Diesel price hike has put the railways in a spot, as it will have to buy the fuel at the market price with an increase of about `10 a litre. With an annual consumption of 240 crore litres, the railways will take an additional burden of `2,400 crore after the price hike, which would knock off a third of the additional revenue of `6,600 crore from the recent fare hike.
With railway minister P.K. Bansal having said that the diesel price hike would force him to review his decision not to hike passenger fare in the Rail Budget next month, speculation is rife that the railway ministry could rush in with another set of hike.
Railway officials are of the view that there is not much scope in hiking the freight rate as the road transport is giving stiff competition to it, and hence the passenger fare would be the natural target to absorb additional outgo due to diesel price hike.
After the Cabinet in its meeting on Thursday allowed partial decontrol of diesel pricing, the oil companies unveiled dual model wherein while the retail consumer will be paying 50 paisa more per litre, bulk consumers like railways and state transport organisations would pay the market price, which would translate into `10 per litre more. “Railways consume 240 crore litre of diesel a year. So, the maths is quite simple on additional burden. One-third of the additional revenue from the recent fare hike would be gone in footing the hiked portion of diesel price alone,” said a senior official, who added that the railways have a fleet of 4,500 diesel locomotives. The railways had spent over `10,000 crore in the last financial year for fuel, which is now likely to zoom to about `13,000 crore. It has pegged its annual plan expenditure this year around `51,000 crore.
The diesel price hike is further likely to compound the woes of the railways, which last week only missed its target for freight load.