A tidy increase of 6.5 per cent in freight charges by Railways will push the cost of raw materials like steel and coal besides leaving a cascading effect on most of the trade and industry, hitting in particular the small and medium enterprises which are battling slowdown, some industry bodies, including FISME have said.
“Though the revision of Railway freight has been overdue, the increase nevertheless would exacerbate the woes of SMEs in landlocked states especially in North and also those using coal as major source of energy as the cost of haulage would push cost of raw material,” the Federation of Indian, Micro, Small and Medium Enterprises (FISME) said.
Demanding a partial roll-back of increase in rail fares, President PHD Chamber of Commerce and Industry Sharad Jaipuria said that the new Government should have analysed the implications of increasing the passenger and freight fare of railways and then taken the appropriate steps at the time of presentation of the railway budget for current fiscal.
“At a time when the industry and people are hit with the inflationary pressures, the announcement about hiking the railways fare and freight rates came as a big surprise,” he said adding the government should roll back at least half of the fare hikes.
Coal and iron ores, both crucial raw materials are the two largest source of income for the Railways. While the revised fares will improve its financial position, the impact will be widely seen in prices of electricity, steel and cement in particular.