Freight hike won't affect prices of essential items: Prabhu

Defending the hike in freight rates that would rake in Rs 4,000 crore more, Railway Minister Suresh Prabhu today said it would have minimal impact on the transportation of commodities and would not affect the prices of essential items like foodgrains, fertilisers and urea.
At a post-budget briefing, Railway Board Chairman AK Mital said there would be a marginal 3 per cent increase in freight rates on an average due to freight rationalisation and it would have no effect on the prices of essential commodities.
Raising resources through other avenues was necessary for the national transporter as it could not rely upon gross budgetary support (GBS) alone to fund its infrastructure augmentation, Prabhu said after presenting the Railway Budget today.

Laying emphasis on capacity augmentation and decongestion of the rail network, he said that the idea was to not announce new trains till a review was completed aimed at unclogging the network.
Prabhu said that the rail budget has laid a roadmap for the coming five years for an overall revamp of the rail system, which entails an investment Rs 8,56,020 crore. For the current year, the investment figure is Rs 1,00,011 crore.
"Money that is to be raised to finance our operation is largely coming from extra-budgetary resources. But we cannot depend upon the GBS alone. The finance ministry also raised money from the market. So why not we do the same thing?" Prabhu said during his post-budget media interaction.

He said railways had suffered enough because it could not invest adequately in capacity augmentation even as he averred that "that is what we are trying to do".

With the rationalisation, there have been some changes in classification and slabs for various commodities, he said.
Railway Member (Traffic) Ajay Shukla dismissed talk that the freight rationalisation would lead to an across-the-board hike in rates.
He said that the rationalisation would lead to a saving of Rs 1 lakh per rake in case of coal if it was being transported from Korba to Gandhinagar and about Rs 4.65 lakh per rake if iron and steel was being shipped from Bokaro to Amritsar.

Similarly, the savings per rake in case of limestone and dolomite being transported from Jaisalmer to Rourkela would be Rs 5.49 lakh.
Prabhu said, "We have only rationalised the freight rates. For some sectors, rates will come down while overall it (impact) is very small.