NEWSLINKS
BUDGET 2000
BUDGET PROCESS
BUY BUDGET
Y2K BIZ FEATURES
INDIA & THE W.T.O.
NEW GOVERNMENT
SPECIALS
INTERVIEWS
COMMENTARY
CREDIT POLICY
BUDGET 1999-2000
USEFUL INFO
ARCHIVES
SEARCH REDIFF

Falling freight market-share causes concern to railways

Neena Haridas in New Delhi

Railway Minister Mamta Banerjee's "populist Railway Budget" may please her votebank, but the Indian Railways -- these comprise zonal rail systems across the country -- are seeing red, thanks to the falling freight and passenger market-shares and severe resource curnch.

According to VK Aggarwal, chairman, Railway Board, the Indian Railways' prime concern is their falling market-share in both freight and passenger travel. "Indian Railways used to have a market-share of 80 per cent in freight, but now it has come down to 40 per cent while passenger travel has fallen from 50 per cent to 20 per cent. The railways' loss inevitably seems to the gain of the roadways."

The falling market-share is being attributed the railways' poor and eroding facilities. Says Aggarwal: "The problem is that the railways need to be restructured and this will cost us Rs 150 billion. We have a major resource-crunch. There are two reasons: one, the market-shares have fallen; two, the wage bill and pension fund after the implementation of the Fifth Pay Commission recommendations has cost Railways an additional Rs 60 billion. We have a high-cost of inefficiency and cost of cross-subsidy. Hence, we have to look at other sources of income besides freight and passenger revenue."

The Railway Board chairman suggested that government should come up with an integrated transport policy to improve the transportation scene in the country. Says Aggarwal: "We are not complaining that our share of the market is going to roadways. The railways, roadways and waterways should be used optimally and a policy should be worked out to make this happen. If there is optimum use of railways -- that is if the freight has to increase to 60 per cent or so -- then the country can save upto Rs 70 billion on petroleum which is otherwise spent on roadways."

The Railway Budget 2000-2001, being touted as the 'growth budget', has hence charted out 'other sources of income' for the cash-starved public sector.

The railways have decided to supplement their revenues by commercial utilisation of land and airspace, commercial publicity on passenger trains and stations, freight wagons, hoardings and billboards at level-crossings, advertising on miscellaneous items like tickets and consumable items supplied on trains, hoardings for rural marketing alongside the tracks, etc.

It has also signed an MoU with the Housing and Urban Development Corporation for taking up commerical utilisation of surplus railway lands in certain corridors.

Keeping the non-traditional sources of revenue in view, the Union minister has laid out a plan outlay of Rs 110 billion for 2000-2001, higher than the Rs 97 billion last year. Aggarwal believes that the plan outlay can be met by increasing passenger and freight traffic by pepping up the marketing efforts.

"We have lost out on our market-share because we have not been selling properly. I think if we make a deliberate attempt to sell, then we will do much better. In fact, we are hoping to achieve freight loading target of 450 million tonnes, though the freight earnings are likely to fall short of target by Rs 2.50 billion due to drop in lead and change in commodity mix."

Run-up to the Budget 2000-2001
Buy Budget 2000
Budget 1999-2000
Business