Hike in diesel price to cause effect in rail, road fares

The oil marketing company’s (OMCs) decision to elevate the price of diesel to Rs 10 per litre for bulk consumers who include railways, defence, state transport undertakings, cement, power plants and mines will lead to an all-round hike in public road transport costs, rail fares, cost of cements and other infrastructure activities across the country.

According to the statement by Indian Oil Corporation (IOC), subsidy will not be made available for the bulk consumers who take supplies directly from the installations of OMC and it would be market determined price. As a result, the annual subsidy savings for the OMCs would be Rs 12,907 crore.

Due to the under-recoveries on the hike in diesel price, both bulk and retail consumers would decrease by around Rs. 3,400 crore till March 2013, while the decrease in the under-recoveries annually would be around Rs 15,000crore for the OMCs.

Railways cough up 30 per cent more on fuel cost

With the hike in the diesel prices for bulk consumers, the Railways have to pay 30 per cent more on fuel cost. Also, the government’s decision on unavailability on subsidy to bulk purchasers will enforce an additional annual burden of Rs 2,700 crore on Railways.

Including other charges like VAT to the diesel prices, the Railways will have to shell out Rs. 9000 crore annually on diesel.

In addition to that, Railways will have to take burden of Rs.550 crore in the remaining financial year, which, as a result, lead to hike in passenger fares that will be carried out from January 22.