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Indian Railways to Raise Freight Rates on Fuel Costs, Wages

Indian Railways to Raise Freight Rates on Fuel Costs
Indian Railways, the nation’s biggest train operator, will raise charges for hauling iron, steel and other products by about 4 percent from Dec. 27 to offset higher wages and fuel costs. Photographer: Adeel Halim/Bloomberg

Dec. 24 (Bloomberg) -- Indian Railways, the nation’s biggest train operator, will raise charges for hauling iron, steel and other products by about 4 percent from Dec. 27 to offset higher wages and fuel costs.

Rates for coal, coke, cement, caustic potash and some petroleum products will also be raised by a similiar amount, according to a Dec. 20 circular posted on the Ministry of Railways’ website. Charges for food grains and fertilizers will remain unchanged, while rates for salt and sugar will rise marginally, it said.

“Costs such as employee wages, fuel and operational inputs have risen,” said Anil Kumar Saxena, a spokesman for the railway ministry. “Still, about 50 percent of the increase has been absorbed by the railways.”

Higher freight rates may hinder Prime Minister Manmohan Singh’s efforts to curb price rises that have sparked strikes and public protests. Food inflation accelerated to a six-week high in the week ended Dec. 11.

“It will add to inflationary pressure,” said Shubhada Rao, chief economist at Yes Bank Ltd. in Mumbai. “The government has to balance between coming closer to market rates, reducing the subsidy burden and simultaneously ensuring it doesn’t cascade into sharper inflationary pressures.”

State-owned Indian Railways carried 593.4 million tons of freight from April to November, 3.3 percent more than a year earlier, according to a press release.

The charges for transporting cement, coal and coke for a distance of between 501 kilometers and 510 kilometers will increase to 489.90 rupees from Dec. 27 from 471 rupees, according to the table posted on the ministry’s website. The rates for alloys, metals, iron and steel will go up to 587.90 rupees from 565.20 rupees, the ministry said. The increases vary based on the product and distance hauled.

To contact the reporter on this story: Subramaniam Sharma in New Delhi at ssharma@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

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