Indian Railway is toying with a proposal to hike freight rates on keycommodities to tide over cash crunch though railways minister Mamta Ban­erjee did not take recourse to revenue mobilisation measures in her budget last fortnight.

First such hike was announced on iron ore meant for export markets. Railways announced a Rs 300 per tonne hike freight rates beginning Wednesday. The hike will be effective till month end. After assessing the impact of such a hike, railways will consider extending the enhanced freight rates during next financial year not only on iron ore but other key commodities.

“This (hike in freight rates on iron ore) has been done on an experimental basis for additional revenues. If this does not impact iron ore traffic in terms of volumes and value, we may consider hike in freight rates for other commodities as well,” said a railways ministry official.

In order to retain her budget’s populist tinge, Mamta Banerjee delinked freight rates hike from the Railway Budget, conceded railways officials.

They also cited the case of finance minister Pranab Mukherjee who made such key announcements outside the general budget. For instance, the retail prices of fertilizers have been freed two weeks before presentation of budget.

Sanction of central government is hereby accorded for increasing the existing distance based charge further by Rs 300 per tonne on bookings of iron ore traffic meant for other than domestic consumption to manufacture iron ore, steel and cement, a railways ministry notification said on Monday.

“The demand for iron ore meant for export markets has started picking up. The revised rates would give us better revenue, without having any impact on the domestic market,” a railway ministry official said.

Even the steel companies echoed similar views. “The hike is not going to impact domestic companies, but applicable only to those that are looking at exports. When a domestic company goes in for spot purchase of iron ore, he would be benefiting rather than losing money,” Sheshagiri Rao, joint managing director and group CFO, JSW steel told Financial Chronicle.

He said the steel prices would not be revised in domestic markets as the increase is restricted to exports only. But the railways havenot been able to achieve much in iron ore loading for exports business. In February 2010, the loading was lower by 27 per cent.