Railway minister Lalu Prasad addressing reporters in New Delhi on Tuesday. A Telegraph picture

New Delhi, Feb. 26: The railway budget today cut freight rates across the board.

The budget reduced the highest tariff class from 210 to 200, and the impact would be felt across all commodities

In simple words, this means the average freight rate of Rs 3,655.90 per tonne will be reduced to Rs 3,481.80 for a distance of up to 4,275 kilometre.

The move which translates into an average cut of 4.7 per cent is likely to benefit firms whose operations involve the transportation of bulk goods.

Railway minister Lalu Prasad reduced the freight rates for petrol and diesel by five per cent to help the state-run oil companies which are selling the fuels at a loss.

“The freight rates for these commodities (petrol and diesel) have been reduced by about 17 per cent during the last three years. Thus, the rationalisation of freight tariff has now been completed and barring a few commodities, the difference between the highest and the lowest rates is not more than two times,” rail minister Lalu Yadav said in his budget speech.

The rate cut will see the cost of moving petrol and diesel over a distance of 100 km coming down to Rs 172.40 per tonne from Rs 181.

However, the move will lead to a saving of less than Rs 50 crore annually for the oil companies as less than 40 per cent of the fuels are moved on rails.

But oil industry officials said that as the cost of transporting the fuels by road was rising, the token cut could help in greater transport of the fuels by rail.

To help the cement industry, which has seen its input costs going up sharply, the railways reduced the cost of transporting fly ash, an ingredient used by cement firms, by 14 per cent.

Claiming an unprecedented growth in freight traffic, the railway minister said that unlike in the past, freight rates were no more based on the value of goods, but were fixed after taking into account railways’ competitiveness and elasticity of demand.

Under the new pricing strategy, a surcharge is levied during the peak season and discounts offered during the lean season. Peak and non-peak seasons have been fixed uniformly for all the commodities.

For the loading of incremental traffic from empty flow direction, the discount has been increased to 40 per cent from 30 per cent. The measure relates to trains coming back after unloading their cargo.