Rail freight rate raised by 15%

Will affect the already worrisome rate of inflation

Inflation is expected to soar further with freight tariff on all commodities, including foodgrains, cement, chemical manure, iron ore and coal, set to rise by 15 per cent from October 1.

The railways have decided to levy a 15 per cent busy season charge on all commodities from October 1. According to a railways notification, the busy season charge of 15 per cent on all commodities will remain in force from October 1 to June, 2014. The container and automobile traffic are exempted from busy season traffic.

The move has come at a time when the inflation rate has increased from 5.79 per cent in July to 6.1 per cent in August. The decision comes ahead of the review of fuel adjustment component, applicable after every six months to adjust fuel prices, also due on October 1.

 However, a senior railway ministry official said, "No decision has been taken on FAC issue yet. But busy season charge is effective from next month as per the dynamic pricing policy."  

Besides freight rate, FAC also covers passenger fare. But it seems unlikely that the cash-strapped railways will opt for raising passenger fares further given the political situation with the general elections round the corner.  With rising diesel price impacting railways' fuel bill, the national transporter is left with no option than levying busy season charge on freight.

Food prices are already on the rise and any move to raise transportation cost on goods and commodities at this juncture will have a direct impact on inflation.

Busy season charge is not levied during the period between July to September as these three months are considered a lean season.