Railways to add 13000 new Wagons this fiscal to ramp up Freight business

Shortage of Wagons adversely affected Railway finances during the last 5 fiscals.  To mitigate this and to ramp up further revenue streams through increased freight traffic operations, Govt. release “Developmental Order” for additional 2000 wagons on Monday on four firms.

New Delhi:  Expanding its inventory of wagons and using IT tools to bring transparency in the allotment of wagons are among the major 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, Railway Minister D.V.Sadananda Gowda on Monday placed a “Developmental Order” of 2000 additional wagons on four firms – two of which are new entrants in the area.

Among reasons the freight operations have been adversely affected has been the ‘shortage of wagons’ during the last 5 fiscals. 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 fresh developmental order will help expand the manufacturing base of wagons and also bring in competition in the sector”, an official said.

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.

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.

“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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