Union Budget 2023-24: A great year for Indian Railways, says expert

IR, which stimulates almost all sectors of industries and commerce by transporting raw materials and finished goods, is moving much more BTKMs (Billion Tonne Kms) during and post-pandemic times

For the Ministry of Railways, which is focusing on leapfrogging to a freight volume of 3 billion tonnes over the next decade, the finance ministry has provided a marvellous bonanza — a budgetary support of Rs 2.4 trillion. The entire 11th five-year plan (2007-12) could promise less than this outlay for the Railways.
 

There must be reasons for such encouraging support. One, that the government is pleased with the Railways moving towards 1.5 billion tonnes of freight loading in 2023, a milestone despite the Covid-19 pandemic. Next, 2023 will be a great year. Economic, and commerce and industry ministries are poised to unveil some highly visible projects that are nearing completion at a frenzied pace.

The showcase projects of Railways, too, now have an opportunity to accelerate the hectic pace of last-mile connectivity, and funds must not be a constraint at all. In 2022, one of the highly visible symbols of modernisation in Railways was the new Vande Bharat train sets. Nationally, they have attracted a lot of attention.
 

The freight business unexpectedly made enormous gains even during the second wave of Covid-19 and even later. The Railways, which stimulates almost all sectors of industries and commerce by transporting raw materials and finished goods, is moving much more BTKMs (billion tonne kilometers) during and post-pandemic times. BTKMs are the Railways’ breadwinner. After Covid hit, freight has emerged from the decade-long hapless trap of clocking 691 billion in 2011-12 and 707 billion in early 2020. These gains since 2021-22 were possible only because of the Centre’s substantial fiscal support for infrastructure expansion and modernisation through the finance ministry and the Railways’ intense use of its assets — track and rolling stock — by stretching their capacities to absorb the pent-up demand.
 

Freight BTKMs leapfrogged from 707 billion in 2019-20 to 807 billion in 2021-22.  In fiscal year 2022-23 (FY23), even as pent-up demand is plateauing, my guess is that the Railways is preparing for another big leap in BTKM. Despite even a likely drop in tonnes moved in FY23, higher leads (average distances that the freight moved) are pushing up BTKMs. BTKM, as a reliable performance index, is a combination of kilometres over which tonnes of freight are moved. The Railways’ freight rates are also among the lowest among global peers.

 

Now, about the future of BTKMs-led rail business growth during times of climate change. Roughly, 60 per cent of India’s rail BTKMs are from non-coal commodities and 40 per cent from coal. Will coal start shrinking in the Railways’ commodity basket? Not likely. One offshoot of the present global energy crisis is the revival of coal-based power plants and the coal industry is likely to get a new lease of life. However, for the Railways, expanding the non-coal commodities basket is of paramount importance. The Railways should also join Unified Logistics Interface Platform in its efforts to accelerate the container turnaround time.
 

 With bigger BTKMs, and revenue passenger kilometres returning to expected levels, rail finances appear to be somewhat stable. There is a need to strengthen the sales teams to raise more interstate, intercity, long-distance and ordinary passenger ridership. There is a need to have a deep look at sundry and other earnings. Possibly, better expertise may be required to expand the parcel business and land asset monetisation plans. Both of them need new business and revenue models.

The author is former financial commissioner of Railways