Beginner's Guide 1: Road Transport vs Rail Transport

The transport sector in India is growing at 8.5% per annum and constitutes 6.5% of the total GDP. The transportation sector is the lifeline of the Indian economy and is crucial for the growth of several other industries such as agriculture, mining, construction, etc. With rail, road, air and water being the major means of transportation, the freight industry in India is fiercely competitive. Of all these mediums of carrying goods from one place to another, roadways and railways score the most, responsible for the maximum number of goods across India. In this beginner’s guide, we will take you through the two major transportation modes in India (the railways and the roadways), their share in GDP, and role in movement of freight traffic.

Freight traffic of Road vs Rail

Several modes of transportation such as roadways, railways, pipelines, coastal shipping, inland water transport, and airways are used for catering to freight movement in India. However, roadways and railways are the most significant contributors to goods movement. Although railways were the dominating means of transportation initially, roadways have become a preferred means over the passing years.

While rail share was an astounding 80% in 1950-51, roadways took over 65% of the share in 2011-12. Although Indian Railways is one of the four railway systems in the world which transports one billion tons of cargo per year, due to the booming growth in freight traffic, railways achieved only 1 percent growth in 2015-16 as compared to 4-4.5 percent the previous few years.

The reasons for the shrinking percentage in rail freight are many. Due to limited capacities, expensive rates and fierce competition, roadways have overtaken railways since the past few decades. Also, Indian Railways were not able to provide the required customer service, and as highways developed, prospects for door to door service opened, that further fueled the demand for trucks.

GDP Share of Modes of Transport

Transportation as a major role in GDP share. The contribution of transport sector to Indi’s GDP has increased from 6 percent in 2001-02 to 6.7 percent in 2012-13. This can be attributed to the increase in transport share due to increase in road transport from 3.9 percent to 4.9 percent within the same time period. On the other hand, railway transportation sector’s contribution to GDP has witnessed a degrowth of 1.2 percent in 2001-02 to 0.9 percent in 2012-13.

Contribution of other modes such as water, air and related services have continued to be same during these years.

Projection of freight traffic

A projection of freight traffic by the National Transport Development Policy Committee (NTDPC) predicts that the rail vs. road share would be 50:50 in 2031-32 as against the current 35:65 percent ration in 2016-17. These predictions have been calculated based on the assumption that the growth rate is 1.2 times the GDP growth rates.

The 15% increase in rail freight transport within the next 15 years has been attributed to the increasing focus on carbon emissions. This would force the freight industry to look for other means of transportation such as railways and waterways. However, road freight would also increase raising the numbers from 1000 btkm in 2011-12 to 4000 btkm in 2031-32.

Conclusion

Though road transportation is currently on great heights, freight owners need to curb vehicular pollution levels, especially in heavy trucks. If this issue is not addressed on time, freight owners may be forced to move to other environmental-friendly means of transportation in the future, which may jumble the numbers in the freight transportation industry.