Freight rate hiked to get Rs 4,000 cr a year

 Syed Ali Ahmed

New Delhi, February 26

Railway Minister Suresh Prabhu today hiked freight rates on a host of items by up to 10 per cent to garner Rs 4,000 crore (13.5 per cent) additional revenues a year but spared passengers from any raise in fares while ruling out privatisation.

Freight rates have been hiked on urea, grain and pulses (10 per cent), coal (6.3 per cent), cement (2.7 per cent), Bituman and Coal Tar (3.5 per cent), scrap and pig iron (3.1 per cent), slang (2.7 per cent), groundnut oil (2.1 per cent), LPG (0.8 per cent), kerosene (0.8 per cent) and iron ore-domestic (0.8 per cent).

While common salt has been left untouched, in case of diesel and limestone, there will be marginal reduction in the freight adjustment done through re-classification of goods and distance rationalisation.

The hike will be effective from April 1. “The freight structure for the Base Class-100 has been proposed to be increased by 10 per cent. It has been proposed to reduce the classification of salt for human consumption, cement, coal, limestone and dolomite, steel, pig iron, iron ores and petroleum products,” an explanatory statement said.

Prabhu also proposed to reduce the number of classifications to ascertain freight rates, and also rationalise the distance slabs — a move that will see freight revenues jump from Rs 106,927 crore as per the revised estimates for this fiscal to Rs 121,423 crore.

At the post-Budget briefing, Prabhu sought to justify the exercise saying rationalisation had always been done while Ajay Shukla, Railway Board Member (Traffic), was at pains to project that on some goods there would be reduction in freight on longer distance.

Minister of State for Railways Manoj Sinha said there would be no increase in the prices of urea for farmers since the government would subsidise the commodity.

But officials estimated an additional revenue mobilisation of Rs 4,000 crore a year on account of freight increase. Industry associations estimate Rs 3,000 crore subsidy burden on movement of urea and Rs 600 crore on foodgrains.

Meanwhile, a statement issued by the Railway Ministry said it was wrong to say that freight rates had been increased by flat 10 per cent. “The hike in freight rates at certain distance slabs is matched with reduction in the higher slabs so that the effect at the higher-end user is reduced further. Important commodities which affect the common man such as HSD and diesel have not been touched at all,” a statement said.