How Dedicated Freight Corridors are adding to GDP growth, boosting Rail revenues

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Last Updated07/11/2024

The study said that reduction in freight cost and travel time due to the DFCs has helped reduce prices of commodities by up to 0.5%, and the corridors have contributed to 2.94% of the revenue growth realised by the Railways between FY 2022–23 and FY 2018–19.

A recent study from the University of New South Wales highlights the economic benefits of India’s Dedicated Freight Corridors (DFCs), noting significant contributions to GDP growth and Indian Railways’ revenue.
The study, published in Elsevier, focused on data from the Western Dedicated Freight Corridor (WDFC) for FY 2019–20 and assessed the economic impact using a Computable General Equilibrium model developed by the government.

Revenue Boost for Indian Railways: DFCs contributed to 2.94% revenue growth for the Railways between FY 2018–19 and FY 2022–23.
Commodity Price Reduction: DFCs lowered the cost and travel time for freight, resulting in a 0.5% reduction in commodity prices.
Equitable Economic Impact: The corridors notably benefitted states with lower per-capita GDP, creating a "social-equalising effect."

DFC routes are dedicated exclusively to freight trains, improving speed and efficiency through higher capacity and infrastructure for double-stack containers and heavy-haul trains. This structure benefits the supply chains of industries and logistics hubs along the corridors, enhancing both domestic and international trade.
- Eastern Dedicated Freight Corridor (EDFC): Spanning 1,337 km from Sonnagar, Bihar, to Sahnewal, Punjab.
- Western Dedicated Freight Corridor (WDFC): Covering 1,506 km from Mumbai’s Jawaharlal Nehru Port to Dadri, Uttar Pradesh.

As of March 31, 2024, ₹94,091 crore had been spent on the DFC project, and currently:
- EDFC is fully operational with connections to coal mines and thermal plants.
- WDFC is 93% complete, with its remaining sections expected to finish by December 2025.
On average, 325 trains run daily on these corridors, 60% more than the previous year. Over 10% of Indian Railways’ freight now operates on DFCs, contributing to faster, safer, and more efficient freight transit.

The DFC project was initiated to:
- Alleviate Overload on Existing Lines: The golden quadrilateral, linking India’s major metros, constitutes only 16% of the rail network but carries over half of India’s passenger and freight traffic.
- Reclaim Rail’s Share in Freight Transport: Aiming to increase rail freight traffic to 45% by 2030 as per the National Rail Plan.

To further strengthen India's freight network, four new DFCs have been 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)

The University of New South Wales study evaluated freight costs, industry needs, and population data to capture the DFCs' broader economic effects. It noted that Western regions, in particular, benefitted from substantial reductions in freight costs, contributing to regional economic growth and logistics efficiency.