Freight booking with the Western and Central Railway following the volume discount scheme indicate that both will outperform their revenue targets this year. For instance, in the third quarter of the current fiscal, Western Railway has moved almost one million tonnes more than their target. Given the fact that all divisions of the Indian Railways did not meet targets in the first half of the current year, this is a remarkable turnaround.

For the first time in the history of the railways, things were beginning to look a little difficult. For instance, in the Central Railway as against a half-yearly target of21.70 million tonnes, only 21.05 mn tonnes was achieved (although this was 2 per cent higher than last year).

In the Western Railway too, as against a target of 14.8 mn tonnes, only 14.43 mn tonnes was achieved in the first half (this again was higher than last years 14.1 mn tonnes). Given the fact that freight is not just the only revenue earner for the railways, but heavily subsidises passenger traffic, the decline in freight was extremely worrying for the Railway Board.

While this decline in freight traffic was a reflection of the economic slowdown, the fact remains that the railways were fast losing traffic to the road sector. According to the status paper published by the railway ministry, railways accounted for 89 per cent of freight in 1950. In 1998, it accounted for about 40 per cent.

Experts have attributed this loss to two reasons. First, the railways as a deliberate strategy decided to focus on long distance bulk movement (2,000 tonnes and its multiples). This meant cement, coal, POL,fertiliser, iron ore and steel. But as the economy expanded, non-core sector production increased, boom towns sprung up and rural consumption picked up, this share of the traffic automatically went to the trucking industry, eroding the share of the railways in transportation.

Second, the railways have lost long distance bulk traffic to the road sector as successive populist railway budgets increased freight rates to subsidise passenger travel. Truckers, especially in the last three years, have gained at the expense of the railways. This, and not the first reason, has hurt the railways. Even cement and steel companies, despite the volumes and long haulage found road transport more cost-effective.

The volume discount of 10 per cent therefore has been extended only to those customers, who in the second half of the year, will load 5 percent more cargo than they did in the first half. According to Central Railway spokesperson, Mukul Marwah, "The idea is to extend the concession to our regular clientele - thecore sector."

The concession applies only to cement, iron and steel, iron ore, sponge iron and clinker. In case the party fails to book the incremental five per cent traffic, the concession will be withdrawn.

Also, the scheme has not been extended to those goods which already have benefits of reduced station to station rates - another initiative aimed at higher capacity utilisation, which was introduced a few months ago.

According to a western railway source, another good decision has been the one to increase passenger tariff, leaving freight untouched, "It will send the right signals to industry that the level of cross subsidy is on the decline." With freight traffic on the rise, the railways are tidying up their house to make the most of it. For instance, Western Railway's efficiency indicators have started showing a marked improvement. Net tonne (nt) km per day, an indicator for rolling stock utilisation, has improved from 2,635 nt km till Dec 1997 to 2,795 nt km in Dec 1998. According to transportexperts, these indicators are very static and only a radical improvement registers a change.

While the return of bulk freight to the railways is good news, the bottom line will eventually depend on how efficiently they are able to use their limited rolling stock. According to Marwah, a team at the centre is monitoring the flows and will co-ordinate to ensure maximum returns from their existing stock.

Now that the railways has finally realised that freight is their main earner, major policy decisions made earlier will begin to pinch. The policy of unigauging the tracks to broadgauge has swallowed most of the railways investment resources, thereby starving rolling stock expansion and upgradation - a fact that will be acutely felt now.

Central Railway to auction wagons

Central Railway is trying to generate pennies wherever it can. It will soon auction eight tonnes of cargo (called SLR wagons) space on the 61 passenger trains that it runs every day. Each train has two wagons for parcels, used bycourier companies and passengers, which have an average capacity utilisation of a mere 33 per cent. Since the profit margin in quite high for this service, the low capacity utilisation has been a cause for concern. By auctioning it, the railways hopes to increase revenues.