Railway Budget misses the train; Opportunity lost to Reduce the Freight Rates to Stimulate Economy: PHD Chamber

New Delhi, 24 February 2010: The Railway Budget should have been used to reduce freight rates across the board to stimulate the economy which has just begun to recover after the global financial meltdown, according to Mr. Ashok Kajaria, President, PHD Chamber.

An increase in the freight rate was not announced in the last budget also but the same was revised upwards more than once during the year.  The Budget should have announced some relief to the industry to make it competitive in the present economic scenario. Freight rates are very high in India – twice that exists in China and need urgent rationalization through phased reduction in cross subsidization of passenger fares by freight rates, says Mr. Kajaria.

The railways have lost a quantum of freight to the roads in the past decades. The share of railways in freight movement has dropped from 86.2 % in 1950-51 to just 38.7% in 2007. The share has also fallen in the passenger movement from 84.6% to 12.6 % in 2006.

The Chamber feels that the announcement to invite private sector participation in development and modernization efforts and setting up of a mechanism for faster approvals is a welcome step bur speedy action should be initiated to translate the vision into reality unlike in the past.

Chamber also welcomes the announcement for extension in route of trains, introduction of Modified Wagon Investment Scheme, Double Decker wagons on pilot project basis and door to door service for freight movement, however, no concrete steps have been outlined in the budget to address capacity constraints on the high density corridors, improvement of terminals and logistic management, upgradation of rolling stock and very importantly, movement of the goods with speed and safety.

Growth of railway traffic faces a major constraint due to saturation of track capacity and much more needs to be done in terms of immediate measures for enhancing track capacity for carrying more freight. The transport sector has to grow by a matching or higher rate than the economy. Mr. Kajaria, stressed that more freight would only come to Indian Railways if they become price competitive, provide economical rates, adequately address capacity constraints on the high density corridors, improve terminal and logistic management, upgrade rolling stock and very importantly move the goods with speed and safety.

Introduction of new trains, extension of some and increase of frequency of some others, though welcome from the users’ viewpoint, should have been dovetailed with a time bound plan for line capacity augmentation.

Not much progress has taken place in the dedicated freight corridors announced some years back and proper milestones for achieving the targets on time are missing in this Budget as well.

Progress in the areas announced in recent years under public-private partnership has been extremely slow and needs to be expedited. The Proposed Special Task force for consideration and approval of private investors’ proposals should be supplemented by empowered monitoring mechanisms so that all projects are implemented in a time bound manner.

The emphasis being placed on better passenger amenities and services, cleanliness and hygiene, safety and security, etc. are indeed welcome as the deterioration in the last few years has been disturbing.

Special facilities and trains for perishable agro products, upgradation of stations to world class, effective and commercial use of railway land under PPP, linkages between industrial clusters of handicrafts and textiles and markets, as also coal mines, creation of cold storage facilities for agro products, multi-functional complexes in some stations, new freight corridors, etc. are welcome features in the budget. Upgradation of amenities at railway stations across the country to world standards should greatly help in boosting both domestic and foreign tourism.

.