DMPQ- “Currently Railway’s freight sector is possessed by many challenges” Elaborate.

. First and the foremost reason for this is the high cost of rail movement arising out of policy  of cross subsidization by IR. Passenger fares especially sleeper class are underpriced and  made up through increased freight fares. In India, passenger rail fares are highly politically  sensitive. However, this is also because of the social responsibility character of IR. At the  same time, actual cost should be recovered. If fares are to be kept low, efforts should also  be made to bring down costs at the same time. If passenger fares are to be lower than  costs, then the difference should be recoverable from the government and not from freight  charges.

According to the figures compiled by the World Bank, the freight rates charged by IR  are extremely high compared to major freight railways such as US Railroads, Chinese and  Russian Railways. In fact, the rates of US Railroads are only one-fourth of that charged by  IR. Germany is the only country which has freight charges higher than India, but it is nor  among the major railway freight movers globally.

Second reason is that over 60 per cent of the freight movement is through electric  traction which has high initial capital cost and also high overheads, resulting in higher  cost for freight movement. There has always been a debate around diesel versus electric  traction. However, there has been no empirical evidence found over superiority of electric  over diesel traction. It has been established that initial capital cost of electric traction is manifold more than that of diesel traction. This becomes more relevant in the case of India  as it is deficit in power and electric traction of the railways will always get priority over  the other users. The only positive factor is that it does not have variable price like that of  diesel. The other point in this is the diesel and electric traction cannot be seen as alternates  but as complements and a mix of say 50:50, given the vulnerability of supply and prices  of imported crude petroleum.

One method of distribution is to allocate passenger traffic for electric traction and  freight traffic for diesel traction. Allocating specific operational and geographic areas to  either mode is another method. The objective is to give equal importance to both the  modes.

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