Title - Inflation to soar further as railway freight tariff set to rise

NEW DELHI: Inflation is set to soar further with freight tariff on certain goods such as cement, iron ore and coal are set to rise by more than 5%. This is because service tax and busy season charge will come into force from Monday.Railways will impose an additional 3.708% service tax and another 2% busy season surcharge on goods loading from October 1, which will increase the price of several commodities. Fortunately, the 2% busy season surcharge will not be levied on food grains, flours, pulses and chemical manures. According to railways notification, the busy season charge will remain in force from October 1 to March 31, 2013.Though levy of busy session charge is a routine affair as its falls under dynamic fare pricing, the move has come at a time when the UPA government is battling with higher inflation, which has touched double digits at 10.03% in August — up from 9.86% in the previous month.The service tax — to be levied on goods such as iron ore, coal, and cement at the rate of 3.708% — is likely to jack up the prices of these commodities.However, the government has exempted transportation of few items such as petroleum products, food grains, pulses, jute, fruits and vegetables from service tax. Any move to raise transportation cost on these goods and commodities has direct impact on inflation, an official said.The slew of tough measures comes in the wake of the pullout of Mamata Banerjee-led Trinamool Congress from the UPA and Congress nominee CP Joshi taking over as the new railways minister.Trinamool Congress nominees in railways ministry had bulldozed several attempts from the Planning Commission and the finance ministry to rationalize passenger and freight tariff over the years.The levy of service tax on freight was announced in the Union Budget in 2009-10, but then railways minister Mamata Banerjee had forced finance ministry to get it deferred.