Indian Railways is planning to bring a freight policy under which companies will pay freight charges based on their profitability. The national transporter is currently studying the books of major public and private firms to ascertain their profitability the last few years. This would then become the basis for different slabs within a particular freight category.
Under the existing freight policy, rates are decided based on the type of goods and distance traveled.
Changes in the railways? freight model are being considered necessary as freight operations contribute more than 60% of its revenue, which means any change in it can lead to a significant increase in revenues. A section of the ministry also feels such an increase could be used to subsidise passenger operations, where any hike is politically difficult to implement.
?I am not in the business of subsidising operations of profitable companies. I am working on a few companies to check how profitable they are. I am looking at whether they can pay higher freight rates without the possibility of transferring the increase to end users of goods,? railway minister Dinesh Trivedi told reporters.
A senior official of the ministry said coal and iron ore are currently major contributors to railway freight earnings and companies in these sectors could be most hit once differential freight is implemented.
Trivedi favoured public debate on an earlier proposal of increasing passenger fares. ?It is going to affect a lot of people, including the poor. So I want to initiate a public debate to hear all views on the matter,? he said.
Railways is trying all possible measures to beef up its revenues that have fallen short of targets so far. It has earned R58,844.12 crore till the end of October, 2.56% short of target. A lower than targeted income would put pressure on almost empty coffers of the entity.
It has also decided to set up a special purpose vehicle (SPV) called Railway Station Development Corporation Limited under the Companies Act, 1956, with equal equity contribution of its subsidiaries Ircon International and Rail Land Development Authority.
The SPV will develop parking lots, shopping areas and eating outlets. ?The development of stations can involve private participation on the lines of airports. However, ownership of stations will remain with railways. We can have a revenue sharing model for the private companies,? Trivedi said.