Railway freight tariff will go up from October 1, while passenger tariff will remain untouched, minister of state for railways Adhir Ranjan Chowdhury said on Tuesday.
The increase in freight rates will come in accordance to the budget proposal of reviewing the Fuel Adjustment Component (FAC) after every six months. FAC is linked with fuel and energy prices and calculated accordingly.
Last April, the Railways had hiked the freight tariff by 5.7%.
“In view of the global fuel prices, freight tariff will be hiked once again in October,” Chowdhury said on the sidelines of an international conference on the “modernisation of the railways”.
The FAC adjustments in freight are to be calculated in a “dynamic way”, providing for a decrease in freight rates in the event of a decline in the global oil price. However, given the current slide in the value of the Indian rupee, it is expected that freight rates would be raised.
Meanwhile, the Union Cabinet last month accorded approval for the setting up of a Rail Tariff Authority — which will suggest freight and passenger rates from time to time, taking into account the input costs and market conditions.
At a ASSOCHAM conference, Chowdhury conceded that the railways were facing an acute shortage of funds and invited the private sector to participate in a big way.
“Private investment in telecom sector is to the extent of 82% and in the roads sector it is 16%. But it is almost negligible in the railways,” Chowdhury pointed out.