The Railways has raised the busy season surcharge on freight rates from 12 per cent to 15 per cent even as it deferred a decision on passing on a part of the burden of rising fuel prices.
A decision on raising the Fuel Adjustment Component (FAC) was slated to be taken by September 30. In addition, the Railways was to take a call on adding FAC to passenger fares. However, it has put off for now the decision on the politically sensitive fare issue.
“The marginal increase in fuel surcharge was because of increase in various input costs for Railways, excluding fuel. We will take a call on implementing the Fuel Adjustment Component over the next few days,” Devi Prasad Pandey, Member-Traffic, Railway Board, told Business Line.
“The Railway Budget basically said we can decide on implementing the FAC twice a year. It can be every six months, or even five and seven months,” Pandey explained.
The revised fuel surcharge will come into effect from October 1. Traditionally, the Railways levies a busy season surcharge on freight traffic for nine months during the year, barring July to September.
In March, Railways had defined the busy season surcharge levels at 12 per cent for all commodities, 10 per cent for chemical manures, foodgrains, flours and pulses.
The exceptions to the surcharge continued to be container traffic and automobile traffic.
Key commodities moved by trains include coal, iron ore and steel, cement, petroleum products and foodgrains.
The move may have an inflationary effect if companies pass on the hike to consumers.
Staff cost is the largest cost component for the Railways with an employee base of about 13 lakh.
The recent 10 per cent increase in dearness allowance for Government employees is expected to cost the Railways Rs 1,000-1,300 crore this year, another Railway Ministry official said, declining to be identified.