Freight rate hike to get Rs 4000 cr; no Rail fare increase

Last Updated: Thursday, February 26, 2015, 17:15

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New Delhi: The Railway Budget today hiked freight rates on cement, coal, foodgrain and pulses, urea, kerosene and LPG by up to 10 per cent to mop up an additional Rs 4,000 crore a year but spared passengers from any raise in fares while ruling out privatisation.

Presenting his maiden budget, the first full-fledged exercise of the Modi government, Railway Minister Suresh Prabhu did not announce any new trains or lines pending a review but said he would concentrate on consolidating the existing ones.

"I have not increased the passenger fares," he announced at the outset of his hour-long budget speech and made no mention of the rationalisation of freight rates that was done by a sleight of hand through an explanatory memorandum.

The hike, which will be effective from April 1 this year, will cover a wide-range of items like cement, coal, grains and pulses, urea, iron ore, kerosene and LPG.

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 briefing, Prabhu sought to justify the exercise saying rationalisation has always been done while Member (Traffic) Ajay Shukla was at pains to project that on some goods actually there will be reduction in freight on longer distance.

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.

But officials estimated an additional revenue mobilisation of Rs 4,000 crore a year on account of freight increase. Industry associations estimate Rs 3,000 crore subsidy burden on movement of urea and Rs 600 crore on foodgrains.

Carriage of grain and pulses as well as urea will suffer a 10 percent hike in freight while coal will attract a 6.3 per cent increase.

In a Budget that had no big bang announcements but aims at providing more facilities, Prabhu unveiled 11 major thrust areas to improve cleanliness, better bed linen, helpline for ensuring security including camera surveillance for women safety, ticketing and e-booking of meals of choice.

Onboard entertainment on select Shatabdi trains, provision of wi-fi in B-category trains and 200 more stations to be brought under Aadarsh Station Scheme were some of the passenger amenities that the Railway Minister announced.

The Budget envisages an investment of Rs 8.5 lakh crore in the next five years to be mobilised from multiple sources to cater to funding through multilateral development banks and pension funds.

It hiked the plan outlay for 2015-16 by 52 per cent to Rs 100,011 crore over the revised estimate of 2014-15. Passenger earnings growth has been pegged at 16.7 percent and earnings target budgeted at Rs 50,175 crore.

Goods earnings is accordingly proposed at Rs 1,21,423 crore, which includes rationalisation of rates, commodity classification and distance slabs.

Against the backdrop of talk of privatisation of railways, the Minister said Railways will continue to be a precious national asset and people of India will own railways always.

The other thrust areas include efforts to make Railways the prime mover of economy again, resource mobilisation for higher investments, decongestion of heavy routes and speeding up of trains, passenger amenities and safety.

The Railway Budget today hiked freight rates on cement, coal, foodgrain and pulses, urea, kerosene and LPG by up to 10 per cent to mop up an additional Rs 4,000 crore a year but spared passengers from any raise in fares while ruling out privatisation.

Presenting his maiden budget, the first full-fledged exercise of the Modi government, Railway Minister Suresh Prabhu did not announce any new trains or lines pending a review but said he would concentrate on consolidating the existing ones.

"I have not increased the passenger fares," he announced at the outset of his hour-long budget speech and made no mention of the rationalisation of freight rates that was done by a sleight of hand through an explanatory memorandum.

The hike, which will be effective from April 1 this year, will cover a wide-range of items like cement, coal, grains and pulses, urea, iron ore, kerosene and LPG.

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 briefing, Prabhu sought to justify the exercise saying rationalisation has always been done while Member (Traffic) Ajay Shukla was at pains to project that on some goods actually there will be reduction in freight on longer distance.

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.

But officials estimated an additional revenue mobilisation of Rs 4,000 crore a year on account of freight increase. Industry associations estimate Rs 300 (rpt Rs 300) crore subsidy burden on movement of urea and Rs 600 crore on foodgrains.