Indian railway budget: Hike in rail charges to have little effect on Nepal trade
NEW DELHI, FEB 28 -
The India n government has decided to hike railway freight charges which is expected to have an impact, though “minimal”, on Nepali imports and exports and market prices.
The India n central government, in its railway budget presented on Tuesday, decided to increase freight rates by 5.79 percent and link the rates with the fluctuation in diesel prices. This decision will come into effect in April.
However, two disparate opinions have emerged across Nepali stakeholders regarding the possible effects of this increment in the neighboring country on which Nepal largely depends for its trade with third countries.
Nepal’s consul general in Kolkata Chandra Ghimire said that the decision would push up transaction costs which would eventually lead to higher production costs and market prices of daily goods.
“The increment in freight rates could trigger an inflationary trend which will ultimately have an impact on the common people,” he said. On the export front, Ghimire opined that the freight rates hike could affect the capacity of Nepali products to compete in the international market.
However, entrepreneurs said that the recent increment could be absorbed easily and would not bring any change in market prices or production costs.
“It is true that transaction costs will go a little higher with this increment. But while breaking down the increment, it will just have a minimal impact on market prices and production costs,” said RB Rauniar of Interstate Multi-Modal Transport. For instance, if the rate is increased by Rs 3,000 per 10 tonnes, the increment comes to just 3 paisa per kg.
Similarly, another entrepreneur Ramesh Naulakha of Eastern Clearing Agency said that the increment should not in any way be made an excuse to hike market prices.
Recent freight rates from Kolkata Port to Birgunj range from IRs 26,676 to IRs 38,500 for a 20-ft container depending on the weight of the goods. For a 40-ft container, rates range from IRs 48,561 to IRs 51,413.
Source: The Kathmandu Post
