Hike in rail freight likely

Our Bureau New Delhi | Updated on November 21, 2017

Getting ready: A view of goods trains at a railway station.

The Railway Budget may see some announcement related to increase in rail tariffs, though it is still not clear whether the hikes will be effective only on the freight segment or passenger segment as well.

“After the diesel rate hike, we have to do something. We are considering all options,” said a source. No firm decision has been taken as of now, added the source.

The Railways’ fuel costs shot up recently after the public sector oil marketing firms (OMCs) withdrew the subsidy element for bulk users in January, resulting in a hike of Rs 10 a litre. Moreover, oil firms defined bulk users based on the consumption point. After the hike, some users such as buses of State transport undertakings and industrial users started buying fuel from retail outlets, but railways do not have such an option.

For the Indian Railways, the fuel price for a litre of diesel by the start of next fiscal will be about 33 per cent higher against the prevailing price a year ago.


Moreover, depending on how the recent Government directive is interpreted by the OMCs, the fuel prices for bulk users such as the Railways could move fortnightly or monthly with movement in retail prices.

On January 16, the OMCs brought the diesel price for bulk users in sync with market price.


After January 16, the bulk consumer price has further gone up by over Re 1 a litre.

The recent drop in inflation will also make it easy for the Railways to announce a rate hike. In fact, during the last few years, the Railway Ministry has brought in tariff increases more often outside the Budget announcement than in the Budget. Also, freight rate hikes have been relatively easier to implement, as passenger fare hike has been a political call.

But, freight users have now started demanding that the Railways should limit the extent to which it charges cargo users to make available loss-making passenger services.

Industry lobby body CII has even demanded that Railways should announce freight rate increases three months in advance so that firms can change their logistics plans “accordingly”, in what is a veiled threat about potential shift of customers from rail mode.

It is these threats that may force the Government to either increase the budgetary support or allow another round of passenger fare increase.

For the Railways, losses from passenger services hover around Rs 23,000 crore a year.

> Mamuni.das@thehindu.co.in

> Richa.mishra@thehindu.co.in

Published on February 23, 2013

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