Railway Minister sharply hikes freight rates

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SME Times News Bureau | 26 Feb, 2015
Even as he chose to remain silent on freight in his speech and said he will keep passenger tariff unchanged, Railway Minister Suresh Prabhu Thursday sought to hike goods rates on a host of items between 2.1 percent and 10 percent in his maiden budget, to garner 13.5 percent additional revenues on this count.

"Then freight structure for the Base Class-100 has been proposed to be increased by 10 percent," an explanatory statement on freight, appended with the budget documents showed, indicating the hike sought in the most basic goods such as salt for human consumption.

The minister also proposed to reduce the number of classifications to ascertain freight rates, as 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.

Looking at some of the specific commodities, the revision in the class of freight and the tariff works out to 2.7 percent higher for cement, 6.3 percent for coal, 0.8 percent for iron and steel, 10 percent each for grain, pulses, urea and 0.8 percent for kerosene.

But in some cases there has ben a marginal cut as well - such as 1 percent for high speed diesel, and 0.3 percent for limestone, dolomite and manganese.

"Keeping in view the buoyant trend of freight loading during the course of the year, the revised target of freight loading for 2014-15 has been retained at the budget estimate level of 1,101.25 million tonnes," said the explanatory statement on the budget.

The increment for 2015-16 has been kept to just 85 million tonnes.

M Rafeeque Ahmed, President, Federation of Indian Export Organisations (FIEO) while commenting on the Railway Budget 2015-16 stated that a focus towards improving efficiency as indicated by the highest operating ratio in 9 years of 88.5 percent for 2015-2016; setting up of a Transport Logistics Corporation (TLC) for expanding and improving rail freight operations; increasing track capacity to 1.38 lakh kms; increasing share of Railways in freight traffic; Wi-fi facilities at 400 stations; 67 percent outlay on passenger amenties are some of the highlights of the budget.

FIEO chief stated that inspite of a fall in fuel prices, freight rates have been on the increase and constitute about 65 percent of Indian Railways total earnings.

Between April-January 2015, earnings in absolute terms for freight were Rs 87,291 crore as compared to Rs 77,694 crore in the same period last fiscal (even though volumes grew by a mere 5 percent in the April-December 2014 period) and in the past freight hike by rail ministry of recently was 5.8 percent in April 2013, 1.7 percent in October 2013 and 6.5 percent in June 2014, a congestion surcharge of 10 percent is being levied on all goods traffic including containers originating from ports since November 2014. In addition, 31 percent surcharge was levied on containers in two tranches in December 2012 and February 2013 and an increase in inland haulage charges both for export and import containers effective from 5th December 2014 ranging from 19 percent to 42 percent which was only partially rolled back later added to cost of transportation through containers impacting both exports and imports adversely.

FIEO chief stated that with the focus on efficiency and improving the operating ratio it is hoped that freight rates would be stable and Rs 1.8 trillion worth projects which are over 300 projects in number would be mobilized.