The Hindu Business Line : Rlys to mop up Rs 900 cr from freight, fares rejig

A HIKE in the rail freight tariff on essential commodities and a cut in the rates on steel and petro-products are on the anvil in the Railway Budget along with a 5 to 6 per cent increase in passenger fares.

According to senior Railway Board officials, the proposed increase of freight rates on essential commodities such as foodgrains, salt and fertilisers will yield additional revenue of around Rs 200 crore.

The average increase in freight tariff, which has been roughly 2 per cent over the last four years, is likely to be around 4 per cent this time around.

The freight rationalisation, through changes in the classification, coupled with the passenger fare increase, will translate into an additional revenue mobilisation of around Rs 900 crore.

Currently, the freight earnings from salt, fertilisers and foodgrains are around 25 paise, 47 paise and 44 paise per tonne kilometre respectively. The average cost of transporting these goods by rail is higher at around 65 paise per tonne kilometre.

Among the options which are being looked at are a dual tariff structure for the same commodity as there is significant internal cross-subsidisation of freight rates within commodities.

For instance, tariffs are at par on grains moved by the Food Corporation of India (FCI) for meeting requirements of the public distribution system and those moved by private trade.

Plans are also afoot to lower tariffs on petro-products moved by rail in view of the competition from pipelines. Officials pointed out that despite a conservative freight traffic projection by user Ministries (of 497 million tonnes), the target would be pegged at over 510 million tonnes for 2002-03.

The passenger fare rationalisation, after a gap of two years, will be based on a re-assessment of the difference in the levels of comfort between sleeping and sitting accommodation.

The Railway Minister, Mr Nitish Kumar, is understood to have turned down suggestions of a hefty increase in fares, saying that commuters will, in any case, continue to pay the safety surcharge. The Railways will earn roughly Rs 800 crore from this surcharge in the ensuing fiscal.

With the Finance Ministry clearly indicating that it will not be in a position to substantially raise budgetary support, the Railway Ministry has decided to step up market borrowings by the Indian Railway Finance Corporation (IRFC) to finance its annual plan of around Rs 10,000 crore.

A decision has also been taken not to factor in any significant amount as revenues from non-traditional sources.

An amount of around Rs 4,340 crore is set to be provided as budget support, besides Rs 1,000 crore towards the Special Railway Safety Fund. With the Railways' fund balances in a precarious position, the Ministry expects extra monies to be channelised during the course of the year to complete `last mile' projects and safety-related works. Allocations for new line projects are likely to be pruned this time around.

Mr Nitish Kumar has already given an indication that the Budget will outline broad reform measures and operational and marketing strategy in freight for the medium term.

These include a flexible pricing mechanism to capture additional freight traffic, eliminating the speed differential between passenger and freight trains and recapturing the `merry-go-round' system.

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