The latest increase in the price of diesel will put an additional burden of INR 720 crore annually on the Indian Railways, even as it tries hard to bring down expenses to maintain weakening financial viability.

The railways buy an average of 2.4 billion liters of diesel every year spending around INR 4,500 crore annually on diesel fuel expenses for operating locomotives. The government had raised diesel prices by INR 3 a liter to INR 41.13 on Saturday.

A senior ministry official said that “The decision to increase diesel price by INR 3 will have an impact of INR 720 crore annually on Indian Railways’ expenditure. It has become difficult to keep afloat (economically).”

The railways use a mix of electric and diesel traction, the motor used to propel rail cars. Around 51% of the 11,000 passenger trains and 37% of freight trains run on diesel.

Overall fuel cost accounted for over 19% of railways’ working expenditure of INR 83,167 crore in 2010-11. The railway ministry had budgeted for an additional INR 993 crore spending on fuel in the current financial year owing to increase in prices of diesel and electricity tariff.

(Sourced from BS)