Innovative methods adopted by Railways resulted in its budget improvement.
Indian Railways has recorded a growth of 6% in the April-September period and it is likely to exceed its target for FY14. However, the major commodities such as coal and iron ore witnessed a 2 MnT fall in traffic for Q2 FY14. Cement and steel traffic helped railway budget in attaining their target. Cement traffic recorded an increase of 2 MnT but, Coal traffic is expected to rise back by the end of this year.
According to the railway officials, the budget improved because of the measures taken by the Indian railways. They converted the rail-cum sea route on the eastern and western coasts to an all-route, helping customers cut handling cost and in improving steel traffic. All-route option might be majorly opted in states like, Andhra Pradesh, Karnataka and Tamil Nadu.
Railways also allowed two point rakes for the same commodity that helped in enhancing the efficiency of cement traffic and it increased the volume growth of the Indian Railways.
Indian Railways need to increase its loading volume by 4% in order to achieve the target of 1,047 MnT, happens to be more than 40 MnT of volume loaded in last fiscal. The railways expect to gain about INR 1 billion from CIL along with a 17 MnT add-on to its volume.
Cement, Steel, Fertilizers and Urea witnessed a slowdown in H1 of FY14 giving railways a total earning of INR 434.5 billion which is up by 9%. If the railways maintain this pace, it will surely witness growth in FY14 and fulfill its target.
The railways is in hope of coming up with better figures in H2 FY14, supported by the 15% busy season charge and 1.7% fuel adjustment component (FAC). The FAC is however expected to make about INR 7 billion which in turn could help balance the increased fuel expenses.