Economic Survey 2018: The alarming slide in Indian Railways’ (IR) share in the country’s freight movement is primarily due non-competitive tariff structure, noted the Economic Survey for 2017-18. “While the passenger the passenger fare had remained more or less flat, the freight rate has increased sharply over the years,” said the Survey tabled by finance minister Arun Jaitley. The railways has been losing traffic mainly to roads sector due to various reasons such as lower tariff, timely delivery and reach to remotest corners of the country. While the Indian Railways commanded a 60% freight share in 1991 compared with 40% by roads, the tables have turned by now with roads having 60% share and railways at 40%. Freight earnings is the mainstay of the Indian Railways’ revenue and it cross-subsidises passenger traffic to the tune of Rs 33,000 crore-plus every year at present. The Goods and Services Tax system implemented last year has further complicated the issue containers hauled by the railways is charged 12% tax compared with 5% levied on transportation through roads.
However, the transporter initiated various programmes in 2016-17 to augment freight traffic. These include tariff rationalisation, new policy guideline for station to station rates, withdrawal of dual freight policy for export of iron ore and rationalisation of coal tariff. The efforts have helped the railways increase its freight earnings by 8% during the April-December 2017 period compared with the year-ago period.
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“These measures are focusing on prioritising investments in important areas, viz dedicated freight corridors, high speed rail, high capacity rolling stock, last mile rail linkages, port connectivity, and attracting private and foreign direct investment,” the Survey said.