Freight rate hike to hit govt's subsidy budget

NEW DELHI: At a time when the government is using all its resources to avert an economic slowdown, a decision by the Indian Railways may result in diversion of scarce funds towards food and fertiliser subsidies.

The railways minister Laloo Yadav���s decision to hike freight rates for these commodities is threatening to upset the government's budgeting, though it will see the railways' coffers swelling.

Last week, the railways hiked the freight charges for foodgrains and fertilisers by moving them up from category 120 to category 130 on the basis of total freight movement and revenue-earning potential.

It has been a common practice for railway ministers to hike freight charges mid-year to avoid major hikes in the annual railway budget. Freight rate for fertilisers and food grains has gone up by around 8.33%. Analysts say the decision couldn���t have come at a worse time.

The freight rate for carrying one tonne of grain for 1,000 km has been revised to Rs 694 from Rs 651 earlier.

"As for fertilisers, this will show up in the subsidy bill since the government has kept issue prices to farmers controlled," said an analyst.