Railway minister Lalu Prasad?s turnaround mantra for his ministry could fall victim to the economic downturn. With just days left for fiscal 2008-09 to end, the Railways are unlikely to meet the freight loading target of 850 million tonne (mt). Railways? freight loading had contracted in February by 0.86%. That has improved in March as the infrastructure sector growth rate has improved but it is still just about 4%.
The Railways will, therefore, end the year with a growth rate in freight traffic of 5.1%. The Railways freight growth rate is a fairly reliable indicator of the performance of the economy. This means the Indian GDP could be far lower than the estimate of 7.1% made by the Central Statistical Organisation in February 2009.
?March is traditionally a busy month for freight transport. But given the economic situation and the deficit of 100 mt to be covered in a month, achieving the budget target will be difficult. We estimate to carry (only) about 835 mt of freight in this fiscal,? a Rail Bhawan official said.
Prasad was optimistic the target of 850 mt for 2008-09 will be met despite the economic slowdown. In the interim Rail Budget presented in Parliament last month, he said, ?The declining trend of railways share in transportation of steel and cement, witnessed during the past several years, has also been arrested as the Railways increased their share in transportation of these commodities, over the last five years.?
Thanks to the rejig in freight rates, the cash surplus of India?s largest infrastructure system will be on target at Rs 1 lakh crore, as per the target during the minister?s five-year term. Just as freight, passenger traffic in certain classes is increasing by over 20% and earnings are expected to exceed the target of Rs 22,330 crore for 2008-09.
Transport of iron ore, pig iron and finished steel shrank in absolute terms till February. The Railways carried 118.91 mt of iron ore traffic till February 2009, which is 4% lower than the 123.31 mt it carried a year ago. Iron ore is a key commodity transported by the Railways and the ministry had hoped to carry 136.72 mt of the ore by February 2009.
Similarly, pig iron and finished steel traffic, till February end this year, too, declined significantly. Railways carried 24.19 mt of pig iron and steel in comparison to the 24.28 mt of the metal it carried till a year ago. It had estimated to transport 27.26 mt of pig iron and steel till February 2009.
Rail Bhawan officials said that the drop in iron ore and steel traffic is mainly because of the decline in demand for the metal. The transport of these two commodities has seen a partial recovery in March but the Railways are unlikely to meet the full fisc target.
The share of foodgrains transported by the Railways has also dipped by over 8%.
This is surprising as demand for foodgrains hardly ever tapers.
In absolute terms, it was a drop of 2.76 mt by February 2009 to 30.79 mt as against the 33.55 mt it carried a year ago. As per Budget estimates, the Railways was estimated to transport 32.54 mt of foodgrains till February this year.
The only silver lining for the railway ministry is coal transport.
Till February 2009, Indian Railways transported 331.79 mt of coal, which is an 8% rise or 26.57 mt more than it did in the same period last fiscal.