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Untouched freight rate irks industry

business Updated: Feb 13, 2009 21:13 IST
HT Correspondent
HT Correspondent
Hindustan Times
Untouched freight rate irks industry

Is no news good news? Industry does not seem to think so after Railway Minister Lalu Pasad left freight rates untouched. They are unimpressed by the interim railway budget he presented on Friday.

User industries like steel, mining and cement manufacturers believe rates had already been raised in the past and the recent fall in diesel prices called for a matching cut in freight charges.

"We were expecting a reduction in railway freight as only then would we have been able to export more," said RK Sharma, Secretary General, Federation of Indian Mineral Industires (FIMI). "Since last budget, freight rates have been increased by over 50 per cent."

After a robust growth of 9 per cent till September, freight loading took a hit in subsequent months as the impact of the international credit crunch and recession started playing out in India.

"In October and November, freight loading was adversely impacted as there was a steep decline in iron ore for export and container traffic. Growth of steel traffic also reflected a decline," the minister said.

Despite the downturn, with earnings growth of 14 per cent at Rs 38,093 crore till December, he raised the full-year target for 2008-09 by 3 per cent to Rs 54,293 crore.

"I am not happy that the budget did not roll back the freight hikes imposed on coal and cement transportation recently. Also its disappointing that the cause of the environment was not helped by extending freight concessions to fly ash, slag and green products," said Sumit Banerjee, CEO, ACC Cement. "One day, these items will receive concessional treatment but this was a good time to start."

Other than freight, railways also charge punitive charges, demurrage, rent on land used for sidings, all of which have been regularly revised during the year.

"The Interim Rail Budget has been pretty flat one, there haven't been any direct benefits for the industry as such but certain indirect benefits are looking bright," said Ankit Miglani, director (commercial) at Uttam Galva Steels.

Freight rates were reduced during last year's budget but the industry had then expressed concern that they would be moved up gradually during the course of the year. Industry is worried that the same might happen again this year.