September 08, 2008

Railway freight might be reduced – Reports

As per media reports, railway budget 2008-09 may see a lowering of freight charges for coal, fertilisers and iron ore by 3% to 5% due to reduction in the freight determination classes. The new budget may also allow private players to design their own commodity specific wagons.

As Indian Railways had already reduced freight rates for lighter commodities over the years, the 2008-09 budget may focus on bringing down freight rates for bulk commodities. Also, the usual lean season discount, empty flow direction and mini rake schemes are expected to continue.

To promote private ownership and investment of wagons, Indian Railways plans to expand the ambit of the wagon investment scheme. Private players may be allowed to design customized wagons as per their requirements. However, the designs may have to be duly approved by the Railways.

In 2007-08 railway budget, freight rates for petrol, diesel and limestone came down by 6%. If the classes are brought down further, it would result in reduction of freight rates of coal and iron ore.

Indian Railways has generated about INR 33,757.87 crore of revenue earnings from freight traffic during April to December 2007 period up by 11.62% YoY as against INR 30,242.78 crore during April to December 2006 period. It carried 571.35 million tonnes of freight traffic during April to December 2007 up y 8.22% YoY as compared to 527.95 million tonnes.