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Rail Budget: Industry reaction mixed

July 06, 2004 18:41 IST

Hailing as "pragmatic" Lalu Prasad's maiden Railway Budget that spared any freight and fare hike, the Indian industry on Tuesday said that government should have cut freight tariff to attract traffic and generate more revenue as part of rationalisation and reform measures.

Responding to proposals particularly relating to concessions announced for freighting heavy machinery and investments for rolling stock, the stock markets reacted favourably with the reflective Bombay Stock Exchange index spurting by about 85 points to close the day at 4928.59.

Some of the industry associations were, however, sceptic as to how Lalu would generate "resources to support the Railway's proposed drive for adequate safety measures and undertaking a modernisation programme."

Federation of Indian Chambers of Commerce and Industry complimented the minister for choosing to keep the freight rate stable and thereby earn more from attracting additional revenue-earning goods traffic.

However, Confederation of Indian Industry felt that the minister could have used the opportunity arising from buoyancy in the economy to earn more freight traffic, which it lost to road sector by reducing its goods tariff.

Presidents of both the Federation of Indian Industry and Commerce and CII -- Y K Modi and Sunil Munjal -- were unanimous is suggesting that the government should have taken more steps to reduce "cross subsidisation" that was making freight tariff expensive because of which Railways was losing its market share to road sector.

CII hailed the introduction of 'engine on load' scheme to release the wagons faster and exemption from payment of engine line charges, siding and shunting charges to EOL customers.

The 10 per cent rebate on the freight rate will encourage the heavy machinery consignment and help woo the customers from the road sector, Munjal added.

The introduction of several IT measures such as pilot project on e-procurement as also the transparency in awarding catering contracts will bring about the much needed fairness in the purchase and procurement system.

Stressing that no attempt was made to leverage idle assets for commercial exploitation by the railway, which is the largest owner of surplus land, to plough back for further investment and infrastructure development, Association of Indian Chambers of Commerce president M K Sanghi said it would also be used for creation of a dedicated fund to further improve rail network in the country.

PHD Chamber of Commerce and Industry criticised the Rail Budget saying it failed to rise above short term and populist focus.

The Budget has also failed to talk about setting up of an independent regulator to fix rational railway fare both for passengers and freight, a PHDCCI release, quoting its president Ravi Wig, said.

Indian railways need to relook at their role in the WTO regime, which has compelled the Indian industry and economy to be price competitive, he added.

Expressing concern over a slew of concessions, CII president said that expenditure would skyrocket notwithstanding the Railway Minister's speech where he talks about controlling it.

Federation of Indian Export Organisations said that the increase in rates for parcel bookings was not favourable to the sector.

The Export Promotion Councils for EOUs and SEZs said that the introduction of electronic payment gateway would expedite transfer of funds from freight customers.

President of the Indo-American Chamber of Commerce V Rangaraj appreciated the enhancement of freight loading target to 10 million tonne and said it reflected the general buoyancy in the economy and was indicative of the Railways recapturing its share in the movement of goods.

Welcoming the move not to raise passenger and freight rates, he said the Railways should continuously make efforts to improve its performance and drastically cut down its dependence on budgetory support.

President of the Indian Stainless Steel Development Association, N C Mathur said the Rail Budget clearly specified the usage of stainless steel in freight wagons for handling transportation of minerals and its use in the manufacture of coaches for long distance trains including Shatabdi and Rajdhani.

The steel industry was fully prepared to meet the demand, he said.

The Indian Chamber of Commerce and Industry said the Railways should lay more emphasis on the modernisation of its operations to run the system on a more commercial basis.

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