Aiming to increase its finances, the cash-strapped Railways is mulling over introducing a new policy under which companies will pay freight charges based on their profitability.

“We are currently studying the books of major public and private firms to ascertain their profitability in the last few years which would become the basis for different slabs within a particular freight category,” a senior Railway Ministry official said.

Currently freight rates are decided on the basis of type of goods and distances travelled.

The official said: “We are looking at those companies who can pay higher freight rates (based on their profitability) without the possibility of transferring the burden to the customers.”

Coal and iron ore are at present major contributors to railway freight earnings and once the differential freight tariff is implemented, it would have a direct impact on the companies in these sectors.

Changes in freight model are being considered necessary as freight operations contribute to over 60 per cent of the railways revenue.

Besides the new freight tariff, the railways is also considering to pursue an aggressive marketing policy to divert the goods traffic from roads to rails.

“A significant amount of goods is still being carried in trucks and our attempt is to attract those to railways,” the official said, adding that a proposal is under consideration to create a new post of general manager for coal operation.

As far as passenger fare is concerned, the railways is considering to link it with the fuel cost.

“We are considering to segregate fuel adjustment component from the basic fare structure so that whenever fuel price increases, fare will automatically increase,” the official said.

Passenger fare has not been revised for the last eight years even though fuel cost has gone up many times since then.

The Railway Minister, Mr Dinesh Trivedi, has also advocated for introducing dynamic fare system in passenger fare.

Related Topics
comment COMMENT NOW