Is the Railways' freight target achievable?

The Indian Railways' freight traffic target for 2012-13 has been set at 1,025 million tonnes (mt), according to an announcement in the Rail Budget. What has not been announced in the Budget is the internal target that has been fixed at 1,040 mt. Is the proclaimed target achievable? A million-dollar question.

The target for 2011-12 was initially fixed at 993 mt (internal target at 1,000 mt), subsequently pruned to 970 mt and by March 31 the actual throughput further dropped, marginally though, to 969.78 mt. Will that episode be repeated this year? Difficult to say anything firmly right now as much would depend on how the economy behaves during the course of the year.

Slack industrial growth

If the economy grows, there will be no dearth of traffic for the Railways. If it does not, the Railways, like many other sectors, will take a hit. However, the initial indications are ominous.

Perhaps for the first time, the fiscal year began with stabling (idling) of wagons due to poor demand. Normally the slack season wagon stabling starts from the third week of May or early June, with the onset of the monsoon. This time it started much earlier, in April.

One reason could be the slackening of industrial growth contributing to low-key wagon demand. In March, the factory output declined by 3.5 per cent as compared with 9.4 per cent growth a year ago.

None of the broad sectors performed well, be it dominant manufacturing (-4.4 per cent), mining (-1.3 per cent), electricity (-2.7 per cent) and perhaps the most dismal picture was presented by the capital goods sector which contracted by 21 per cent.

This was the second time in the last fiscal. The first was in October when the contraction was 4.9 per cent and industrial production entered the negative zone.

Ability doubted

But then there are other challenges also. It is not clear if the Railways is really geared to handle the targeted volume even if there is no dearth of traffic.

Doubts are being expressed in certain quarters about the ability of the Railways. The reason: capacity constraints fuelled by resources crunch.

Achieving the targeted volume presupposes daily loading of 48,000 wagons on an average. But enquiries reveal that loading in excess of 46,000 wagons a day on an average for more than three consecutive days might throw up a difficult-to-meet situation for the Railways. The limited line capacity will pose a major challenge. This is not surprising.

Coal continues to be the single largest item of freight traffic for the Railways, accounting for more than 47 per cent of the total, and yet the progress of various capacity expansion programmes launched by the major coal-loading zonal railways, such as the East Coast, the South East Central, the South Central and the East Central, has been tardy — an inevitable fallout of spreading limited resources too thinly over a number projects, mostly socially relevant but not revenue-generating.

System improvement

The Railway Board, therefore, has urged these zonal railways to go for what is called system improvement, that is, monitoring the terminal operation, keeping equipment failure as low as possible and rationalising empty and engine flow circuits to obtain optimum benefit. One wonders if the palliatives can hope to yield desired results.

In the absence of adequate investments, the reliability of equipment such as locomotives, signalling system and tracks will be in question and the safety issue at stake.

Unfortunately, there is no clear road map for raising resources for investments needed to avert what appear to be eventualities. Abstinence from fare increase on the ground of political expediency has only forced the Railways to fall back more and more upon freight increases, often outside the Budget.

Such an option — exercised indiscriminately and already stretched too far — therefore, could not by any measure be the part of any prudent long-term policy.

Resources squandered

Meanwhile, the other avenues for raising resources such as budgetary support and market borrowing, too, do not appear to be promising. The public-private projects are not taking off and attracting private investments is proving to be a challenge.

But the mindless announcements of new passenger trains, with little regard to viability and the infrastructure bottlenecks, continues. Squandering away limited resources on low-priority socially relevant projects, it appears, has proved to be the most favoured option of successive Railway Ministers over the years.

One sincerely hopes that the political masters, as they decide on the fate of an organisation as critical as the Railways, will be guided more by the head than anything else and take serious note at least of the recommendations of the expert committees emphasising cap on new projects and prioritisation of resource generating sanctioned projects.

> santanu@thehindu.co.in