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Daily Archives: December 2, 2018

Powell River Food Security Project – Ireti Adesida

Powell River Food Security Project – Ireti Adesida

This story is pretty inspiring, and sounds like where we could be headed in the Powell River region, with some more smaller farms springing up, a bit more awareness of the value of local food to the local economy, maybe some small businesses and value-added operations, and something like Helena Bird’s proposed teaching farm & market garden (AKA “Full Circle Farm”) to anchor the community around a central facility to provide a common infrastructure for production and processing.

Here’s the part I like:

“All of us have realized that by working together we will be more successful as businesses,” said Tom Stearns, owner of High Mowing Organic Seeds. “At the same time we will advance our mission to help rebuild the food system, conserve farmland and make it economically viable to farm in a sustainable way.”

Cooperation takes many forms. Vermont Soy stores and cleans its beans at High Mowing, which also lends tractors to High Fields, a local composting company. Byproducts of High Mowing’s operation — pumpkins and squash that have been smashed to extract seeds — are now being purchased by Pete’s Greens and turned into soup. Along with 40,000 pounds of squash and pumpkin, Pete’s bought 2,000 pounds of High Mowing’s cucumbers this year and turned them into pickles.

Somehow we need to start pulling in the same direction. Things seem very ragged and disorganized right now, largely thanks to the policies of large centralized governments, but helped along by societal forces that make farming an unattractive profession. It’s so bad now for small-scale farming that almost anything would help reverse the trend.

Like this:

Alternate proposal to the National Food Security Bill | PRS

Alternate proposal to the National Food Security Bill | PRS

Freight traffic: Railways majorly transports bulk freight, and the freight basket has mostly been limited to include raw materials for certain industries such as power plants, and iron and steel plants. It generates most of its freight revenue from the transportation of coal (43%), followed by cement (8%), food-grains (7%), and iron and steel (7%). In 2018-19, Railways expects to earn Rs 1,21,950 crore from its freight traffic.

Passenger traffic:  Passenger traffic is broadly divided into two categories: suburban and non-suburban traffic.  Suburban trains are passenger trains that cover short distances of up to 150 km, and help move passengers within cities and suburbs.  Majority of the passenger revenue (94% in 2017-18) comes from the non-suburban traffic (or the long-distance trains).

Within non-suburban traffic, second class (includes sleeper class) contributes to 67% of the non-suburban revenue.  AC class (includes AC 3-tier, AC Chair Car and AC sleeper) contributes to 32% of the non-suburban revenue.  The remaining 1% comes from AC First Class (includes Executive class and First Class).

Railways’ ability to generate its own revenue has been slowing

The growth rate of Railways’ earnings from its core business of running freight and passenger trains has been declining.  This is due to a decline in the growth of both freight and passenger traffic.  Some of the reasons for such decline include:

Freight traffic growth has been declining, and is limited to a few items

Growth of freight traffic has been declining over the last few years.  It has declined from around 8% in the mid-2000s to a 4% negative growth in mid-2010s, before an estimated recovery to about 5% now.

The National Transport Development Policy Committee (2014) had noted various issues with freight transportation on railways.  For example, Indian Railways does not have an institutional arrangement to attract and aggregate traffic of smaller parcel size.  Further, freight services are run with a focus on efficiency instead of customer satisfaction.  Consequently, it has not been able to capture high potential markets such as FMCGs, hazardous materials, or automobiles and containerised cargo.  Most of such freight is transported by roads.

The freight basket is also limited to a few commodities, most of which are bulk in nature.  For example, coal contributes to about 43% of freight revenue and 25% of the total internal revenue.  Therefore, any shift in transport patterns of any of these bulk commodities could affect Railways’ finances significantly.

For example, if new coal based power plants are set up at pit heads (source of coal), then the need for transporting coal through Railways would decrease.  If India’s coal usage decreases due to a shift to more non-renewable sources of energy, it will reduce the amount of coal being transported.  Such situations could have a significant adverse impact on Railways’ revenue.

Freight traffic cross-subsidises passenger traffic

In 2014-15, while Railways’ freight business made a profit of about Rs 44,500 crore, its passenger business incurred a net loss of about Rs 33,000 crore.17  The total passenger revenue during this period was Rs 49,000 crore.  This implies that losses in the passenger business are about 67% of its revenue.  Therefore, in 2014-15, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.67.

These losses occur across both suburban and non-suburban operations, and are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers.  According to the NITI Aayog (2016), about 77% to 80% of these losses are contributed by non-suburban operations (long-distance trains).  Concessions to various categories of passengers contribute to about 4% of these losses, and the remaining (73-76%) is due to fares being lower than the system costs.

The NITI Aayog (2016) had noted that Railways ends up using profits from its freight business to provide for such losses in the passenger segment, and also to manage its overall financial situation.  Such cross-subsidisation has resulted in high freight tariffs.  The NTDPC (2014) had noted that, in several countries, passenger fares are either higher or almost equal as freight rates.  However, in India, the ratio of passenger fare to freight rate is about 0.3.

Impact of increasing freight rates

The recent freight rationalisation further increases the freight rates for certain key commodities by 8.75%, with an intention to improve passenger amenities.  Higher freight tariffs could be counter-productive towards growth of traffic in the segment.  The NTDPC report had noted that due to such high tariffs, freight traffic has been moving to other modes of transport.  Further, the higher cost of freight segment is eventually passed on to the common public in the form of increased costs of electricity, steel, etc.  Various experts have recommended that Railways should consider ways to rationalise freight and passenger tariff distortions in a way to reduce such cross-subsidisation.

For a detailed analysis of Railways revenue and infrastructure, refer to our report on ‘State of Indian Railways’.

Source

https://www.prsindia.org/theprsblog/alternate-proposal-national-food-security-bill

NAC’s Draft Food Security Bill: A Hit or Miss? | PRS

NAC’s Draft Food Security Bill: A Hit or Miss? | PRS

Freight traffic: Railways majorly transports bulk freight, and the freight basket has mostly been limited to include raw materials for certain industries such as power plants, and iron and steel plants. It generates most of its freight revenue from the transportation of coal (43%), followed by cement (8%), food-grains (7%), and iron and steel (7%). In 2018-19, Railways expects to earn Rs 1,21,950 crore from its freight traffic.

Passenger traffic:  Passenger traffic is broadly divided into two categories: suburban and non-suburban traffic.  Suburban trains are passenger trains that cover short distances of up to 150 km, and help move passengers within cities and suburbs.  Majority of the passenger revenue (94% in 2017-18) comes from the non-suburban traffic (or the long-distance trains).

Within non-suburban traffic, second class (includes sleeper class) contributes to 67% of the non-suburban revenue.  AC class (includes AC 3-tier, AC Chair Car and AC sleeper) contributes to 32% of the non-suburban revenue.  The remaining 1% comes from AC First Class (includes Executive class and First Class).

Railways’ ability to generate its own revenue has been slowing

The growth rate of Railways’ earnings from its core business of running freight and passenger trains has been declining.  This is due to a decline in the growth of both freight and passenger traffic.  Some of the reasons for such decline include:

Freight traffic growth has been declining, and is limited to a few items

Growth of freight traffic has been declining over the last few years.  It has declined from around 8% in the mid-2000s to a 4% negative growth in mid-2010s, before an estimated recovery to about 5% now.

The National Transport Development Policy Committee (2014) had noted various issues with freight transportation on railways.  For example, Indian Railways does not have an institutional arrangement to attract and aggregate traffic of smaller parcel size.  Further, freight services are run with a focus on efficiency instead of customer satisfaction.  Consequently, it has not been able to capture high potential markets such as FMCGs, hazardous materials, or automobiles and containerised cargo.  Most of such freight is transported by roads.

The freight basket is also limited to a few commodities, most of which are bulk in nature.  For example, coal contributes to about 43% of freight revenue and 25% of the total internal revenue.  Therefore, any shift in transport patterns of any of these bulk commodities could affect Railways’ finances significantly.

For example, if new coal based power plants are set up at pit heads (source of coal), then the need for transporting coal through Railways would decrease.  If India’s coal usage decreases due to a shift to more non-renewable sources of energy, it will reduce the amount of coal being transported.  Such situations could have a significant adverse impact on Railways’ revenue.

Freight traffic cross-subsidises passenger traffic

In 2014-15, while Railways’ freight business made a profit of about Rs 44,500 crore, its passenger business incurred a net loss of about Rs 33,000 crore.17  The total passenger revenue during this period was Rs 49,000 crore.  This implies that losses in the passenger business are about 67% of its revenue.  Therefore, in 2014-15, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.67.

These losses occur across both suburban and non-suburban operations, and are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers.  According to the NITI Aayog (2016), about 77% to 80% of these losses are contributed by non-suburban operations (long-distance trains).  Concessions to various categories of passengers contribute to about 4% of these losses, and the remaining (73-76%) is due to fares being lower than the system costs.

The NITI Aayog (2016) had noted that Railways ends up using profits from its freight business to provide for such losses in the passenger segment, and also to manage its overall financial situation.  Such cross-subsidisation has resulted in high freight tariffs.  The NTDPC (2014) had noted that, in several countries, passenger fares are either higher or almost equal as freight rates.  However, in India, the ratio of passenger fare to freight rate is about 0.3.

Impact of increasing freight rates

The recent freight rationalisation further increases the freight rates for certain key commodities by 8.75%, with an intention to improve passenger amenities.  Higher freight tariffs could be counter-productive towards growth of traffic in the segment.  The NTDPC report had noted that due to such high tariffs, freight traffic has been moving to other modes of transport.  Further, the higher cost of freight segment is eventually passed on to the common public in the form of increased costs of electricity, steel, etc.  Various experts have recommended that Railways should consider ways to rationalise freight and passenger tariff distortions in a way to reduce such cross-subsidisation.

For a detailed analysis of Railways revenue and infrastructure, refer to our report on ‘State of Indian Railways’.

Source

https://www.prsindia.org/theprsblog/nacs-draft-food-security-bill-hit-or-miss

Home-grown Support for East African Food Security | Tarndie

Home-grown Support for East African Food Security | Tarndie

Television landed in Australia for the 1956 Melbourne Olympics and, evidently, take up was strong ever since.

Not so at Tarndie – the ancestral home of the Dennis family at Birregurra since 1840.

Generation 6 grew up in the big old house in the 1980s without a telly – the height of neglectful parenting by Generation 5. Forced to take our fun outdoors, and bluffing our way through re-enactments of The Simpsons in the schoolyard – life was tough for we Gen 6ers.

So on the odd occasion that it happened, Slide Night was a big deal.

It was like going to the movies, and watching telly, and hanging out with the family all rolled into one.

Even in 1987 the slide projector looked ancient – the 2 part machine needed to be set up in a sequence known only to Mum. While someone sorted the slides to prevent neck strain from the inevitable sideways slide, two others were charged with hanging a bedsheet from the picture rail. Later in life, a popcorn machine came down the chimney with Father Christmas, and tending to it quickly became the favoured pre-slideshow job.

Once settled, the magical, crystalline pictures and nostalgia tinged narrative had us all glued.

Before she married Generation 5’s Dave Dennis, Wendy Greenfield spent many years in the 1960s roaming the globe as a Private Nurse with an agency. Tales of living in fancy British country houses and castles tending the gentry were brought to life in technicolour; an epic Scandinavian road trip in a Morris 1000 convertible that ended abruptly in a bank of snow was gloriously beaming across the lounge room. The baying donkeys and chatter of the Kabul markets in 1965 were almost audible in these 2 inch square portals to an alternate life.

Slide film mustn’t have been widely available in Africa in the 1960s and Generation 6 had to continue our global safari by way of black and white prints as we explored the deepest, darkest in the final chapter.

Wendy missed the boat from Fremantle to Durban.

She thought she’d quickly duck into town to get something done, and when she got to the docks her ship had literally sailed. Not to be deterred, she sweet talked her way onto a pilot tug which got her to the side of the ship whose crew had dropped a rope net for her to climb up to the deck. Heels in hand, with the entire ships passenger load peering over the rails, Wendy clambered up above the open seas. She wanted to get to Africa.

Nursing throughout Sub-Saharan Africa in Rhodesia as it was, and South Africa, Wendy witnessed the last years of colonial rule in the continent. White farmers were wealthy, but wanted the employ of Europeans in the household to take care of their young children, elderly relatives and the sick. Of particular interest to Generation 6 were photos of Wendy with a family she spent time with near Mt Kenya – woolgrowers who imported some Corriedales from friends of the Greenfields in Western Victoria. There she was in an old Land Rover with a cheetah standing on the bonnet. Other photos revealed free-wheeling giraffes, elephants, Masaai herdsmen, sisal plants. Things unimaginable for kids in a faraway corner of Australia. No amount of telly watching could have formed such a powerful impact on Generation 6’s lives.

Slide Night gave way over the years, but the deep resonance of those images and stories has clearly influenced our family’s path in life.

Wendy in Kenya 1969
On safari in Kenya 1969

The eldest of Generation 6 – Michael, now 43, finished school, worked in a bank in the city and then returned to Tarndie where he mostly worked nearby at Lidgerwood Seeds in Birregurra. He worked with Jim Lidgerwood learning all about grain production. Armed with the knowledge that a big world existed out there, complete with cheetahs and Scandinavian road trips, Michael packed a small bag not long after his 22nd birthday, stretched his wings and realised they were very strong indeed. 21 years later, Michael is firmly planted in the East African country of Tanzania.

Population 50 million. Land area equivalent to South Australia.

His 2 children (Generation 7 in Tarndie terms; Generation 2 in Tanzania) were born in East Africa and spent the early years at The Learning Space in Arusha, not far from Tanzania’s iconic Mt Kilimanjaro. Their teacher in Arusha, coincidentally, was a Kate Lidgerwood, who turned out to be a daughter of Jim from Birregurra.

Kate’s wings were also strong and they landed her in Africa some time ago, unaware of the growing Birregurra connection to East Africa. Tarndie Generation 6 son number two, Alastair, found the lure of African life intoxicating and joined his brother in Tanzania on construction and farming projects in early 2000s.

Like all good travel stories, it’s hard to pinpoint how and why things turn out the way they do. For Kate, the connection to Iviani Primary School in Kenya’s arid Western Province seems unlikely, but with time, her thing with East Africa has normalised.

Kate now runs One Tree Love Foundation, which empowers and educates less fortunate communities toward growing food for children to eat while they are at school. With Iviani Primary School piloting the project since 2009, Kate has set up Green Garden Group, a mix of students, teachers and a gardener who have been able to implement changes to their school environment – so far they’ve planted more than 400 trees, created a nursery, vegetable garden and installed fencing and water harvesting equipment.

A member of the Green Garden Group at Iviani Primary School, Kenya

The Group use permaculture principles in their food system – design that uses their limited resources in the most efficient manner. Kate hopes to send the 40 students in the Green Garden Group to a more established permaculture garden nearby for training, and then spreading the model further afield.

It’s very grassroots stuff. We’re talking about 40 kids in a nation of more than 40 million.

But that’s the deal. Little bit by little bit. Do what you can.

Food security in Africa is an often talked about story. It can be overwhelming. With sky-rocketing populations, competing global demands for resources, crop theft and failure, low-level skills and investment in agriculture, conflict and unreliable climates, there’s plenty of reason to wonder how everyone will be fed.

To conceptualise challenges of food security, consider 50 million people living in South Australia. Then imagine 57% of them are not getting enough nutrition each day. Now you see Tanzania’s challenge.

Michael and Alastair are also doing something about raising prospects for food security in their adopted land.

The 2 brothers have combined skills in engineering, grain processing, construction and sheer grit to develop Fieldmasters, which is essentially a broad-acre cropping enterprise in a nation where the average farm size is 5 acres. With 3,600 acres of safflower, maize and barley growing on leased ground, and planting contracts for  farmers on a further 1,700 acres, Fieldmasters is one of the largest independent players in Tanzanian agriculture, and it is certainly a leading innovator.

They might be broad-acre production based, but their practices are aligned to conservation farming. Minimal tillage, high retention of plant reside, use of carbon capture technology on their tractors at planting to give the seeds a type of fertilizer, and they also run training programs with the country’s vocational agriculture educators, VETA, to boost skills.

Michael (in the hat!) in Tanzania’s The Daily News

Fieldmasters and One Tree Love have different approaches to developing food security in East Africa, but through time on the ground, education, innovation and “giving it a red hot go”, they show incredible leadership that we must all support however we can.

That’s why Tarndie is delighted to host One Tree Love’s fundraiser this Friday alongside other farmers and food makers in our region who value good agricultural output. It combines our own family story with ideas we hold close – good farming, global perspectives, and enjoying the culture in agriculture.

So switch off the telly this Friday night and come help someone who is trying to make a difference.

Look out though, Kate has some pretty powerful slides to show you.

Tarndie – 37 Roseneath Road, Warncoort.

Come join us for a warm cosy night learning about great produce from the Otways region, and how to help good food outcomes in Kenya.

We have fabulous tastings by Dinny Goonan Wines and Pennyroyal Raspberry Farm and Cidery.

Contact Kate for more information on 0417 122 202.

Beds available in the Homestead at a special rate of $50 per bed. Shared facilities. Bed only. Contact Tom on stay@tarndie.com or (03) 5233 6241 to book a room.

The Farmers Cottage is also onsite at Tarndie – click here for availability.

Guesstimating Access to Food Security | PRS

Guesstimating Access to Food Security | PRS

Freight traffic: Railways majorly transports bulk freight, and the freight basket has mostly been limited to include raw materials for certain industries such as power plants, and iron and steel plants. It generates most of its freight revenue from the transportation of coal (43%), followed by cement (8%), food-grains (7%), and iron and steel (7%). In 2018-19, Railways expects to earn Rs 1,21,950 crore from its freight traffic.

Passenger traffic:  Passenger traffic is broadly divided into two categories: suburban and non-suburban traffic.  Suburban trains are passenger trains that cover short distances of up to 150 km, and help move passengers within cities and suburbs.  Majority of the passenger revenue (94% in 2017-18) comes from the non-suburban traffic (or the long-distance trains).

Within non-suburban traffic, second class (includes sleeper class) contributes to 67% of the non-suburban revenue.  AC class (includes AC 3-tier, AC Chair Car and AC sleeper) contributes to 32% of the non-suburban revenue.  The remaining 1% comes from AC First Class (includes Executive class and First Class).

Railways’ ability to generate its own revenue has been slowing

The growth rate of Railways’ earnings from its core business of running freight and passenger trains has been declining.  This is due to a decline in the growth of both freight and passenger traffic.  Some of the reasons for such decline include:

Freight traffic growth has been declining, and is limited to a few items

Growth of freight traffic has been declining over the last few years.  It has declined from around 8% in the mid-2000s to a 4% negative growth in mid-2010s, before an estimated recovery to about 5% now.

The National Transport Development Policy Committee (2014) had noted various issues with freight transportation on railways.  For example, Indian Railways does not have an institutional arrangement to attract and aggregate traffic of smaller parcel size.  Further, freight services are run with a focus on efficiency instead of customer satisfaction.  Consequently, it has not been able to capture high potential markets such as FMCGs, hazardous materials, or automobiles and containerised cargo.  Most of such freight is transported by roads.

The freight basket is also limited to a few commodities, most of which are bulk in nature.  For example, coal contributes to about 43% of freight revenue and 25% of the total internal revenue.  Therefore, any shift in transport patterns of any of these bulk commodities could affect Railways’ finances significantly.

For example, if new coal based power plants are set up at pit heads (source of coal), then the need for transporting coal through Railways would decrease.  If India’s coal usage decreases due to a shift to more non-renewable sources of energy, it will reduce the amount of coal being transported.  Such situations could have a significant adverse impact on Railways’ revenue.

Freight traffic cross-subsidises passenger traffic

In 2014-15, while Railways’ freight business made a profit of about Rs 44,500 crore, its passenger business incurred a net loss of about Rs 33,000 crore.17  The total passenger revenue during this period was Rs 49,000 crore.  This implies that losses in the passenger business are about 67% of its revenue.  Therefore, in 2014-15, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.67.

These losses occur across both suburban and non-suburban operations, and are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers.  According to the NITI Aayog (2016), about 77% to 80% of these losses are contributed by non-suburban operations (long-distance trains).  Concessions to various categories of passengers contribute to about 4% of these losses, and the remaining (73-76%) is due to fares being lower than the system costs.

The NITI Aayog (2016) had noted that Railways ends up using profits from its freight business to provide for such losses in the passenger segment, and also to manage its overall financial situation.  Such cross-subsidisation has resulted in high freight tariffs.  The NTDPC (2014) had noted that, in several countries, passenger fares are either higher or almost equal as freight rates.  However, in India, the ratio of passenger fare to freight rate is about 0.3.

Impact of increasing freight rates

The recent freight rationalisation further increases the freight rates for certain key commodities by 8.75%, with an intention to improve passenger amenities.  Higher freight tariffs could be counter-productive towards growth of traffic in the segment.  The NTDPC report had noted that due to such high tariffs, freight traffic has been moving to other modes of transport.  Further, the higher cost of freight segment is eventually passed on to the common public in the form of increased costs of electricity, steel, etc.  Various experts have recommended that Railways should consider ways to rationalise freight and passenger tariff distortions in a way to reduce such cross-subsidisation.

For a detailed analysis of Railways revenue and infrastructure, refer to our report on ‘State of Indian Railways’.

Source

https://www.prsindia.org/theprsblog/guesstimating-access-food-security

Alternate proposal to the National Food Security Bill – Ireti Adesida

Alternate proposal to the National Food Security Bill – Ireti Adesida

Freight traffic: Railways majorly transports bulk freight, and the freight basket has mostly been limited to include raw materials for certain industries such as power plants, and iron and steel plants. It generates most of its freight revenue from the transportation of coal (43%), followed by cement (8%), food-grains (7%), and iron and steel (7%). In 2018-19, Railways expects to earn Rs 1,21,950 crore from its freight traffic.

Passenger traffic:  Passenger traffic is broadly divided into two categories: suburban and non-suburban traffic.  Suburban trains are passenger trains that cover short distances of up to 150 km, and help move passengers within cities and suburbs.  Majority of the passenger revenue (94% in 2017-18) comes from the non-suburban traffic (or the long-distance trains).

Within non-suburban traffic, second class (includes sleeper class) contributes to 67% of the non-suburban revenue.  AC class (includes AC 3-tier, AC Chair Car and AC sleeper) contributes to 32% of the non-suburban revenue.  The remaining 1% comes from AC First Class (includes Executive class and First Class).

Railways’ ability to generate its own revenue has been slowing

The growth rate of Railways’ earnings from its core business of running freight and passenger trains has been declining.  This is due to a decline in the growth of both freight and passenger traffic.  Some of the reasons for such decline include:

Freight traffic growth has been declining, and is limited to a few items

Growth of freight traffic has been declining over the last few years.  It has declined from around 8% in the mid-2000s to a 4% negative growth in mid-2010s, before an estimated recovery to about 5% now.

The National Transport Development Policy Committee (2014) had noted various issues with freight transportation on railways.  For example, Indian Railways does not have an institutional arrangement to attract and aggregate traffic of smaller parcel size.  Further, freight services are run with a focus on efficiency instead of customer satisfaction.  Consequently, it has not been able to capture high potential markets such as FMCGs, hazardous materials, or automobiles and containerised cargo.  Most of such freight is transported by roads.

The freight basket is also limited to a few commodities, most of which are bulk in nature.  For example, coal contributes to about 43% of freight revenue and 25% of the total internal revenue.  Therefore, any shift in transport patterns of any of these bulk commodities could affect Railways’ finances significantly.

For example, if new coal based power plants are set up at pit heads (source of coal), then the need for transporting coal through Railways would decrease.  If India’s coal usage decreases due to a shift to more non-renewable sources of energy, it will reduce the amount of coal being transported.  Such situations could have a significant adverse impact on Railways’ revenue.

Freight traffic cross-subsidises passenger traffic

In 2014-15, while Railways’ freight business made a profit of about Rs 44,500 crore, its passenger business incurred a net loss of about Rs 33,000 crore.17  The total passenger revenue during this period was Rs 49,000 crore.  This implies that losses in the passenger business are about 67% of its revenue.  Therefore, in 2014-15, for every one rupee earned in its passenger business, Indian Railways ended up spending Rs 1.67.

These losses occur across both suburban and non-suburban operations, and are primarily caused due to: (i) passenger fares being lower than the costs, and (ii) concessions to various categories of passengers.  According to the NITI Aayog (2016), about 77% to 80% of these losses are contributed by non-suburban operations (long-distance trains).  Concessions to various categories of passengers contribute to about 4% of these losses, and the remaining (73-76%) is due to fares being lower than the system costs.

The NITI Aayog (2016) had noted that Railways ends up using profits from its freight business to provide for such losses in the passenger segment, and also to manage its overall financial situation.  Such cross-subsidisation has resulted in high freight tariffs.  The NTDPC (2014) had noted that, in several countries, passenger fares are either higher or almost equal as freight rates.  However, in India, the ratio of passenger fare to freight rate is about 0.3.

Impact of increasing freight rates

The recent freight rationalisation further increases the freight rates for certain key commodities by 8.75%, with an intention to improve passenger amenities.  Higher freight tariffs could be counter-productive towards growth of traffic in the segment.  The NTDPC report had noted that due to such high tariffs, freight traffic has been moving to other modes of transport.  Further, the higher cost of freight segment is eventually passed on to the common public in the form of increased costs of electricity, steel, etc.  Various experts have recommended that Railways should consider ways to rationalise freight and passenger tariff distortions in a way to reduce such cross-subsidisation.