Title - Ministry of Railways examine implementation of Fuel Adjustment Component

New Delhi: Railway Minister Mallikarjun Kharge has said that the Ministry is examining the issue of implementing a Fuel Adjustment Component (FAC) on freight and passenger tariff.

Reminded of delay in decision on FAC, Kharge said that the decision on FAC was to be implemented twice a year, without defining a time.

On Saturday, Railway Board’s Member Traffic Devi Pandey had told that a decision on implementing FAC would be taken over the “next few days’’.  “The marginal increase in fuel surcharge was because of increase in various input costs for Railways, excluding fuel. We will take a call on implementing the Fuel Adjustment Component over the next few days,” told Devi Prasad Pandey.  “The Railway Budget basically said we can decide on implementing the FAC twice a year. It can be every six months, or even five and seven months,” Pandey explained.

The revised fuel surcharge came into effect from October 1. Traditionally, the Railways levies a busy season surcharge on freight traffic for nine months during the year, barring July to September.  In March, Railways had defined the busy season surcharge levels at 12 per cent for all commodities, 10 per cent for chemical manures, foodgrains, flours and pulses.  The exceptions to the surcharge continued to be container traffic and automobile traffic.  Key commodities moved by trains include coal, iron ore and steel, cement, petroleum products and foodgrains.

The move may have an inflationary effect if companies pass on the hike to consumers.  Staff cost is the largest cost component for the Railways with an employee base of about 13 lakh.  The recent 10 per cent increase in dearness allowance for Government employees is expected to cost the Railways Rs 1,000-1,300 crore this year, another Railway Ministry official said, declining to be identified.