With the latest freight hike across the board, Railways aims to earn between Rs 15,000 crore to Rs 20,000 crore in the next fiscal.
Railways have increased the freight rate in all commodities including foodgrains, fertiliser, cement, coal, and petroleum products ahead of Rail Budget.
Effective from yesterday, the hike varies from commodity to commodity ranging between 15% to 35%. While for coal and cement, the hike is between 18% to 24%, for foodgrains and fertliser, the increase is between 20% to 35%.
However, railways have reduced freight rate for iron ore export by 16% while there is an increase by 20% for domestic consumption.
Justifying the hike, a senior Railway Ministry official said, "The rationalisation of freight rate was very necessary as our input cost have gone up many times. It should have been done earlier."
The ordinary expenditure of railways has touched Rs 75,000 crore out of which staff salary is Rs 39,000 crore and energy cost is Rs 19,000 crore.
"The organisation has not been able to recover input cost. We have to ensure maintainance and renewal of assets of our system and this requires fund infusion," he said.
The blue print for freight hike was ready but railways could not implement it due to the model code of conduct.
"We have to wait for the elections to be over otherwise we could have hiked it two months back," he said.
Asked whether the hike will add to inflation, the official said, "Currently the inflation is at low level and we hope it will be absorbed in economy and not escalate further."