The Indian Railways is mulling levy of differential freight tariffs based on a company’s profitability and its ability to pay to higher freight rates, without having to transfer the burden to consumers.
Doing so will generate additional revenues and shore up the cash-strapped railways’ finances.
Freight operations account for over 60 per cent of the railways’ revenue, a substantial portion of which comes from transport of coal and iron ore.
Railway minister Dinesh Trivedi has argued that there is no reason to subsidise freight tariffs, especially when some companies or industry sectors can afford to pay a higher tariff than what they are charged.
The minister has ordered an examination of the balancesheets of a few companies, including public sector undertakings (PSUs), to determine a reasonable freight tariff policy. Accordingly, the railways are studying the books of certain public and private sector companies to ascertain their profits in the last few years which will then be made a basis for fixing different slabs within a particular freight category.
Today, the freight tariffs are determined on the basis of type of goods ferried, and distances travelled. Mr Trivedi wants the Indian Railways to wean the business away from road transport sector by aggressively marketing the railways as a more attractive option for ferrying goods.
For instance, the railways is keen to incentivise companies such as car manufacturer Maruti to use more of rail freight.