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Efficient use of rolling stock earns more profits for Railways

— PHOTO: ARUNANGSU ROY CHOWDHURY

GENERATING HIGHER REVENUE: Steel bars being unloaded at a yard of South Eastern Railway in Howrah.

With the Indian Railways turning in another impressive performance in 2007-08, Union Railway Minister Lalu Prasad was showered with praise for presenting another pain-free and profit making budget. When he reported a cash surplus of Rs. 25,000 crore for the current year (profit before tax), there was quite a story left untold. For five consecutive years, Mr. Lalu Prasad has spared the passengers from any increase in fares. He has quietly gone about the task of rationalisin g the freight tariff, and that exercise also appears to have been a painless surgery. Of course, it did entail some upward revisions in the freight rates for some commodities, but the drastic cutting down of the number of slabs made it acceptable to the trade, along with the simplification of procedures. But the question remains, how did the Railway Minister manage to turn the Railways around? How did the public sector monolith that employs about 1.6 million people turn profitable without any increase in passenger fares, or any significant change in the freight tariff?

The answer to these questions can be both simple and complex. Railway Board sources explain that all round efficiency of the system and a significant improvement in the capacity utilisation of the rolling stock as well as locomotives resulted in moving more traffic and generating substantially higher revenue. “Compared to a 20-25-million tonne increase in the freight movement a year in the past, we have averaged almost 60 million tonnes a year during the past five years. From a cargo movement of about 550 million tonnes in 2003-04, we have targeted 850 million tonnes for 2008-09 — an increase of 300 million tonnes,” says a senior freight manager in the Railways.

It is not just increased revenue earning traffic — in effect, the rates have also gone up. Without touching the tariff, the Railway Board slapped a peak season surcharge of 6 to 7 per cent, and the peak season lasts for nine months in a year. But there is also a positive side to it. To ensure that the Railways does not have to run ‘empties’ from the unloading points, a substantial concession is offered to those who book wagons or goods from that end and this has resulted in better capacity utilisation and increased revenue. The focus has been on increasing yield per train, rather than increasing tariff, and this is true for passenger traffic. By increasing the number of coaches on high-density routes and operating more special trains during holidays and festival seasons, the Railways managed to carry about 14 per cent more passengers this year. To continue this trend, more trains will have 22 or 24 coaches and platforms at stations where they stop will be extended to receive them. The fare concessions may be just ‘tokenism.’ But passengers are happy that there has been no increase in fares for five years running, though there have been indirect raises in cancellation and other charges. For the Railways, freight is the bread and passengers the butter.

To put this in perspective, for the year coming to an end on March 31, the Railways would have moved 790 million tonnes of revenue earning freight, and 7056.38 crore passengers — all this without any significant increase either in the railway network, coaches, wagons, or locomotives.

The actual route km of the Railway system has increased by just about 10,000 since 1951. The number of locomotives has declined because of the phasing out of old one, and the number of wagons has more remained constant, with just replacements. It is the number of coaches that have risen sharply from just 13,109 in 1950-51 to 39,896 last year, according to a note from the Press Information Bureau.

To sustain this momentum, the Railways has decided to produce 20,000 wagons, all of 22.9 tonne capacity, in the coming year. A third rail coach factory will be set up, this one in Kerala, to turn out more coaches. An investment of Rs. 5,000 crore has been planned in manufacturing new coaches for the Rajdhani trains, to be completely replaced by 2010-11. Further, aside from the Vision 2025, the Railway Board has also envisaged an investment of Rs. 75,000 crore over the next seven years to revamp and strengthen the saturated routes and lines. Both Eastern and Western freight corridors have been cleared and work will begin this year on them. Feasibility of the other corridors to link up with the South will also be examined.

Of prime concern now will be the PPP on the Railways. A total of Rs. 1,00,000 crore in PPP has been planned in the next five years. A business and legal framework to get this off the ground needs to be put in place. Initially, the Minister has offered to the private sector, the development of container and inland depots on Railway land. A new wagon leasing policy has been unveiled. What is more, the Railway stations in New Delhi, Mumbai Chhatrapati Shivaji Terminus, Patna, and Secunderabad have been offered for PPP development into world-class terminals. Private investment may be invited in locomotive and coach manufacturing. Cleaning and on-board maintenance of super fast trains will be outsourced in phases. Obviously, such steps will face stiff resistance from the opposition parties and the powerful trade unions.

Railway officers say all this has been possible because of the clear understanding between the “political leadership and the administration.” While the Minister lays down his priorities and agenda, he has given the administration a free hand to improve efficiency and achieve the targets.

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