Rail freight users may have to brace for another round of hike with effect from April 1, unless one of the two Government behemoths come to their rescue.
Service tax on rail freight , the implementation of which has been deferred six times now, is due for implementation from April 1.
To spare customers from taking yet another hit, the Finance Ministry has to defer the implementation of service tax on rail freight traffic again.
In case the Finance Ministry — already under strain for a high level of fiscal deficit — does not yield, then the spotlight moves to the Indian Railways with a hope for downward revision of charges. But, the Railways is also short of cash required for renewal of over-aged assets such as tracks, and might look at rescuing itself before coming to others' rescue. It has to look at a sizable increase in traffic earnings to ensure fund availability to undertake track renewal works. Two of the Railways' funds — development fund and depreciation reserve fund — for which proceeds are taken from traffic receipts — are already empty for two years now. If left unattended, this will hit safety. For track renewal works, the Railways cannot use the budgetary support, which are earmarked for identified capacity expansion activities.
RECENT HIKES
It was to address such concerns that with effect from March 6, the Indian Railways has brought in a double digit freight rate hike across all commodities — barring container train operators and iron ore exporters. This will help the Railways mobilise about Rs 15,000-20,000 crore annually.
The exact rate of hike varies depending on weight and distance. Going by the average distances for which the Railways moved commodities in the first 11 months current fiscal, the basic rate hikes on some key commodities are — coal (22 per cent), cement (26 per cent), fertiliser (28 per cent); petro products (23 per cent).