The Railway Budget brought anxiety amongst the industries, common man and stakeholders largely due to a hike in the freight rates on cement, coal, foodgrains and pulses, urea, kerosene and lPG by up to 10 per cent.
The hike of freight charges of coal may affect the common man directly since the electricity tariffs may rise since transportation cost for power producers will go up. leading power producer NTPC said that cost of production would rise by about 4-5 paise due to the freight rate hike.
Other commodities for which rail freight rates have been increased are cement (2.7 per cent), iron and steel (0.8 per cent), grains & pulses (10 per cent), urea (10 per cent), groundnut oil (2.1 per cent), lPG and kerosene (0.8 per cent).
Manufacturing cost for cement is likely to go up by Rs7-10 per bag of 50 kg due to the proposed freight hike on various inputs and the commodity, but domestic firms would prefer to wait for the main Budget to take a call on raising the price.
While common salt has been left untouched, in the case of diesel and limestone there will be a marginal reduction in the freight adjustment done through re-classification of goods and distance rationalisation.
At the post-Budget Press briefing, Rail Minister Suresh Prabhu sought to justify the exercise saying rationalisation has always been done. Member (Traffic) Ajay Shukla attempted to project that on some goods actually there will be reduction in freight on longer distance.
Clearing the air on speculations that urea and fertiliser prices may go up and affect farmers severely, Minister of State for Railways Manoj Sinha said there will be no increase in the prices of urea for farmers since the Government will be subsidising the commodity.
The Railway Budget proposed to increase freight rates of coal and slag, used in the manufacturing of cement, by Rs45.70 per tonne and Rs20.9 a tonne respectively; and also hiked rate by Rs21 per tonne for cement, but reduced tariff for limestone by Rs2.7 a tonne.
The proposed hike in freight rate will help Railways’ earnings from movement of goods grow by 14 per cent to Rs1,21,423 crore in the next financial year, nearly half of which is expected to come from coal and cement. In 2014-15 (revised estimate), the revenue from movement of goods will rise to Rs1,06,927 crore from Rs93,095 crore in the previous year, according to the Rail Budget document.