Food grain prices may ease on rail freight cut

Food grain prices may ease on rail freight cut

Mumbai: Indian railway’s plan to cut freight rate slightly for food grains is unlikely to bring down prices sharply, but will help in price moderation, analysts and traders said.

Indian railways is cutting freight rates for the transport of food grains by Rs100 per wagon, the railways minister said on Wednesday.

“Cost of transportation would be reduced, so certainly it will have some bearish impact on food grains. It will help in moderating food-grain prices," said Ajitesh Mullick, head of agri- research at Religare Commodities Ltd.

With food prices up 18%, the fastest pace in 11 years, opposition parties have launched protests that shut down Parliament on Tuesday, putting pressure on authorities to act.

“It’s a great relief to know that freight rates are not increased...but the cut in rates is just a token measure," said an executive with a large multinational grains trader.

“Now it is not looking significant but if government increases fuel prices then certainly more grains will avail rail transport," said another Mumbai-based pulses trader.

Energy firms are focused on India’s moves to review fuel pricing, a long-awaited decision that will cut subsidy bills and may raise prices by about 10%.