Rail freight support for fares hits 10-year high

The Indian Railways has been using what it earns by moving goods to pay for not charging passengers the full price of ferrying them. This year, this freight support has hit a 10-year peak.

The widening gap between the average revenue per unit of freight and passenger moved shows up the high cross-subsidisation level.

By moving one tonne of cargo over one km the Railways earned Rs 1.21 in the first half of 2012-13, which is 61 per cent higher than what it did 10 years ago. By ferrying a passenger over one km, it earned 28 paise, about 16 per cent higher than what it did 10 years ago.

The average freight-to-passenger fare ratio touched 4.32, which means an average freight user pays over 4.3 times the average passenger.


The gap between freight and fare has been consistently widening since 2004-05, the year the Congress-led UPA took over. This means with each passing year, freight has been paying more to ferry passengers.

In fact, 2003-04 was only year when the average freight-to-passenger fare ratio dipped over the preceding year. That was the year the BJP-led National Democratic Alliance was defeated at the hustings.

Confirming the trend, Railway Ministry officials said the gap had widened even more after March, when a 22-26 per cent freight hike was put through.

Brakes could have been applied on the cross-subsidisation had the fare hike by former Railway Minister Dinesh Trivedi not been rolled back; he had to quit office for the move that did not get the blessings of his party, Trinamool Congress, chief.

Congress’ C. P. Joshi, who now holds the Railway portfolio, has supported the setting up of a railway tariff regulator to help arrest the cross-subsidisation.


Railways yet to decide on freight hike

Railways have no plans as yet to increase freight charges despite the steep hike in diesel prices which have put an additional burden of over Rs 1200 crores on it.

“There is no move as yet to increase freight charges even if it (diesel price hike) hits us hard,” said a senior Railway Ministry official.

Railways consume about 250 crore litres of diesel per annum to run its fleet of 4500 odd diesel locomotives, hauling both freight and passenger trains.

The national transporter paid about Rs 10,000 crore during the last fiscal towards its fuel bill, which keeps increasing every year due to addition of new services and more freight haulage.The hike is going to cost railways about Rs 1250 cr in a year. “Since six months have already passed, the additional cost of the fuel bill will be around Rs 100 cr per month,” said the official.

The three oil PSUs – Indian Oil, HPCL and BPCL – supply fuel providing a subsidy of 30 paisa per litre as railways is a bulk consumer of diesel.

“We get 80 per cent of our supply from IOC and rest from other two oil majors,” he said.

The hike comes at a time when railways is facing an acute financial crunch. It has sought Rs 4500 crore as additional budgetary support from Planning Commission to fund its ongoing projects.

Railways had already carried out a hike of more than 20 per cent in freight rates before the Rail Budget this year.

Published in: on September 15, 2012 at 3:54 pm  Leave a Comment  

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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