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How the Punjab crisis highlights the importance of rail freight

Post By : Basundhara Choudhury
Post Date : November 5, 2020
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The prolonged impasse on railway services to Punjab has revalidated the importance of rail freight like never before. With an unresolved stalemate between the central and state governments pulling the plug on the economic recovery for the state of Punjab, the non-operation of freight trains has led to a formidable impact on almost every industry of the state. We explore how the Punjab crisis has underscored the irrefutable importance of rail freight in India’s economy.

Due to the prolonged suspension of rail services, key sectors from agro-processing, engineering, hosiery, pharmaceutical, textile, power to auto components makers are going through a harrowing time in Punjab as supply of raw material has come down and delivery of products have nearly reached a screeching halt due to the Rail roko agitation.

The Railways have not run any freight trains to Punjab since October 24. Railway divisions at Ferozepur and Ambala, which operate trains in Punjab, have not received any directions on the resumption of service.  

“The condition of micro, small and medium enterprises has gone from bad to worse due to suspension of railways. Over 90% MSMEs in the State are involved in the manufacture of cycle. But due to shortage of raw materials the production has gone down by at least 50%.”

~Narinder Bhamra, President, Fastener Manufacturers Association of India

Mr. Bhamra brings to light the fact that the industry is unable to supply products against its commitments to foreign buyers and is facing heavy penalties owing to the delay. “A conservative estimate put our industry loss at INR 5,000 crore,” Mr. Bhamra said.

The agro-processing industry has also taken a hit. “The basmati rice exports have come to a complete standstill. Over 2,000 rice containers are lying uncleared at inland container depot (ICD) in Ludhiana,” said Ashok Sethi, Director, Punjab Rice Millers and Exporters Association.

Mr Anil Kumar Mishra, Pladis Global asserted how the non-operation of freight trains has had a formidable impact on industries.

“Industries are facing huge losses. The issue of non-operation of freight trains is costing us our business and customer relations. There is the unavailability of containers which is hampering our efficiency.  Also, we have to re-route our operations which is also adversely affecting the efficiency of operation”, Mr Mishra says.

There is also a huge gap between demand and supply thronging the industry, apart from disrupting regular export-import activities.

The exporters in the state are witnessing order cancellations and penalties on failure to deliver goods coupled with credibility loss. Furthermore, the domestic distribution is also hard to meet as transportation via road instead of rail will lead to substantial increase in expenses. Apart from this, truck trailers lack in terms of capacity in comparison to rail.

The disruption in import is leading to the absence of raw material due to which has led to a cascading effect on different industries as they are unable to continue production, thus ultimately affecting exports equally.

Skyrocketing prices

The railway freight charges from main steel plants to Punjab are INR 2000 per tonne whereas the road freight charges are between INR 3,500-4000 per tonne. Likewise, due to scarcity of scrap, the domestic steel prices have gone up more than INR 2,000 per tonne since the past weeks.

This has also led to huge financial losses on the part of exporters and importers who are compelled to supply the material in specified periods as per order, and now face losses due to delay and cancellation of orders.

While governments continue to pass the buck over the cause of the suspension, members of as many as 30 farmers outfits decided to allow movement of goods trains till November 20 amid the ongoing ‘rail roko’ agitation against Centre’s farm legislation.

Farmers also announced to shift their ‘agitation’ from railway platforms to nearby vicinities. The Railways, meanwhile, said its losses have crossed INR 1,200 crore in the last month as train operations remain suspended due to farmer protests currently at about 32 places on railway premises and tracks in Punjab.

“Earlier we had decided to let goods train go through the railway tracks till November 5, and now we have decided to extend the date till November 20. The ongoing impasse is due to authoritarian attitude of the Central government and discrimination towards Punjab farmers.”

~ Jagmohan Singh, General Secretary, Bhartaiya Kisan Union (Dakaunda)

Several industry-players believe that unless the stalemate between Central and State governments is resolved, it would be difficult for the businesses to get back to normal.

The stoppage of freight trains has had a direct impact on the construction industry that has witnessed escalated prices in steel and cement. The garment and knitwear segment that was reeling under the impact of the pandemic, had hopes of a comeback with the winter inventory, but the present situation has also sabotaged the dreams of the same.

With stalled transportation of consignments, rising input costs due to alternative means of transportation and insurmountable losses, the crisis of Punjab has added to the woes of an economy that is still trying to recuperate from the covid losses. However, it is also a resounding reminder of the importance of rail freight in driving the economy of the state- a fact reverberated, time and again, across the lifelines of the country.

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