Railways examining further cuts in freight rates

The Railway Minister, Mr Lalu Prasad Yadav, said that the Railways was examining the possibility of further reduction in freight rates to leverage its competitiveness over road transportation in the wake of the latest hike in diesel prices.

These further reductions, if any, are likely to be aimed at attracting incremental traffic in those routes where rail capacity is currently unutilised.

Discounts
In a statement, Mr Prasad reiterated the steps taken earlier this year wherein General Managers of all Zonal Railways were allowed to grant up to 50 per cent discount, as against the earlier 30 per cent, for loading of essential commodities like cement, foodgrains, fertilisers, etc in the empty flow direction.

Further reduction in freight rates is also being examined keeping in view the competitive position of the Railways in the transport market to attract more traffic and increase earnings, the Minister added.

The move is in line with Railways’ strategy during last few years wherein it increased freight tariffs through various surcharges for long distance movement of bulk commodities (like ores and minerals) which do not have road transportation as a financially viable option.

Meanwhile, Railways offers discounts only for incremental traffic in those routes where train and track capacity is available and for those industries that prefer road transport. Railways offers discounts on those routes (empty flow direction) where it is unable to garner any traffic earnings.
He said Railways will not pass its additional financial burden on its users – both passengers and freight customers. Railways consumes 2.27 billion litres diesel per annum and an increase in the price of diesel by Rs 3 per litre would cost Rs 681 crore annually and Rs 560 crore for the remaining 10 months of the current financial year.