The fuel bill of Indian Railways will go up by about Rs 1,200 crore annually due to the Rs 5 a litre hike in diesel price. It is not yet clear whether the Railways will consider a tariff hike to pass on the higher cost to its passengers or freight users.
“The Board will have a meeting to discuss the issue before taking a call,” said a source.
The Railways consumes 2.4 billion litres of high speed diesel annually and spends about Rs 8,000 crore to buy the same.
In the current fiscal, the Railways will take a hit of over about Rs 700 crore since five months of the year are already through.
The hike also provides a chance to the Railway Ministry to step up efforts to bring in a fuel adjustment component (FAC) in its fares, a proposal that was discussed in the Budget.
The FAC was proposed to provide a linkage of rail tariffs with the diesel price as diesel is a cost element for the Railways. Indian Railways is the single largest high speed diesel consumer.


Truck rentals on most major routes went up by 10-15 per cent on Friday following the diesel price hike, says the Indian Foundation of Transport Research and Training.
This is despite a much lower impact on the cost side for the truck owners, says IFTRT.
Meanwhile, organised transport service providers such as the listed company Transport Corporation of India (TCI) have long-term contracts with their customers with built-in clauses to absorb increase in input costs.
“With 80 per cent of our customers, we have long-term contracts with escalation clauses. So, at a company level, the higher costs will be passed on the customers,” said TCI’s Joint Managing Director Vineet Aggarwal.
Vineet Kanaujia, Vice-President (Marketing), Safexpress, another logistics service provider said there will be a “double digit hike in freight rates driven by the steepest diesel price hike ever”.