CHUGGING ALONG

New Delhi, June 10: The Indian Railways is all set to give road carriers a tough ride by reducing freight charges on iron ore despite the hike in diesel prices.

The railways’ decision comes as good news for secondary steel producers who have been forced to hold prices for three months by the government.

The railways have put the iron ore charges in the 170 classification from 180, which will bring down the freight rates by about 10 per cent.

Source said the railways had also raised the discount on loading of essential commodities such as cement, food grains and fertilisers in the empty flow direction to 50 per cent from 30 per cent.

Truckers, on the other hand, have spiked rates following the hike in diesel prices. They may now have to revise their rates with the railways threatening to capture their share in the transport market.

Sources said, “The incentive will attract more customers to the railways and will help generate additional revenues that could compensate for the burden created by the recent diesel price hike.” The government has increased the price of diesel by Rs 3.

The fuel cost of a Delhi-Mumbai-Delhi round trip has now gone up by about Rs 2,100, said S.P. Singh, a senior official with the Indian Foundation of Transport Research and Training.

According to Singh, “A hike of Rs 3 per litre should result in an increase of 5 per cent in truck rentals. However, in the immediate future, truck rentals may increase only 3 per cent as the growth in cargoes is lagging behind the rise in the number of trucks”.

The railways need 2.27 billion litres of diesel per annum and an increase in the price of the fuel would cost it Rs 681 crore annually and Rs 560 crore for the remaining ten months of the current financial year.

In the last few years, the Indian Railways has been attracting customers with its flurry of incentives and discounts. This resulted in a record freight loading of 795 million tonnes during 2007-08.

The railways have set a target of 850 million tonnes in 2008-09, while an ambitious goal of 1,100 million tonnes has been fixed for the concluding year of the Eleventh Five Year plan, officials said.

The earnings from goods have increased 23.54 per cent to Rs 9,121.74 crore in April-May this fiscal compared with Rs 7,383.35 crore during the same period last year. Of the total freight earnings, coal continued to remain the major source of revenue.