Industry concerned over falling health of rly finances

Industry concerned over falling health of rly finances
ENS ECONOMIC BUREAU

FEB 26: Industry has expressed concern over bypassing of the second generation of reforms in the Railway Budget and lack of bold, pragmatic and visionary measures to put the railway finances on track.

Confederation of Indian Industry (CII) president Arun Bharat Ram raised concern on the virtual wipe out of internal resource generation and accruals, with the unsustainable operating ratio at 98.5 per cent and budgeted at 98.8 per cent for 2002. This clearly reflects the urgent need for restructuring of the Railways system and lay stress on fundamental reforms, Bharat Ram said.

Federation of Indian Chambers of Commerce and Industry (Ficci) president Chirayu R Amin said that there is a need for the department to review its entire policy in order to attract largest freight traffic. The essential element of this exercise should be to review subsidisation of passenger traffic and not resort to only raising freight rates continuously.

Associated Chambers of Commerce and Industry of India (Assocham) president Raghu Mody said that yet another opportunity of carrying out fundamental reforms, rationalisation of tariff and commercialisation of huge idle properties has been lost.

PHD Chambers of Commerce and Industry (PHDCCI) president Sushil Ansal stressed the need for running railways on commercial principles and delinking the cost of political, social and other obligations which should be borne by the states as in many other countries.

"It is most unfortunate that the passenger fares have not been revised for the second year in running, while the already high freight rates have been increased further, thus almost certainly speeding up the increasing marginalisation of the railways in the national commerce," Bharat Ram said.

This goes against the intention of Railway Minister to raise the share of railways in freight to 50 per cent by 2010 from the current level of 40 per cent.

Mody said that the three per cent hike in the freight rates may have a cascading effect in the cost of production, leading to cost-push inflation which could have been avoided through rationalisation of passenger fares which have been subsidised considerably.

The freight hike on critical inputs like steel, coal and cement would also adversely impact industry especially at a time when it is in the grips of a slowdown.

Ficci president said that it is a matter of concern that the developmental targets have been scaled down. The target of electrification is now set at 350 route Kms against 460 route Kms of last year. Construction of new railway lines will be only 82 route Kms against 217 route Kms last year, he said.

Phasing out of cross subsidisation was a major demand of the industry for a long time and in the absence of any measures to rationalise the freight and passenger fares, CII feels that railways would lose its share to the roads all the more.