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Freight rates jump, Prabhu says such adjustments are normal

The Rail Minister said it would have minimal impact on the transportation of commodities.

By: Express News Service | New Delhi |
Updated: February 27, 2015 8:21:50 am
Rail Budget 2015, Rail Budget, Suresh Prabhu, Suresh Prabhu rail budget, rail fare, new trains Railways Minister Suresh Prabhu while presenting the Rail Budget 2015 announced four goals to transform the India Railways. (PTI)

Without mentioning it in his budget speech, Railway Minister Suresh Prabhu on Thursday altered the freight structure of the Indian Railways, whereby base rates of freight saw a 10 per cent jump.

Outside Parliament, after the Budget, Prabhu allayed fears of impact on prices of important commodities because of the rise, saying such adjustments were normal. Later, Member, Traffic, Ajay Shukla explained that the rationalisation was meant to end an anomaly in the freight model and that it would in fact result in reduction in cost of moving a number of commodities by rail even as marginal increase in some other commodities was expected.

Rail_embed“The whole move would result in an additional mop up of just about Rs 4,000 crore. The rationalisation will lead to a saving of Rs 1 lakh per rake in case of coal if it was being transported from Korba to Gandhinagar and about Rs 4.65 lakh per rake if iron and steel was being shipped from Bokaro to Amritsar,” he said.

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The present system of charging freight on Railways is a combination of distance slabs and commodity classes. Thus, in each class certain commodities are kept and freight is charged on those commodities on a variable scale depending on distance. Shukla said this system created certain disparities whereby slight change in the distance made a bigger impact on the freight charged due to change of distance slab. This was causing concern to the customers. “It was felt that such anomalies need to be addressed,” he said.

Rail_embed1Therefore, for distances above 1,500 km, the distance slab which was earlier 250 km each, was reduced to 125 km each. While Railways said crucial commodities like urea and foodgrains were subsidies items, and hence people will not be impacted, the estimated subsidy burden on the national exchequer thanks to this is around Rs 3,000 crore.

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