Indian Railways Withdraws Busy Season Charges
• In the Railway Budget for 2016-17,it was declared that a review of tariff policy would be undertaken to evolve a competitive rate structure vis-à-vis other modes, permit multi point loading / unloading and apply differentiated tariffs to increase utilization of alternate routes. It was also stated that the current tariff structure of IR has led to out-pricing of our services in the freight market.
• Keeping in view the above commitment made in the Railway Budget, the following initiatives have already been taken:
1) Allowing Two-point/ Multi point/ Mini Rake loading in all kinds of covered wagons. Earlier there was a restriction on BCN wagons.
2) Minimum distance for Mini Rakes was increased from 400kms to 600kms.
3) Automatic Freight Rebate Scheme in Traditional Empty Flow Direction has been extended.
4) Port Congestion Charge (10% of Base Freight) has been withdrawn.
5) Scheme to attract Merry-go-round System traffic has been introduced.
6) Guidelines for traffic on IR for Coastal Shipping for Iron Ore for Domestic consumption has been allowed.
• Further, in line with the Budget announcement to rationalise the tariff structure, it was decided to review Busy Season Charge of 15%. Industry, various trade associations and field officials have been representing that due to fall in Diesel prices, there has been sharp decline in road rates in the last few years, which has made rail freight highly uncompetitive for customers. In view of the same, after review, it has been decided to withdraw Busy Season Charge levied on all commodities loaded in Covered Stock for two months. This will be applicable from 1st May 2016 to 30th June 2016. As per our existing policy, this charge is not levied during the Lean Season i.e. 1st July to 30th September, which implies that BSC will not be levied effectively till 30th September 2016.
• There will be a reduction of 15% in the Basic freight due to withdrawal of BSC.
• Generally, Cement,Fertilizers and Foodgrains are loaded in Jumbo rakes. Out of these commodities the rail co-efficient of Cement has fallen substantially during the previous years from 50% to 40% and its demand is also highly price elastic and sensitive.
• It is expected that by this policy initiative of withdrawal of Busy Season Charge, there would be a likely increase in loading by around 6-7MT, which will more than compensate the financial loss due withdrawal of this surcharge).