Rediff Logo Business The Rediff Music Shop Find/Feedback/Site Index
February 25, 1999


Freight hike will lead to inflation, says IMC; Paswan finds 450mt target unrealistic

Email this report to a friend

Reacting sharply to the freight hike in the Railway Budget, the Indian Merchants' Chamber said that the four per cent hike in freight rates on all commodities for all distances will have a major cascading affect on the prices of all industrial and agricultural products.

IMC president Y P Trivedi said that the Budget will steeply raise the rate of inflation. With the hike of four per cent on freight, movement of bulk industrial goods like coal, cement, ferrous and non-ferrous ores and metals, automobiles and other machinery will become more expensive, resulting in multiplier affect, Trivedi added.

On inputs of downstream industries, prices of their products would go up. Exports will be hit severely and the prices of goods will become increasingly non-competitive in global market.

Trivedi said that the railway minister did not spare the agricultural inputs. The freight hike will raise prices of fertilisers and bulk farm produces like wheat, rice, jute cotton and oilseeds.

Former railway minister and senior Janata Dal leader Ramvilas Paswan, MP, described the Rail Budget proposals as ''most unrealistic''.

Paswan said the freight target of even 224 million tonnes during the current financial year has not been met and while the target of 450 million tonnes laid down in the Budget is not likely to be achieved, the railways have suffered a loss of Rs 10 billion only on account of freight.

He said the anticipated growth of five per cent in passenger traffic also cannot be achieved and in this way, railways are likely to suffer a loss of Rs 20 billion by the end of the financial year 1999-2000.

According to Paswan, the only way to make up for the huge loss would be to cut down the development work because during 1998-99, the plan size of Rs 90 billion had to be cut down which would affect overall development work.

Referring to Bihar as a backward state, Paswan said several projects such as Patna Railway Bridge, Munger-Khagaria railway bridge besides Katihar-Jogbani, Khagaria-Samastipur guage conversion, which were already included in 1997-98 Budget and passed by Parliament, have not yet been cleared by the Cabinet Committee on Economic Affairs. Various projects included in 1998-99, he alleged, have already been cleared.

The new fare structure proposed by Railway Minister Nitish Kumar will have an overall increase of six per cent in passenger fares of different classes except second class mail or express.

Railway Board chairman V K Aggarwal said that 90 per cent of passengers, who travel by second class, have been spared from any increase in fares.

As per the proposals, the actual increase in the sleeper class will range between nine and eleven per cent with an average of eight per cent, first class between one to seven per cent with an average of two per cent, AC chair car between one and six per cent with two per cent, AC three tier between three and 23 per cent with an average of 13 per cent.

Travel by AC two-tier and AC first-class would be costlier by two and ten per cent respectively.

A steep hike of 13 to 14 per cent has been proposed in all the classes of Rajdhani and Shatabadi Expresses barring AC chair car, where the proposed increase will be about eight per cent.

The outlay for Bombay suburban section has been increased from Rs 2.67 billion to Rs 3.04 billion and full share capital of Rs 125 million for the Bombay Rail Vikas Corporation which was cleared by the Cabinet, has been provided for.

Minister of State for Railways Ram Naik, who represents the North Bombay constituency, said that the Railway Budget was commuter-friendly as there was no hike in monthly season tickets, both on second and first class, and a lot of projects and expansion programmes have been sanctioned.

The minister said that as far as Maharashtra is concerned the outlay for various projects under new lines, guage conversions, doublings and electrification have been increased to Rs 3.29 billion.


Fare hike to fetch Rs 9 billion for railways

Fourteen new trains to be introduced

Budget 1999-2000

Business news

Tell us what you think of this report