Impact of Dedicated Freight Corridors on India’s GDP and Railways Revenue

What’s in today’s article?

• Why in News?
• Dedicated Freight Corridors (DFCs)

Why in News?

A recent study by the University of New South Wales highlights the economic impact of India’s Dedicated Freight Corridors (DFCs) on the country’s GDP and Indian Railways’ revenue.

The study found that reduced freight costs and shorter travel times on DFCs have lowered commodity prices by up to 0.5%. Additionally, DFCs contributed to a 2.94% revenue increase for Indian Railways from FY 2018–19 to FY 2022–23.

The analysis focused on the Western Dedicated Freight Corridor (WDFC) for FY 2019–20, using a Computable General Equilibrium model developed by the central government.

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Dedicated Freight Corridors (DFCs)

• About
  • DFCs are specialized freight routes that boost transport capacity through faster transit, double-stack container trains, and heavy-haul trains, enhancing supply chains for industries along economic centers and increasing export-import traffic.
  • The Ministry of Railways launched the DFC project in 2006, constructing two main corridors:
  • Eastern DFC (EDFC): Spanning 1,337 km from Sonnagar, Bihar, to Sahnewal, Punjab. This corridor is complete and operational, with feeder routes to coal mines and thermal plants.
  • Western DFC (WDFC): Extending 1,506 km from Mumbai’s Jawaharlal Nehru Port to Dadri, UP. Currently 93% operational, it serves major ports in Gujarat and is set for full completion by December 2025.
    • As of March 31, 2024, Rs 94,091 crore has been invested in the DFC project (excluding land costs).
• Need
  • The need for Dedicated Freight Corridors (DFCs) arose due to two main reasons:
  • Overuse of the Golden Quadrilateral: This critical rail network, linking Delhi, Mumbai, Chennai, and Howrah, along with its diagonals, makes up only 16% of routes but handles over 52% of passenger and 58% of freight traffic.
  • Declining Rail Freight Share: To address the Railways’ decreasing share in total freight traffic, the National Rail Plan set a goal to increase rail freight’s share to 45% by 2030.
• DFC project
  • The DFC project was first announced in the Railway Budget for FY 2005-06. In 2006, then PM Manmohan Singh laid the foundation stones for the Eastern DFC in Ludhiana and the Western DFC in Mumbai.
  • In October 2006, Dedicated Freight Corridor Corporation of India Limited (DFCCIL) was established as a Special Purpose Vehicle for the corridors’ construction, operation, and maintenance.
  • In March 2024, PM Modi inaugurated three new DFC sections: the 135-km Makarpura-Sachin segment on the WDFC, and the 179-km Sahnewal-Pilkhani and 222-km Pilkhani-Khurja sections on the EDFC.
• Current Status and Future Expansion of India’s Dedicated Freight Corridors (DFCs)
  • As of now, approximately 325 freight trains operate daily on India’s DFCs, reflecting a 60% increase compared to the previous year.
  • These trains are faster, heavier, and safer. Since the inception of the DFCs, they have transported over 232 billion Gross Tonne Kilometres (GTKMs) and 122 billion Net Ton Kilometres (NTKMs) of payload.
  • Currently, DFCs handle more than 10% of Indian Railways’ freight traffic.
  • In addition to the existing DFCs, four more corridors are proposed:
    • East Coast Corridor: Kharagpur to Vijayawada (1,115 km)
    • East-West Sub-Corridor-I: Palghar to Dankuni (2,073 km)
    • East-West Sub-Corridor-II: Rajkharsawan to Andal (195 km)
    • North-South Sub-Corridor: Vijayawada to Itarsi (975 km)

Q.1. How do Dedicated Freight Corridors impact India’s GDP?

Dedicated Freight Corridors reduce freight costs and travel time, leading to lower commodity prices by up to 0.5%. This contributes significantly to economic growth, boosting India’s GDP and enhancing industrial supply chains along key economic centers.

Q.2. What is the current status of the Dedicated Freight Corridor project?

The Eastern Dedicated Freight Corridor (EDFC) is complete, while the Western Dedicated Freight Corridor (WDFC) is 93% operational. Both corridors have transported over 232 billion Gross Tonne Kilometres (GTKMs) and contribute more than 10% of Indian Railways’ freight traffic. 

News: On the growth track: How Dedicated Freight Corridors are adding to GDP, boosting Rail revenues | Dedicated Freight Corridor Corporation of India Limited | The Hindu