The railway transport infrastructure services industry plays a crucial role in shaping the logistics backbone of India. However, recent trends indicate a slowdown in project completions and freight traffic growth. This article delves into the key developments, providing an analytical overview with data-backed insights.
Railway Transport Infrastructure Services: Project Completion Trends
A Record-Breaking 2023-24
In 2023-24, the railway transport infrastructure services industry witnessed a milestone achievement. For the first time, project completions surpassed the ₹1-trillion mark, reaching a remarkable ₹1.06 trillion. This was a significant leap from the ₹803.8 billion worth of projects completed in 2022-23.
Expected Decline in 2024-25
After peaking in 2023-24, project completions are projected to decline by approximately 35% in 2024-25, with expected completions totaling ₹692.3 billion. Historically, election years have seen a dip in project completions due to factors such as policy inertia and delays in decision-making.
Historical Comparison of Project Completions (Rs. Million)
| Financial Year | Projects Completed (Rs. Million) |
|---|---|
| 2019-20 | 357,800 |
| 2020-21 | 234,400 |
| 2021-22 | 746,400 |
| 2022-23 | 803,800 |
| 2023-24 | 1,060,000 |
| 2024-25 (F) | 692,300 |
Contributing Factors to Delays
Several challenges contribute to delays in railway project completions:
- Land Acquisition: Obtaining land for projects remains a persistent hurdle.
- Environmental Clearances: Securing forest and environmental clearances often leads to prolonged timelines.
- Funding Constraints: Delays in fund allocation impact project timelines.
- Geographical Challenges: Topography and local law and order issues further complicate implementation.
Key Projects in 2024-25
Four major projects account for over 51% of the total completions in 2024-25:
- Pune Metro Rail Project (Phase 1)
- East-West Metro Corridor Project
- Indore Light Metro Rail Project (Phase 1)
- New Bongaigaon-Rangiya-Kamakhya Rail Line Doubling Project
These projects have faced significant delays, ranging from 68 to 154 months, leading to cost escalations of ₹15-87 billion.
Freight Traffic Growth: Slowing Momentum
Peak Growth in 2021-22
The railway freight traffic saw its highest growth in 2021-22, with a 15% increase. This surge was primarily driven by a 20.4% rise in coal freight traffic, supported by increased demand from power plants and other industries.
Declining Growth Rates
In subsequent years, freight traffic growth has slowed. The growth rate declined to 6.6% in 2022-23 and further to 5.2% in 2023-24. For 2024-25, the growth is forecasted to drop to 3.2%.
Factors Influencing Freight Traffic
- Coal Freight: Coal remains the dominant contributor to railway freight, accounting for nearly 50% of total traffic. However, its growth is slowing due to reduced demand in power and non-power sectors.
- Other Commodities: Cement, iron ore, petroleum, and containerized goods are expected to contribute to freight growth, albeit at modest rates.
Freight Traffic Growth Rates (%)
| Year | Total Freight | Coal | Iron Ore | Cement | Other Goods |
|---|---|---|---|---|---|
| 2021-22 | 14.99 | 20.44 | 5.79 | 14.28 | 15.15 |
| 2022-23 | 6.63 | 11.48 | -4.88 | 5.77 | -0.26 |
| 2023-24 | 5.20 | 8.19 | 13.00 | 5.29 | -4.41 |
| 2024-25 (F) | 3.18 | 4.99 | 2.27 | 2.11 | 5.26 |
Coal Freight and Its Challenges
Coal freight growth is projected to slow further to around 5% in 2024-25. This is attributed to:
- Moderation in Power Demand: Thermal power generation is expected to grow by only 4%, compared to 9.9% in 2023-24.
- Industrial Output: Slower growth in sectors like steel and cement impacts coal demand.
Railways’ Initiatives to Boost Freight Traffic
Indian Railways (IR) has introduced several measures to enhance freight operations:
- Kisan Rail: Dedicated freight trains for agricultural produce.
- Business Development Units (BDUs): Focus on simplifying freight operations.
- Tariff Concessions: Incentives to attract new customers.
Budget 2025: Industry Expectations
Focus Areas
The industry is optimistic about the upcoming Union Budget 2025-26. Key expectations include:
- Increased Capex: A 10-20% rise in railway capital expenditure is anticipated.
- Wagon Orders: Expansion of the wagon procurement plan to enhance freight capacity.
- Dedicated Freight Corridors (DFCs): Accelerated development of DFCs to improve logistics efficiency.
Sustainability Goals
With the government’s focus on sustainability and net-zero emissions, investments in green rail initiatives and electrification are expected to increase.
Infrastructure Modernization
The industry also advocates for:
- Advanced 12,000 HP electric locomotives.
- Enhanced freight train speeds (target: 50 kmph).
- Real-time tracking systems for freight operations.
Conclusion
The railway transport infrastructure services industry faces a mixed outlook. While project completions are set to decline in 2024-25, the long-term trajectory remains positive, supported by government initiatives and sustained investment. Freight traffic growth, although slowing, is expected to stabilize with contributions from diverse commodities. As the industry gears up for the Union Budget 2025-26, strategic investments and policy support will be crucial to address current challenges and drive future growth.
Disclaimer: This article is for informational purposes only. It is based on publicly available data and projections as of January 2025. Readers are advised to consult professionals for investment and business decisions.