DISSERTATION ON CLASSIFICATION OF RATES FOR GOODS TARIFF WITH CHANGES INTRODUCED DURING LAST TWO YEARS

byP. Suresh IRAS(P)

Classification of goods tariff

The classification of rates of goods tariff is a classification of various classes of commodities and their differential rates.The classification is based on three critical criteria. 1.     Cost of services.2.     Risk bearing factor.3.     What the traffic can bear?There are further different rates for train load and wagon load.

Changes introduced during the

financial year 2000-01  No change in freight rates in case of Grains & pulses, Salt, NOC, Oil (Edible), Fruits fresh NOC, Potatoes, and sweet potatoes, onions, Kerosene Oil & Superior kerosene oil, Liquefied Petroleum gas, Sugar,

Urea.

There will be general increase of 5% in all the existing class rates except those mentioned above.

Coal cooked for household use will be eligible for freight relief of 2% subject to special conditions.

Changes introduced during the financial year 2000-01

The following addition and deletions in the classifications were effected during 2000-01.

ADDITIONS: 80C,85C, 130A, 130C, 145A, 145B, 150C, 160C, 200A, 200B, 220C, 280C,270 & 290

DELETIONS: 90A, 84B, 135A, 150A, 150B, 210A & 210B

Changes introduced during the year

2001-02   -

Grains & pulses Div A & B, Bulgar wheat-flour, Salt NOC, Edible oils, Fruits fresh NOC, vegetables NOC, Potatoes and sweet potatoes; onions, Kerosene oil/ superior Kerosene oil, LPG, Sugar, Urea.

There was an increase of 2% freight rates in case of coal (except for household use), iron and steel and 1% increase for furnace oil and for all others it is 3% hike in freight rates.

Changes introduced during the year 2002-03

Existing 25 classes with suffix A, B, C, K, M & X are proposed to be abolished.

In the revised freight structure, there will be 32 percentage classes in relation to the Base class-100. The array of classes will be as under:

90, 95, 100, 105, 110, 115, 120, 125, 130, 135, 140, 145, 150, 155, 160, 165, 170, 175, 180, 185, 190,200,210, 220, 230, 240, 250, 260, 270, 280, 300.

       . Ratio of freight in highest class to lowest drops from 8 to 3.3.

Changes introduced during the year 2002-03

  Commodities of common use such as Edible Salt, Fruits, Vegetables, Gur, Jaggery, Shakkar, certain items of Edible Oils, Food Grains, Pulses, Organic Manures, Urea, Fodder and Dry Grass are proposed to be carried at the lowest Class-90. Marginal increase in rates of coal, iron ore and raw material to steel plants. Marginal reduction in case of Iron & Steel, Pig Iron, Cement and most petroleum products. These modifications expected to yield additional revenue of Rs.450 cr

The analysis of the revision of

freight classification of 2002-03 1. During the month of April 2002 there was an increase of

13.35% and 25.5% in terms of weight and earnings over the corresponding year last year. And during the month of may 2002 it was 0.02% and 12.28% increase in terms of weight and earnings respectively over the corresponding last year.

2. Initially traffic in salt got reduced because there is a hike of 120% in freight charges. Salt merchants have represented their case to reduce the freight tariff.

3. There was a net increase in the overall NTKM.

4. This revision is more simplified than in the past.

Thank you