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Rail Minister proposes to scrap ‘dishonest’ fuel subsidy

The rail ministry has proposed scrapping an incentive that gives a subsidy of about Rs. 50 per unit to fuel companies that ship fuel to ports or railways.

The move, which was flagged by railways minister Rakesh Goyal on Tuesday, comes after a Supreme Court ruling in August last year, which banned the subsidy for fuel tankers.

The Centre had last year introduced the scheme for rail freight.

Under the scheme, rail companies can earn a fixed amount, based on the size of the fleet, from the excise duty collected on the imported fuel.

However, the subsidy is often misused.

A study by the Railway Budget Committee (RBCC) in 2016 had recommended scrapping the subsidy.

Goyal had flagged the idea during a meeting of the committee on Tuesday.

“It is against public interest to give the subsidy to rail companies to facilitate their trading.

We are working to find a way to provide incentives for these companies,” he said.

“We have a very large rail fleet and this subsidy will only be used to help our companies operate.

It will be a good measure to help them survive.”

The move has the support of the Bharatiya Janata Party (BJP), which has long advocated scrapping fuel subsidy.

The ruling alliance, which is also in the opposition, has demanded scrapping of the subsidy and has demanded a complete overhaul of the Indian Railways.