Exports have shrunk. Indirect tax collections have seen negative growth. Now, in yet another sign that the global economic slowdown is beginning to hit home, the total freight carried by railways recorded negative growth of 0.14% year-on-year in October ?for the first time in nearly two years. Freight traffic in the month also fell over 5% short of the Indian Railways? budgeted target of 69.69 million tonne (mt), to 66.08 mt.
The dip in freight traffic seen this October is in sharp contrast to the healthy growth of 8.18% in freight loading registered a month before in September. Rail Bhawan officials admitted that the freight traffic has reduced. ?With the slowdown in the economy, it is obvious that goods transport too will decline,? an official pointed out.
Data released on Wednesday revealed that industrial production is on the decline. While the Index of Industrial Production staged a partial recovery from its dismal performance in August to register a growth of 4.8% in September, it is still much lower than the 7% it clocked in September last year.
Transport of some bulk commodities?which are the main bread earners for railways?such as iron ore and coal has come down significantly. The exact commodity-wise break up of freight loading will be available later during the month when a clearer picture will emerge, the official said.
?The Railways is a bulk transporter. If production and demand of key commodities such as iron ore and coal declines, then it is bound to affect railways in a big way,? says JP Batra, former chairman of the Railway Board.
?The demand for iron ore for exports has decreased significantly in the past few months, and so it has led to lowering of rail freight. The reduction in rail freight also indicates the beginning of the economic slowdown,? Amrit Pandurangi executive director, PricewaterhouseCoopers points out.
The railway ministry however is still confident of meeting its full year target of moving 850 mt of freight this fiscal. Despite the drop in its freight traffic in October, between April to October this year, railways? freight traffic grew 7.23% to 467.97 mt.
But it is perturbed enough to have instructed general mangers and deputy regional managers of zonal railways in a meeting last week to ensure that monthly targets are met. Sources said the ministry is also likely to introduce more freight incentives. In one such move, it reduced freight charges by 10%-50% for long distance iron ore export traffic last week.
Railways had faced a decline in its freight traffic in early 2007-08 when industrial production had dipped. In fact, at the time, finance minister P Chidambaram had highlighted the slow growth rate of the infrastructure sector, including railways, in a letter to Prime Minister Manmohan Singh.