IR depends on coal for almost 65% of it's freight traffic. For the past decade and more, traditionally the coal traffic would increase in the winter i.e., the December to February period, and bail out IR which would be operating at a high operating ratio till November ( This years 109% is not really a first time, nor is it unexpected). But for the past 2 years and in particular this year, the demand for Coal movement has greatly fallen.
Ironically, this fall this due to a somewhat good decision taken by the BJP government. The BJP government has rationalized all the coal linkages in the country in the past 2 years. Because of this, now coal...
more... only has to travel short distances from the point of mining to the power plant. This severely hit the railways' main revenue source, the shipping of coal in the 1500-2000km segment. Further more, the power distribution system has also been revamped and they are preferring to supply power over large distances by utilizing better power grids instead of setting up power plants in remote areas and supplying coal all the way. This has proven to be the biggest hit for IR, which depends heavily on Coal transport.
You can see a detailed break-up of this problem here in this well-written report. :
click here It may look like an attempt to cover-up a less than stellar performance from the RM, but in reality, I'd really pity anyone in Suresh Prabhu's position now. Not only is the railway's facing serious competition from other means of transport, even the segments that the railway depends on, for it's revenue, are dwindling away leaving him practically no room to increase revenues in anyway! The hit in coal traffic alone deals a much larger blow to the railways than any of the more publicly scrutinized decisions the ministry has taken!!