Railways on Thursday decided not to hike its freight rates and passenger fares despite rise in petroleum prices.

"In the wake of the recent diesel price hike, the Indian Railways will not pass its additional financial burden on its users -- passengers and freight customers," Railway Minister Lalu Prasad Yadav said.

Yadav pointed out that Indian Railways consume 227 crore litres of diesel per annum and an increase in the price of diesel by Rs 3 per litre would cost railways Rs 681 crore (Rs 6,81 billion) annually and Rs 560 crore (Rs 5.6 billion)  for the remaining ten months of the current financial year.

While truck rental is expected to be increased by about 5 per cent, private taxis and commercial passenger vehicles are also expected to follow suit.

Currently railways expenditure on account of fuel stands at an average of Rs 8,000 crore (Rs 80 billion) annually which is 15 per cent of its total working expenses.

The minister said that railways have decided to absorb the diesel price hike by improving its productivity, efficiency and volumes.

Increasing electrification is also expected to save about Rs 150 crore (Rs 1.5 billion) per year. Railways have electrified 18,145 km route out of the total 63,000 km network so far.

Yadav said that all zonal railways have been directed to grant upto 50 per cent discount against the prevailing 30 per cent, for loading of essential commodities like cement foodgrains, fertilizers in the empty flow direction. 

Inflation, the silent killer