Rlys new mantra to overcome fuel price hike

Offring discounts in non-performing areas and playing on volumes is the new mantra taken up by the Indian Railways to neutralise its Rs 400-crore additional burden resulting out of the recent fuel price hike.

Offring discounts in non-performing areas and playing on volumes is the new mantra taken up by the Indian Railways to neutralise its Rs 400-crore additional burden resulting out of the recent fuel price hike.

In spite of the hike, the Railways has announced freight discounts for a four-month non-peak season between July and October this year. With an eye on volumes, it has planned a detailed freight strategy not just to counter the diesel price hike but also to achieve a target of 750 million tonnes of freight loading for the current financial year.

‘‘A Re 1 hike in diesel rates causes an additional burden of Rs 211 crore on the Railways. With a Rs 2 hike in diesel rates this time, the total additional burden for us works out to be around Rs 400 crore,’’ said a Rail Ministry official. ‘‘For an organisation like the Railways having a fund balance of around Rs 15,000 crore, neutralising the effect of this Rs 400 crore is not a big worry,’’ the official added.

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As part of its strategy to increase the volumes, the Rail Bhavan has announced a 30 per cent discount on trains running in empty flow direction. ‘‘Earlier, Railways used to charge the same freight rates on trains running on empty flow directions and thus faced huge losses. This discount would now ensure that we earn at least some revenue from these trains,’’ said a Ministry official.

Further, Railways is offering a loyalty discount for its frequent and major users dealing in cement and steel. ‘‘The idea is to woo more and bigger customers towards us,’’ the official said. In addition, Railways is also going to allow users to hire mini rakes for smaller loads and also allow two-point unloading facility at no additional charges.

‘‘We are in direct competition with road transport but much better placed with just a 20 per cent cost of energy against road transport’s 60 per cent. So, any hike in fuel prices will hit road transport operator harder than us. It is not that Railways would not be hit. But our freight strategy would counter that,’’ said the official.