Though there was no increase in passenger fares, Railway Minister Suresh Prabhu has proposed hike in freight rates for select commodities.
The freight rate for coal transport will increase by 6.3 per cent. For iron ore, it will go up by 2.7 per cent and for cement and steel by 0.8 per cent. Freight charges for the transport of urea and grains will also go up by 10 per cent.
In the wake of declining diesel prices, it was expected that freight rates would not be increased.
In his press conference post-budget, Mr. Prabhu played down the freight increase. It was done to rationalise tariff on different set of commodities, he explained. “You will see some commodity prices coming down and some going up. Freight rates for long distance will be less. It will have a marginal impact,” he said.
The move to increase freight rate has attracted sharp reactions, however.
“The 6.30 per cent hike in freight rates for coal will dent a range of industries, and is also out of whack with the Make in India spirit. Along with the 0.8 per cent hike in steel freight, this is a double whammy that could have been avoided,” Ravi Uppal, MD and Group CEO JSPL, said.
“This may likely impact Railways’ plans to arrest its sliding transport market share in freight. This may further increase existing imbalances in freight rates vis-à-vis passenger rates,” Vishwas Udgirkar, Senior Director, Deloitte India, said.
“The total impact of freight hike on cement and coal is expected to be Rs. 20/tonne, which is Re. 1/bag. We believe that the impact of Rs. 20/tonne or Re. 1/bag is very marginal considering the average total cost of Rs. 4,000/tonne for major players,” Vijay Goel, analyst at Karvy, said in a research note, post the budget.
