The Hindu Business Line : Rlys may reduce freight charges for iron ore export traffic

New Delhi, Dec 11 The Railways may reduce freight charges on iron ore export traffic even further, Mr Shri Prakash, Railway Board Member (Traffic) indicated on Thursday.

This comes on the heels of a statement by the Union Commerce Minister, Mr Kamal Nath, that the Government is considering a stimulus package for exports.

“Railways has reduced freight charges for certain segments of iron ore export traffic and domestic container traffic in the last few months. Further reductions are also likely,” Mr Shri Prakash said.

Defending the decision to hike cement and coal freight charges despite a rollback in diesel charges, the Indian Railways has said that diesel is just one of the several inputs for the railways. Moreover, the decision to increase freight charges for cement and coal was notified on November 28, much before the diesel price reduction was announced. “The cost of several inputs such as steel, cement and labour has gone up in the last few years, and the railways has not increased freight charges by similar extent,” he said.

Pay panel impact

“The impact of the Sixth Pay Commission (at about Rs 11,000 crore) has been much more than what we were expecting. The higher cost of market borrowings will also impact us. Then, the steel and cement prices have also gone up,” Mr Prakash said. The Indian Railways had budgeted Rs 6,414 crore for the impact of Sixth Pay Commission.

On indications of cement companies’ that rail freight is eating into their margins, Mr Prakash said that Railways moves about 42 per cent of total cement traffic, where as 58 per cent of cement traffic moves through roads.

“The share of rail transportation for cement traffic has been declining for the last four years as an increasing number of large cement plants are locating their grinding units closer to the consumption centres, within a distance of 250-300 km,” he said. This cement traffic now moves by road. In fact, the Railways tried attracting this short-lead traffic from the road sector by offering up to 50 per cent discounts to cement plants for short distance traffic. But the offer does not seem to have worked to the extent expected.

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