Railways offer the industry fixed freight rates for a year to boost revenues

Railways offer the industry fixed freight rates for a year to boost revenues

Railways offer the industry fixed freight rates for a year to boost revenues

At a time when its monthly incomes are faltering, Indian Railways has come up with a novel scheme offering fixed freight rates to the industry for a year to boost its revenues.

Indian Railways has decided on a strategy to raise its cash flows by at least Rs 1,000 crore from each of its large customers by luring them to pay upfront their freight charges for the whole year and offering them in exchange fixed freight rates that won’t go up during the year.

Railways is also set to allow companies to run their own private wagons on its track systems, thereby reducing easing demand for its own wagons.

The proposed scheme seeks to provide a onetime facility to major freight customers to avail tariff certainty against advance freight. Indian Railways and its customers shall benefit from a regime of guaranteed tariff offerings and tariff certainty,” a document of the Railway board while inviting views and suggestions of its consumers said.

Termed as Freight Advance Scheme, Indian Railways would ask its large customers, who pays the department at least Rs 1,000 crore yearly, to pay the same amount as advance payment at a freight rate applicable on the day of the agreement entered between the two parties.

“Under this scheme, only the base freight rate and the class of commodity for the customer shall remain fixed at the rate prevalent on the date of commencement of agreement till such time that the mode of payment of freight in advance is in operation or for a period of 12 months from the date of commencement of agreement, whichever is earlier,” the document said.

Among major commodities transported by Indian Railways, petroleum products, coal, iron ore, food grains and fertilizers accounts for the bulk of the freight.

Indian Railways need to beef up its revenue collection on an urgent basis with expenses exceeding revenue generation in recent times.

Farsana

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