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Railways: Overview
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Despite continued dominance of roadways in the overall freight transport in India, railways dominate freight movement in the bulk goods segment. However, the Indian Railways continue to be challenged by infrastructure constraints, particularly line capacity on busy routes, and terminal detentions (goods are detained at terminals for various reasions).
Key issues answered through this analysis: 1. What are the infrastructure bottlenecks faced by the Indian Railways? 2. What are the key factors impacting growth in rail movement in the country? 3. What is the composition of rail traffic in the country?
Publish Date: 23-Aug-2012
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Although the Railways have initiated measures such as obtaining superior quality of wagons and improvement in turnaround time, priority needs to be given to augment the freight-carrying capacity on high-density routes to handle the growing traffic volume in the coming years. In addition, capacity augmentation would also be necessary on feeder routes to serve major, highdensity freight traffic streams on end-to-end basis, facilitating high-speed passenger train operations on existing routes and improving the share of railways in the freight business segment. Indian Railways has set a target of achieving 1,100 million tonnes of freight loading in the terminal year of the Eleventh Plan as compared to 726 million tonnes in the Tenth Plan. Indian Railways exceeded this target by 16.7 per cent. The capacity-enhancement strategy of the Indian Railways would be dependent on the growth pattern of major commodities such as coal and steel. More than 70 per cent of the proven coal reserves in India are concentrated in Jharkhand, Chattisgarh and Orissa, The Planning Commission has projected a demand-supply gap of about 51.1 million tonnes of coal by the terminal year of the Eleventh Plan. If this gap is to be fully or partially met through imports, rail connectivity to gateway ports needs to be strengthened. Similarly, in case of steel, the expected expansion plans of production capacity in India entails strengthening of rail linkages between raw material (primarily iron ore and fluxes) sources and steel plants on priority.
Economic growth to drive rail movement in India Railway traffic growth vis-a-vis IIP growth:
Railway traffic growth is positively correlated with IIP growth. However, Indian Railways has not been able to capture this growth due to the unavailability of wagons and lack of infrastructure. As a result, it has been steadily losing share to roads. This Related User RSS Ask the trend is more prominent in the recent years. InAnalyst 2011-12, the railways for 29 per centFavorites of the overall freight Feeds accounted Links
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movement. The below chart also depicts how for most of last 5 Railways years rail traffic growth has been lower than IIP growth for more Domestic Freight Transportation Services Industry Information Railways Overview than 50 per cent of the times.
Source: Ministry of Statistics and Programme Implementation (MoSPI) and Ministry of Railways (MoR)
Reform initiatives:
Market-driven tariff policy linked to seasonality and price elasticity of demand has also played an important role in driving demand for rail freight services. Across-the-board freight rate increases have been replaced by selective changes in tariffs in response to market forces, while simultaneously reducing tariffs in real terms. The Indian Railways has announced various discount schemes in the recent annual budgets to ensure high utilisation of wagons throughout the year.
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In 2011-12, coal freight traffic, the largest contributor in total freight traffic, grew by 8.5 per cent to 455.8 million tonnes. Cement and iron ore followed next, with cement freight traffic growing by 8.6 per cent to 107.5 tonnes in 2011-12, while the freight traffic for iron ore fell by 11.6 per cent to 104.7 million tonnes in 2011-12. Freight traffic for fertilisers, food grains, POL grew by 9.6 per cent, 8.4 per cent and 2.1 per cent to 52.8 million tonnes, 45.6 million tonnes and 41.1 million tonnes, respectively, in 201112. Iron and steel grew by 7.9 per cent to 34.8 million tonnes during the same period.
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