The industry has expressed its shock at proposed increase in freight charges of certain commodities fuelling speculation that it might impact wholesale price index.
Rashtriya Ispat Nigam Limited, the corporate entity of Visakhapatnam Steel Plant, will be forced to shell down an additional amount of Rs.20 crore on account of increase in freight rates. RINL spends Rs.700 crore on rail freight every year. Steel major SAIL will also be badly hit.
Incidentally, the steel industry is now in a bad shape with shrinking profit margins due to abnormal increase in shipment of steel from China. The power industry is also heavily dependent on imported coal.
The budget proposals submitted by Railway Minister Suresh Prabhu include 6.3 per cent increase in coal, 10 per cent urea, 0.8 per cent iron and steel and 2.7 per cent on cement products.
An official of NTPC said though the increase would entail some impact on them, they were yet to quantify its implication.
Port sector, which is facing rough weather due to decline in movement of various cargoes, is mainly dependent on coal and iron ore. To cap it all, the budget has not mentioned about increase in rakes. While Visakhapatnam Port gets eight million tonne of imported coal, Gangavaram Port handles little over four million tonne.
“Increase in freight on coal will be difficult for commodity sector to absorb. This will have a cascading effect leading to power tariff increase. There is no word on augmenting rake shortage faced by Waltair Railway Division,” CII Vizag zone chairman Neeraj Sarda told The Hindu .
While welcoming the formation of Transport and Logistics Corporation of India, Sravan Shipping Services Managing Director G. Sambasiva Rao said the industry was disappointed at not announcing the carving out of new zone with Vizag as headquarters.
