Rail budget evokes mixed reaction from India Inc.

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SME Times News Bureau | 25 Feb, 2010
The Railway Budget 2010-11 presented in the Lok Sabha by Railway Minister Mamata Banerjee on Wednesday evoked mixed reactions from the industry with some terming it as both people and industry friendly, even as others in the India Inc said that it 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.

Welcoming the rail budget, the Confederation of Indian Industry (CII) said that the budget is a fine balancing act between growth imperatives and inclusivity; The pro-people, pro-industry and pro-economy Railway Budget will create a win-win situation for all – the railways, the wagon manufacturers, heavy industries and the common man, said CII President Venu Srinivasan.

The new rail budget is forward looking and it has laid emphasis on PPP initiatives for attracting investments in creating infrastructure for Railways. This opens huge opportunities for the private sector to participate effectively in realizing the vision that has been outlined in the Mission 2020, he added.

Srinivasan mentioned that the revamping of the Dedicated Freight Corridor Project, Introduction of the Dedicated Passenger Corridor under the Golden Rail Corridor initiative, Rake Allocation, Modification of the Wagon Investment Scheme and Safety concerns mentioned by the Rail Minister are positive indicators for industry.

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has also described the Railway Budget proposals for 2010-11 as People and Industry-friendly since there is no increase in passenger and freight rates, service charges on AC fares slashed and commitments made to launch 17 new trains and Task Force to clear investment proposals for railways within 100 days.

In a statement, ASSOCHAM President, Swati Piramal, however, emphasized that Railway budget proposals are not very explicit as to how it's land can be suitably utilized through public-private partnership initiatives and generate resources for expansion and modernization of railways.

According to ASSOCHAM, Banerjee has lost yet another opportunity in failing to come out a detailed railway's modernization and upgradation programme by listing out her clear priorities, added Piramal pointing out that a provision of Rs.4411 crore has been made for laying new lines is a welcome step.

Another industry body, Federation of Indian Export Organisations (FIEO), commenting on the Railway Budget, however said that freight rates need rationalization in view of global slowdown.

FIEO is of the view that in spite of the slow down in the external markets and the inflationary pressure within the country the passenger tariffs and other services remain heavily subsidized and the burden of the same falls on the freight services.

The social obligations of subsidizing passenger tariffs are expected to be Rs.13,958 crore in 2008-2009 which in turn will impact freight rates and escalate costs for transport of raw materials. This cross subsidization adds to the overhead costs of business and needs to be rationalized, FIEO President A Sakthivel said.