Incidentally, the Railways has impressive loading figures for last year.
The target was kept at 540 mt, which was later revised to 550 mt in December 2003 on account of a buoyant economy. The final loading figure for 2003-04 stood at an even better 557.75 mt. But the problem the Railways face is that it is attracting less remunerative cargo.
"We are getting more of short lead and lower class cargo. That might be good enough to complete our loading targets, but it does not translate into increased revenues," the official said.
Despite exceeding the loading target by nearly 16 mt last year, the Railways fell short of their revenue target of Rs 27,815 crore by Rs 700 crore. At Rs 42,516 crore, the total earnings from freight and passenger and other sources, has fallen Rs 930 crore short of the target for the year. The Railways has a complex system of classifying cargo on the basis of the demand and supply. Thus, there can be a wide variation in the freight charges for hauling the same quantity of different commodities for the same distance.
The Railways command good premium from products such as petroleum, oil and lubricants (POL), steel and finished goods, although they do not account for high loading figures.
Products such as fodder, salt and water that are carried by the Railways as part of its social obligation, does not even meet the operation cost.
The official reason cited by the Steel Ministry is a planned cut in steel production due to shortage of coking coal. But Steel industry sources cite the Railways' inability to provide wagons to evacuate products on time as one of the reasons for the reduction.
Similarly, with the overall foodgrains situation across the country improving, there is little need for the traditional movement of food from north to south. The advent of pipelines has continuously reduced the dependence of the petroleum sector on the Railways.
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