Expanding its inventory of wagons and using IT tools to bring transparency in the allotment of wagons are among the initiatives that the NDA government has taken for bringing about a turnaround in rail finances.
Within months of the “regular order” for approximately 11,000 wagons for this fiscal, railways minister DV Sadananda Gowda placed a developmental order of 2,000 additional wagons.
The railways have an inventory of 2,19,931 wagons. This is hardly enough to meet current or future requirements, as approximately 5% of the stock is sold off as scrap each year, while a sizable section of the wagons are said to be running on an over-age life.
The Vision-2020 document estimates that the railways will need 2,55,227 additional wagons by 2020.
“The fresh developmental order will help expand the manufacturing base of wagons and also bring in competition in the sector,” an official said.
Ramping up freight transportation operations is critical to rail finances, as the public transporter earns 64 paisa of every rupee from freight against 34 paisa earned from passenger services and 2 paisa from sundry operations such as advertisements and sale of passenger tickets.
In order to enable an earning of 34 paisa, a spending of 60 paisa of every rupee is necessitated in passenger services. The extra spending of an additional 26 paisa comes by way of cross subsidy from freight earnings.
Over the years, the subsidy element in the passenger segment has risen, with losses estimated at a whopping Rs 25,000 crore this fiscal.
“The need is to overhaul freight operations by providing faster movement of goods trains and ensuring transparency in the allotment of wagons,” an official said.