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Lalu announces Dynamic Pricing Policy

Written by: Staff

New Delhi, Feb 24 (UNI) Showing brilliance of a financial expert, Railway Minister Lalu Prasad today proposed a dynamic pricing policy for freight rate as well as passenger fare, which would have 'increase volumes - reduce unit costs' as its focal point.

Riding high on a historic Rs 11,000 crore of fund balance, Mr Prasad, who presented the UPA government's third Railway Budget, said that in the past rail passenger fares and freight rates remained uniform for all seasons and for all routes, whereas tariffs in the airline and road sectors varied depending upon the demand and the season.

In order to counter stiff competition from road transport in freight business and from budget airlines in passenger traffic, the minister introduced a Dynamic Pricing Policy for freight as well as passenger segments, for peak and non-peak seasons, premium and non-premium services, and for busy and non-busy routes.

As per this policy, the rates for non-peak season, non-premium service and empty flow directions will be less than the general rates and the rates for peak season and premium services could be higher than normal.

For the freight, the non-peak season would be from July 1 to October 31. For the passenger segment, this period would be from January 15 to April 15 and from July 15 to September 15.

While leaving the freight rates for 2006-07 largely untouched, he sought to simplify and rationalise goods tariff by reducing the number of commodity groups to a mere 28 and lowering the highest class for charging freight from 240 to 220. With this, there will be a reduction in freight rates of diesel and petrol by around 8 per cent.

Over the next three years, he said the highest class would be lowered below 200 and the rates for the highest classification would be less than double that of the lowest classification.

The minister announed a non-peak season incremental freight discount scheme under which a rebate of 15 per cent would be offered to over Rs five crore in a month and 10 per cent if the incremental earning is less than Rs five crore. This rebate would be applicable for all commodities, except coal, minerals and items with classification below 120, during July 1-October 31, when the demand for freight transportation dips on account of monsoon.

Mr Prasad also announced a heavy discount on incremental freight in the empty flow direction. For distances beyond 700 km, the discount would be 30 per cent during non- peak season and 20 per cent in the peak season. The scheme would be applicable for all items loaded in covered wagons.

In the case of open wagons, the discount would be applicable to all commodities except coal, coke and iron-ore for export. In peak season, this discount will be applicable for open wagons for distances over 1000 km only.

To encourage the transportation of cement and iron and steel by rail, the minister announced a Loyalty Discount Scheme under which a discount of one per cent in freight would be given during the non-peak season if over 90 per cent of the production of any steel or cement factory is transported by rail.

The discount would be half per cent if the share of rail transportation is more than 50 per cent but less than 90 per cent of the total production. This discount would be applicable on the transportation of finished products only.

Considering the popularity of mini rake and two-point rake scheme, he announced extension of these facilities in both the peak and non-peak seasons. During the non-peak season, mini-rakes and 2-point rakes will be made available without any additional charge, whereas during the peak season, for commodities up to class 130, the freight rates will be 5 per cent more than the rate for block rake trains.


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