Indian Railways marginally misses FY17 revenue target as passenger segment yields Rs 1,000 cr less, but upbeat about FY18

Indian Railways has missed its revenue targets — albeit marginally — for FY17, with th heavily-subsidised passenger segment yielding `1,000 crore less than the revised estimate announced in the Budget. Officials are, however, upbeat about a robust increase in the transporter’s revenue in the new financial year as both its passenger and freight traffic have lately started looking up.

According to provisional figures, freight loading traffic was around 1,107 MT in 2016-17, against a revised target (RE) of 1,094 MT and compared with 1,104 MT achieved in the previous year. The moderate increase in loading over the RE was despite losing 60 MT of coal loading, primarily due to low demand from power houses and reduction in imported coal traffic. The revenue from freight for last fiscal was around `1,07,000 crore compared with an RE of `99,555 crore and `1,04,000 crore in 2015-16.

Passenger revenue at `47,000 crore was short of the revised target of `48,000 crore. The railways carried 7 crore additional passengers in 2016-17, a 1% growth after a continued fall since FY13. The overall gross traffic (GTR) revenue in 2015-16 was `1,63,700 crore, which, according to provisional estimate, was at least `1,67,000 crore in 2016-17. The revised target for 2016-17 was `1,72,000 crore.

These could be the results of the initiatives taken by the railways periodically in the last year. While on the passenger side it introduced differential pricing, added 1.01 crore berths and introduced various categories of trains, on the freight side port congestion charges of 10% were waived, busy season discount of 15% and dual freight policy for iron ore were abolished, and empty wagon flow discounts ranging from 10-30% were introduced. “This advantage was given so that we can get traffic back from the roads and retain with us,” said Mohd Jamshed, member traffic, Railway Board.

Coal, which is 50% of the total freight, has hurt the carrier the most. “We agreed to load 253 rakes every day of coal from CIL (Coal India) at the start of the year 2016-17 but between April and October it was a mere 205 rakes per day. In coal, 70% traffic is from CIL and the rest is imported coal which reduced by 20 rakes per day,” Jamshed added. This was coupled with 10 MT of loss from some coal blocks in West Bengal, Punjab and Maharashtra, which which have not been operational for two years.

The reduction in CIL traffic can be attributed to power houses not taking coal, as they had 30 days of coal.

“So we decided to look at other commodities other than coal and the freight rates were being hiked every year, which was becoming a challenge compared with the road sector,” said Jamshed. The result was that after the initial six months, the railways started seeing green shoots with people rearranging their logistics and coming back to the railways, and January onwards, a robust swing in freight was witnessed, as reported by FE earlier.

To top it, November onwards, CIL traffic too started picking up and 223 rakes per day were loaded, which is the highest ever and compared with 213 last year.

However, concerns remain in terms of net tonne km coming down, which has come down to 560 from 600, because long leads of coal are not picking up despite railways announcing a 7% discount last year. “It is an important issue as the market scenario is changing because coal leads are down and it is true few other commodities too. The principle now is that power should be produced at pit heads and iron ore and POL be transported through slurry pipelines,” said Jamshed, adding that despite this, the railways will look to incentivise long-lead traffic and look at direct transport, rather that going through the rail-port system.

The railways is also talking to PSUs and ministries, and expects freight demand to be sustained during the lean period till October.

The railways also opened the freight basket and included stone chips, bauxite, gypsum, vegetable oil, sugar, timber, cement byproducts, food and vegetables, among others, resulting in sizeable traffic and loaded around 80 MT this year from this category.