The Fertliser Industry today said the reduction in freight charges is unlikely to benefit farmers and manufacturers, but may help the government in bringing down its subsidy bill marginally.

"The cut in freight charges on fertiliser will not have any impact on farmers and companies," Fertiliser Association of India Director General Satish Chandra told PTI.

The industry, he said, would not benefit as government reimburses freight charges on actual basis under the current fertiliser subsidy scheme.

However, Chandra said the reduction would help the government lower its subsidy bill to that extent.

In her Budget speech for 2010-11, Railway Minister Mamta Banerjee today announced a cut in freight charges by Rs 100 per wagon for fertiliser, foodgrains and kerosene transport to check price rise.

Fertiliser companies currently pay Rs 1.2 per tonne for 1,000 km. Normally, fertiliser is carried in rakes. One railway rake carries 2,400 tonnes of fertiliser, Chandra said.

Asked whether cut in freight charges would offset last week's hike in retail urea prices he said, "It will offset to an extent that the government's subsidy will come down."

Last week, the Cabinet decided to increase urea prices by 10 per cent to Rs 5,310 a tonne, effective April 1.

The Budget allocation for fertiliser subsidy was Rs 49,980 crore in for 2009-10, but it is estimated to go up as high as Rs 70,000 crore.