Railway Minister Suresh Prabhu is betting on a 5 per cent increase in goods earnings at ₹1,17,933 crore, which he hopes will be achieved by ferrying an additional 50 million tonnes of goods.
This is even as he is set to miss his target for 2015-16 by 80 million tonnes. Growth in coal production and revival in the steel industry due to protective measures taken by the government is what Prabhu seems to be betting on.
Of the additional amount of goods that will be carried, the projection is that the Railways will carry 21.97 million tonnes of additional coal as compared to the revised estimates of 2015-16, while an additional 11.15 million tonnes will come from transport of steel and iron ore.
The target set for fiscal year 2016-17 is lower, at 1,157 million tonnes, versus 1,186 million tonnes for this fiscal.
Prabhu also proposes to work on a tariff policy that will make the business more lucrative.
“The 2016 Rail Budget has largely surrounded the promise of capacity additions to prevent losing further market share to road transportation. The proposal to develop a new freight tariff structure to evolve a new competitive rate structure shall help the Railways regain market share vis-à-vis other transportation modes,” said Mukesh Butani, Managing Partner, BMR Legal.
Widening the basketPrabhu announced that a study is being conducted to expand the freight basket of the Railways beyond the 10 bulk commodities. He also announced that time-tabled freight trains will be started in 2016-17 on a pilot basis.
He said a review of the tariff policy will be undertaken to “evolve a competitive structure vis-à-vis other modes”.
“Differentiated tariffs to increase utilisation on alternate routes and the possibility of long-term tariff contracts using pre-determined price escalation principles will be explored,” Prabhu said.
What would help the Railway Minister is Coal India meeting its production target for 2016-17, which would add 150 million tonnes of coal in the domestic market. Further, several of the 18 coal mines that have been auctioned, but are yet to start production, will come on stream.
The minimum import price imposed on 173 steel products is expected to give domestic manufacturers a fillip and add to the rail freight.
The S&P BSE Metal Index closed 0.41 per cent higher at 6,638.67 even while the S&P BSE Sensex closed 0.49 per cent lower at 22,976. This indicates that the markets see no hike in freight fares and is hence a positive.
The Transport Logistics Company of India will build warehousing facilities and logistics parks in public-private-partnership mode to attract more traffic. At least 10 goods sheds will be developed in 2016-17.
Among the major goods, in the current fiscal year only steel and cement movement through the railways witnessed a drop compared to 2014-15