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ARTICLE: Freight or passengers?
Friday, 22 February 2013 07:04

Freight or passengers?
The eternal dilemma for the railways

INDIAN Railways is a transport utility whose basic unit for business is a “train load”. The infrastructure such as the track on which these trains run, the signaling system, the stations, the locomotives, the operating staff , etc, does not differentiate between a 24-coach superfast carrying 1500 passengers or a 54 BOXN train carrying 4500 tonnes of coal.

For each is simply a “train” with vastly different earning power, occupying valuable section capacity, needing locomotives to haul it, drivers, guards, station masters, maintenance and hordes of supporting staff to make it run fast, safe and on time !

In 2009-10, the railways' total working expenses were Rs 82,915 crore, when around 11000 passengers (including 6000 suburban or locals ) and 6000 freight involving a total of 17,000 trains originated every day, costing just over Rs. 4.87 crore per train. During the same period, it also earned Rs. 56,911 crore, from freight and Rs. 23,414 crore from passenger business, or Rs. 9.48 crore from freight and Rs. 2.13 crore from each passenger train.

This pattern of earnings is almost the same the world over and, given its vastly superior earning capacity, the hard-nosed management of 14 Class I railroads of the US with over 2,00,000 km of rail network between them have understandably chosen to put all their eggs in the all-important “freight” basket.

Back home, rampant populism during the last two decades has resulted in an addition of nearly 3000 new passengers while less than 500 new freight trains could be introduced. Moreover, successive Railway Ministers, keen to “win friends and influence people”, have also frozen the passenger tariff practically at the same level for the last 10 years.

As a result, the railways lose around Rs 20,000 crore in the passenger fare segment on a yearly basis, and to make up this loss, earnings from freight traffic are increasingly being used to cross-subsidise the passenger business.

Realising the flawed business model, Railway Minister Pawan Kumar Bansal has at last decided to “bite the bullet” by announcing a pre-budget hike of 20 per cent in passenger tariff, a prerogative of the Railway Board not requiring parliamentary approval, but has not been exercised for quite some time.

Against the target increase in the earning of about Rs. 4000 crore consequent to the hike announced in the last budget by Dinesh Trivedi — which unfortunately had to be immediately rolled back — the belated hike would get the railways only an additional Rs. 1200 crore for passenger business.

Added to this, there is likely to be a shortfall in freight earnings since the target loading of 1025 million tonnes may be missed by about 15 million tonnes, resulting in the operating ratio coming down from the present level of 90 per cent to just under 87 per cent.

However, recent initiatives to prioritise linking 122 km from Gevra Road to Pendra Road, and 63 km from Raigarh to Bhupdeopur to speed up the evacuation of coal to be financed jointly by the Railways, the South-Eastern Coalfields and the State of Chhattisgarh would give a boost to freight loading.

So would the proposed doubling of the vital 248 km long track between Palanpur and Samakhiali in Gujarat, which will add to the valuable track capacity and speed up export-import traffic between Bhuj, Kandla, other West Coast ports and the North.

Commissioning of the 1278 km-long eastern leg of the DFCCIL (Dedicated Freight Corporation of India Ltd.), expected to speed up the burgeoning coal traffic from the eastern coalfields to the scores of thermal plants in Bihar, UP, Haryana and Punjab, and the 1515 km-long western corridor, promising faster and assured movement of export- import traffic, is still a few years away.

Till then Pawan Bansal will have to actively pursue every available opportunity to garner more freight and, may be, order a further increase in passenger tariff to offset the escalation in diesel prices to somewhat restore the railways financial health.

Perhaps the recently announced PFT (private freight terminal) policy, promising a better deal for the logistics players, will encourage them to set up their own facilities and contribute to the growth of freight business.

The forthcoming rail budget, the first ever by Bansal and the last by UPA II, will establish if the railways will continue to beat the well trodden populist path or take an entirely different route getting the railways out of the financial quagmire it is fast slipping into. A distinct drop in the number of new trains announced will perhaps signal this change.

Perhaps, the time has also come to take a fresh look at the onward rush for another highly populist measure — electrification. In a power-deficit nation such as India, each electric locomotive on track draws valuable electric energy from the grid, denying power to industries and farmers, who increasingly have to opt for running highly inefficient diesel generators to meet their needs or drive their individual pump-sets!

When each of the 6000 hp electric locomotive hits the track, we could also say goodbye to lighting in about 15,000 middle class homes or villages. The highly industrialised state of Tamil Nadu is reeling from daily power cuts, which is crippling production, hiking costs and making the facilities unviable.

On the other hand, a diesel locomotive does not draw an iota of electric energy from various power grids and is, in fact, a virtual power house on wheels, converting fossil fuel directly to haul a train, eliminating the transmission losses involved in electric traction which can be as high as 30 per cent!

It's no surprise that against a generation of about 22 GTKMs (gross tonne kilometres — a measure of transportation) per million calories of the fossil fuel consumed by an electric locomotive, a diesel unit generates over 30 GTKMs, almost 33 per cent higher.

With thermal power plants increasingly opting for imported coal on account of its higher calorific value and lower ash content, the argument of savings in foreign exchange by changing over from diesel to electric does not appear to be valid !n

Last Updated on Friday, 22 February 2013 07:17