Freight hike to pull railways out of red

His fare hike proposals may have turned controversial for political reasons, but what has gone largely unnoticed is Dinesh Trivedi’s quiet move to increase freight rates by 20 percent on March 6, days before he presented the rail budget as railway minister.

According to sources in the railway ministry, the hike in freight rates will fetch an additional Rs.16,000-17,000 crore and provide a much-needed financial cushion to the railways. The railways’ freight earnings are Rs.80,000 crore annually. “Even without a passenger fare hike, the railways will be in a comfortable position thanks to the freight rate hike,” said the railway ministry official, speaking to IANS only on condition of anonymity as he was not supposed to speak to the media.

Officials say the freight hike went unnoticed as it was announced March 6, when the nation’s attention was focussed on vote count for assembly polls in five states. Indian Railways was staring at an earnings shortfall of Rs.7,000 crore just two weeks ago. It earns around Rs.28,000 crore from passenger fares annually.

The additional earnings from a 20 percent freight rate hike coupled with enhanced loading target and minor to moderate fare hike announced in the March 14 rail budget for 2012-13 would help generate around Rs.25,000 crore for the railways in the next financial year, said the sources.

Even if the fare hike is partially rolled back to placate a miffed Mamata Banerjee, chief of Trivedi’s Trinamool Congress, the railways would still end up mopping up an additional Rs.4,000-5,000 crore in passenger earnings, said sources. Owing to pressure from Banerjee over the rail budget, Trivedi quit the post Sunday.

The railways would still have to take hard decisions to meet the challenge of generating large amounts – to the tune of Rs.9 lakh crore over the next five years – to address the safety and modernisation imperatives pointed out by two expert panels headed by former Atomic Energy Commission chief Anil Kakodkar and prime minister’s adviser Sam Pitroda.

“The safety and modernisation challenges will remain till the railways address them,” former Railway Board chairman R.K. Singh told, adding “the move to hike freight rate before the budget would certainly help the national transporter.”

According to the Kakodkar panel, elimination of over 32,000 level crossings across the 64,000-km track alone would require Rs.50,000 crore, which is one-fourth of the rail budget 2012-13 size of over Rs.2 lakh crore.

Published in: on March 24, 2012 at 2:00 pm  Leave a Comment  
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