Rail freight traffic in April and May plummeted by 28 per cent, or 58 million tonne (mt), to 148 MT, as compared to 206 mt during the same period last year. This decline has been attributed due to drop in economic activity during the first two months of the fiscal year 2020-21, owing to the coronavirus crisis and the resultant nationwide lockdown imposed.
Coal was the worst-hit of all the commodities, with a whopping 60 per cent contribution to the total decline. Out of the total decline of 58 mt, coal freight traffic alone witnessed a drop of 35 MT.
Foodgrains are the only commodity that witnessed a rise in movements. During the period under review, foodgrains traffic saw an increase of 5 MT, and earnings from foodgrains rose by Rs 606 crore.
The fall in coal freight traffic can be attributed to the decline in power demand. State-run Coal India (CIL) witnessed a drop of 23 per cent in sales in the month of May and a 26 per cent drop in April, due to less purchase of coal by power utilities owing to a fall in demand and higher stockpile.
In April-May, coal loading was seen at 71 mt, compared to 106 mt during the first two months of FY20.
Freight earnings too saw a decline of Rs 8,284 crore to Rs 13,412 crore in the first two months of FY21, compared to Rs 21,696 crore during the same period last year.
The earnings from the coal sector saw a decline of Rs 5,313 crore to Rs 5,720 crore, compared to Rs 11,033 crore in the corresponding period last fiscal year.
There has also been a significant drop in power generation in May, plummeting to 14.3 per cent, and it is predicted that the overall power demand for FY21 will drop for the first time in 36 years.
CIL however, believes that the thermal units with coal stocks are sufficient to last for as long as 28 days.
“Many of the thermal plants have requested CIL to regulate coal supplies to them,” it said.
However, there has also been a shift in the outlook, with the CIL now choosing to go slow on mining.
Due to the drop in demand, CIL has turned its focus to removing the overburden, rather than mining. All the subsidiaries have stalled mining operations. Recently, CIL also offered to replace the thermal units’ imported coal supply with domestic coal.
Among other commodities, iron ore witnessed a drop of 7 MT in loading a drop of Rs 763 crore in freight earnings was observed during the same period.
Other commodities that recorded a dip in loading include cement by 6 MT, clinker by 3 MT and pig iron and finished steel by 3 MT.