Wednesday, August 12, 2015

Indian Railways (IR) capital expenditure saw a huge and unprecedented increase and a lower-than-budgeted growth in working expenses in the first quarter, but the national transporter’s freight loading target was missed by a wide margin in the period.

Freight loading by the railways grew a dismal 1.74% in April-June this year as against the budgeted growth of 7.7%, as the tonnages of key commodities like iron ore, cement and food grains declined. As against the loading target for the April-June period, the achievement was lower by 8.6%.

However, thanks to steep hikes in tariff — 6.5% last June and another 5.5% in the latest Budget — the railways managed to register a 15.45% increase in revenue from goods transportation in the first quarter of the current fiscal year, compared with the 13.5% that was budgeted. Freight loading in Q1 stood at 272.35 million tonne (MT) as against 267.68 MT in the year-ago period. The national transporter’s revenue from transportation of goods however rose to Rs 28,431crore in April-June from R24,541 crore in the corresponding period a year ago.

Railway minister Suresh Prabhu recently stated that the transporter’s working expenses grew only 4.22% in Q1 against 7.68% estimate in the rail Budget. He added that IR’s capital spending soared 134% to Rs 17,734 crore in the period.

Experts said although it is a welcome sign that capital expenditure has been given a boost by means largely other surplus created by IR, the decline in freight revenue in some key commodities like iron ore and food grains was a cause for concern

Freight earnings from iron ore and food grains shrank by 15.82% and 13.24% respectively in Q1. Analysts said the commencement of lean season (July-October) could make the matters worse for IR. The loading target for the current fiscal is projected to be 1,186 MT, up 85 MT from last year, the largest annual incremental tonnage ever.

According to the rail ministry data, the loading in the first quarter was 272.35 MT compared with 267.68 MT in the first quarter of the last fiscal year. The tonnage of iron ore, cement, food grains and container services shrank by 4.78%, 5.6%, 23.48% and 2.1% respectively compared to 2014-15 first quarter. FE has learnt that the tonnage for April-July stood at 362.81 mt, up 1.77% compared with the year ago period, which means that the IR was short of the budget estimate of 394.34 mt for the period by 8%.


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