The Hindu Business Line : Lalu may cover tariff hikes under ‘dynamic pricing’ this year too

What’s in store: The Minister for Railways, Mr Lalu Prasad (right), and the Minister of State, Mr R. Velu, at Rail Bhavan in the Capital on Monday. —

Our Bureau

Advertisement

New Delhi, Feb. 25 Going by past indications, some marginal relief in passenger and freight tariff may find place in the 2008-09 Railway Budget to be presented to Parliament on Tuesday, while all the hikes could be saved for adjustments to be made under the ‘dynamic pricing policy’ throughout the year.

Ever since Mr Lalu Prasad took over as the Railway Minister, he has resorted to the practice of not making any tariff hike announcements in the budget.

Busy season surcharge

Pretty much like last year, when he did not think it necessary to mention that almost all commodities would attract a six per cent ‘busy season surcharge’ from April 1-June 30, 2007, except coal, coke, petroleum that had a four per cent surcharge.

And that the ‘busy season’ lasts for at least nine months of the year. Barring July 1-September 30, 2007 period, a seven per cent busy season surcharge was levied on all commodities, with coal and coke attracting a five per cent surcharge.

Iron ore transportation was not even spared for those three months. In February 2007, the Minister did make it a point to announce that freight rates of iron ore and limestone would be down by six per cent by reducing the tariff classification from Class 170 to 160.

What he did not mention was that the Ministry was imposing a six per cent ‘busy season surcharge’ on iron ore for the first half of 2007-08, and seven per cent for rest of the fiscal. Moreover, this January, Railways decided to get back to iron ore tariff classification at Class 170.

Freight earnings

With the various surcharges, Mr Prasad this year too has a good balance sheet in hand. Total freight earnings of the Railways in 2007-08 (April-January) are up 12.34 per cent at Rs 38,292 crore, though actual loadings increased by just 8.43 per cent. Hence, the expectation that he would not need to announce any actual increase in freight rates in Tuesday’s budget as well.

Passenger fares

As for passenger fares, this being an election year, nobody seriously expects the Railway Minister to announce any hikes. In any case, passenger earnings are up 14.21 per cent (Rs 16,135 crore) while passenger bookings were up 5.55 per cent.

Instead, the expectation is that Mr Prasad may announce some relief in passenger fares with Railways rolling out higher capacity AC III tier and sleeper coaches which would ensure higher earnings per coach.