- Revenue from freight has a direct impact on the Indian Railways’ operating ratio
- Volume of commodities transported by the railways is an indicator of the health of the economy
Indian railways freight revenue declined by more than a third during the first two months of the financial year 2020-21 as the coronavirus-led lockdown brought the economy to a standstill.
During April-May, earnings from movement of goods declined 38% on-year to ₹13,436 crore, data released by the railway ministry showed. In terms of volume, freight traffic was down 28% on-year in April-May at 149 million tonne (MT).
In May, freight earnings fell to ₹7,437 crore from ₹11,043 during the same period a year ago. In terms of volume, it fell 21% on year to 82.6 MT. For 2020-21, earnings from freight have been estimated at ₹1.47 trillion.
Revenue from freight has a direct impact on the national’s transporter’s operating ratio–expenses as a portion of revenue or the amount spent on every rupee earned. Besides, volume of commodities transported by the railways is an indicator of the health of the economy. The imposition of a nationwide lockdown from 25 March, led to a cancellation of all train services for over a month, barring the movement of goods trains.
Even as goods trains were operational, earnings have taken a hit due to near negligible coal and cement transportation.
Railways transport a wide basket of goods, including foodgrains, fertilisers, industrial outputs such as coal, cement, iron ore, among others. Cement and coal segment comprises more than 50% of freight movement for Indian railways.
Earnings from coal declined to ₹5,778 crore during April-May from ₹11,033 crore in the same period last year. Earnings from cement fell to ₹730 crore from ₹1,630 crore a year ago.
However, the movement of foodgrains witnessed a sharp jump, with revenue rising over 50% on year to ₹1,177 crore. While the lockdown disrupted the movement of goods across most sectors, the railways continued facilitating transportation of essential goods, including foodgrains and other supplies in the country.
