Railways revenues capability continue to face headwinds in the second quarter of 2016-17 as well. As per the latest numbers, the Indian railways recorded over 10 per cent decline in its freight revenue to Rs 48,340 crore for the July to September 2016 quarter. This was mainly led by the dip in freight on a net tone per kilometer basis. In other words, railways carried lesser freight compared to the corresponding quarter last year resulting in reduced freight tonnage.
Even the month to month comparison has shown worrying signs too. Take for example the figures recorded for just the month of September. While passenger revenue in September were marginally up by around 3 per cent, revenue from transporting goods was down by over 5 per cent compared to same month, a year ago period. The total passenger revenue for September stood at Rs.3815 crore compared with Rs.3,711 crore in the same period a year ago. However, it missed its passenger revenue target of Rs.4253 crore by margin of 10 per cent. In terms of freight, the Indian Railways witnessed a revenue Rs.7719 crore compared with Rs.8157 crore in the year-ago period, and missed the target of Rs 8,564 crore.
Let us come to the October figures till the 10th of the current month. According to a news report despite surge pricing introduced in Express trains, Railways’ revenue collection in the first half of October declined by Rs 232 crore while the occupancy was hit by 15-20 per cent. According to data, railways collected Rs 4,072 crore from October 1 to 10 this year which declined by Rs 232 crore in 2015-16. Last year, railways’ revenue during this period was Rs 4,304 crore. Railway had said earlier that it should generate Rs 1,000 crore from surge pricing in one year of which Rs 200 crore was expected in the month of October alone.
On the freight side, the major decline were recorded in commodities like cement, fertilizers and coal. In terms of tonnage, Railways witnessed around 6 per cent decline in the cement it carried in the second quarter followed by a 5 per cent decline fertilizers and around 4 per cent decline in coal compared to same period a year ago. The revenue recorded from transporting coal recorded a 14 per cent decline in the July-September quarter compared to last year period.
According to a senior official, the decline in freight revenue is due to an overall decline in what is called ‘lead’. Lead in railway parlance means net ton/per km. The target for FY17 is 600 km which in itself is lower than what the target was in FY 16 - 620 km.
Experts said the dip in coal happened despite measures like reducing the freight charges for long-lead traffic. In the second quarter railways had increased the tariff on coal for distances between 200 km to 700 km.
But all is not lost for railways as the traffic for iron ore seems to have picked up after dual freight policy for iron ore scrapped and the 10 per cent post congestion surcharge was also removed. Now railways is banking on the third quarter to show the positive impacts of measures taken to boost the freight revenues.
For the record Railways runs around 12,000 trains and operates 8,000 freight trains every day. From next year, railways will not have the opportunity to present a separate budget, as was the norm for decades. Instead, it has been merged with the General Budget. It remains to be seen that with challenging revenue generation capabilities and ambitious programmes of modernizing over 400 railway stations and starting high-speed trains, how railways will be able to generate cash and resources.
BW Reporters
Ashish Sinha is an experienced business journalist who has covered FMCG, auto, infrastructure, tourism, telecom among several other beats. Ashish has keen interest in the regulatory scenario impacting different sectors. He writes on aviation, railways, post and telegraph, infrastructure, defence, media & entertainment, among a wide variety of other subjects.
