NDA government’s moves to ramp up rail finances

  • Srinand Jha, Hindustan Times, New Delhi
  • Updated: Jul 29, 2014 19:49 IST

Expanding its inventory of wagons and using IT tools to bring transparency in the allotment of wagons are among initiatives that the NDA government has moved in with for bringing about a turnaround in rail finances.

Within months of the “regular order” for approximately 11,000 wagons for this fiscal, Railways Minister D V Sadananda Gowda on Monday placed a “developmental order” of 2,000 additional wagons on four firms – two of which are new entrants in the area.

Among reasons freight operations have been adversely affected has been the shortage of 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 been mounting, with losses in the segment estimated at a whopping Rs.25,000 crore this fiscal.

“Fixing the freight versus passenger anomalies is one issue. The need is to comprehensively overhaul freight operations by providing for faster movement of goods trains and ensuring a transparency in the allotment of wagons”, an official said .

The details of Gowda’s budgetary announcement for the “e-booking” of wagons and rakes for the bulk movement of items including iron-ore, limestone of food-grains are currently being worked out by rail officials in consort with officials of the Coal, Power and Agriculture ministries.

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