Fare cuts to cost Rlys Rs 400 crore

The railways are expected to lose about Rs 400 crore thanks to the 10-18 per cent reduction in upper class fares and 8 per cent cut in the tariff for petrol and diesel.

The total additional resource mobilisation next fiscal is expected to be negative compared to Rs 650 crore earned through changes in freight rates in 2005-06."We expect to increase our earnings through playing on volumes," an official said.

For volumes, the railways hope that their ambitious loading targets will materialise. For the current year, the rail ministry is projecting a 12.1 per cent hike in volumes and 14.4 per cent rise in earnings. Earnings from commodities like iron ore, cement and food grains is expected to rise by over 13 per cent.

The railways are confident to earn 17.4 per cent more during 2006-07 by transporting 15 per cent more of iron and steel. A Rs 2,048-crore income is expected from loading 62 million tonnes of iron and steel in 2005-06.

Business from carrying coal is expected to increase next fiscal 5.8 per cent in volumes and by 7.6 per cent in earnings on account of a fall in domestic production.

A blot in the railways' impressive performance could be their not-so-successful bid to win the petroleum oil and lubricants traffic. In fact, despite reducing its tariffs for two years in a row, the railways expect a 1.09 per cent drop in their earnings from carrying this commodity next fiscal.

According to figures for April-January 2005, the rail coefficient (the railways' share in carrying a commodity as compared to its total production) for steel has gone up by 2.14 percentage points to 36.1 per cent. The rail coefficient for coal during this period increased by 1.51 percentage points to 75.62.