Indian Railways has decided to levy a surcharge of up to 7% from April 1 to earn a higher freight earning during busy season. The move is likely to add to the inflationary pressure on the economy even as finance ministry is expecting a lower inflation during 2011-12.

?I expect the average inflation to be lower next year,? finance minister Pranab Mukherjee had said while presenting general budget for 2011-12 on February 28. According to finance ministry, average inflation in the current fiscal is likely to be nearly 9%, more than double of 3.8% the economy registered last year. In February 2011, headline inflation jumped to 8.31% against 8.23% in January.

As per the railway decision, a surcharge of 5% will be charged on coal and coke group, while all other commodities will attract a busy season charge of 7%. Container traffic has been exempt from any such charge. Railways is trying to meet its higher freight earnings target of R68,620 crore during 2011-12. Railway considers the entire year barring July-September of every year as busy period.

Railways has, however, kept put a special dispensation for items of household consumption to provide relief to comon man from the present rate hike. Accordingly, it has decided to give a concession of R100 per wagon on booking of foodgrains for domestic use and kerosene oil till June 30. Food inflation stood at 9.5% for the week ended March 19, 2011, latest government data showed on Thursday.

A senior railway official told FE, ?Busy period for freight movement gives us an opportunity to earn more. That is why we impose this surcharge under our dynamic freight policy, which gives us a right to increase rates as per our needs.?

In 2010-11 also, railways had increased freight rates of iron ore, coal, sugar, cement, steel, potash, coke and some petroleum products. Incidentally, the rate on iron ore was increased more than twice. The hikes were implemented to make up for the losses on account of ban on export of the mineral from Karnataka and Orissa and improve the dwindling operating ratio last year. The multiple increases paid off with the operating ratio coming down from 95.3% in 2009-10 to 92.1% in 2010-11.

Railways has also decided to levy a congestion charge of flat 20% on traffic to neighbouring Bangladesh and Pakistan. The measure has been taken to encourage faster clearance of rakes at the borders, another official said.