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Global crisis hits Indian Railways

The global meltdown is threatening to take a toll on the Indian Railways and the early warning signals are here, reports Srinand Jha.

business Updated: Nov 07, 2008 22:38 IST
Srinand Jha
Srinand Jha
Hindustan Times

The global meltdown is threatening to take a toll on the Indian Railways and the early warning signals are here.

For the six-month period of the current financial year ending September 30, freight traffic of the Indian Railways amounted to 401.89 million tonnes (up from 370.25 million tonnes during the same period last year — recording a growth of 8 per cent).

But the crucial issue is this: After the galloping growth indices of past four years, freight traffic figures failed to meet the target (413.46 million tonnes) in the first half of this year.

Railways Minister Lalu Prasad is worried. His directions to the Divisional Railway Managers (DRMs) at the end of a specially convened two-day conference that ended on Thursday: Move heaven and earth to ensure that the annual freight traffic target of 850 million tonnes is met.

“It is early days yet, but the marked deterioration in the freight traffic of commodities including cement and steel is a matter of concern”, a ministry official said on conditions of anonymity.

“For the first time these years, we have a situation of empty rakes waiting at the yards in past weeks,” he added.

Plans of the Indian Railways are truly grand. Over the next five years, it needs to spend a colossal Rs 2,51,000 crore ($62 billion) on various capacity enhancement measures. Of this, an estimated Rs 1,00,000 crore is expected to accrue by way of Public Private Partnership. Such schemes include the construction of dedicated freight corridors, world-class railway stations, commercial utilisation of 43,000 hectares of vacant Railway land, setting up units for the manufacture of locomotives, coaches etc.

“Manufacturing activities might remain unaffected, but I do not see infrastructure and real estate projects of the Indian Railways taking off in the foreseeable future. The sector as a whole is in deep trouble,” said Ahkileshwar Sahay, of Feedback Ventures, a New Delhi-based consultancy.

The ministry had earmarked Rs 6,000 crore on account of the recommendations of the sixth pay commission — and 60% of this amount is to be paid in 2009.

Rather than passing it on to the consumer, the Indian Railways had also decided to absorb the Rs 650 crore annual burden of the pay commission payouts.

“The growth slogan is passé. A reverse turnaround is setting in,” said Mahendra Sharma, of the International Transport Workers’ Federation (ITF).

Incidentally, ITF has organised a seminar at Bhubaneshwar later this month, and on the agenda is a very relevant subject — the role of international financial institutions in the restructuring process of the Indian Railways, which factors in the impact of the global meltdown.

Former Railways official Sri Kumar Mudigonda felt that the Railways –being a service organization and not a manufacturing unit – would be able to absorb the expected meltdown shock.

First Published: Nov 07, 2008 22:34 IST