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February 25, 2000
Reactions to Railway Budget: industry angry, common man happy
Leading trade and industry chambers today criticised the government's move to hike railway freight rates by upto seven per cent stating that the Centre has missed the oppportunity of rationalising tariff structures. This will lead to cost-push inflation.
The proposals, industry leaders said, are against the Railway Budget's very intention of diverting goods traffic from road to rail.
The Associated Chambers of Commerce and Industry of India or ASSOCHAM said the increase in freight rates in the face of falling freight movement on the railway network will raise production cost of industrial goods.
''At a time when most companies are experiencing low profitability margins, it may be difficult for them to absorb the hike in input costs. The companies would be forced to pass on the hike to the consumers which will be inflationary. Further, in a globalised scenario, this will be detrimental to the Indian industry as Indian products will become less competitive in the international market,'' the chamber said.
However, the silver lining was the promise of lower freight for bulk goods like coal, iron-ore, iron and steel and fertilisers.
The Punjab, Haryana and Delhi Chambers of Commerce and Industry president K S Mehta said the freight hike should have been avoided for sending right signals to trade and industry.
''Since railways was a commercial organisation, we were expecting announcement to reduce the over Rs 30 billion social obligation expenditure, reduction in manpower and minimising introduction of new trains and other such populist measures in order to balance the budget,'' he said.
In Bombay, India's commercial and financial hub, the reactions were different. The first-ever railway budget by a woman railway minister Mamta Banerjee received a good response from the ordinary citizen, thanks to no hike in passenger fare. The business community however described the five per cent hike in freight as detrimental to the economic growth.
Commuter associations and passenger groups have welcomed the Railway Budget 2000-2001 as there was no hike in the passenger fares in any class of journey. They also welcomed the decision to extensively computerise the railways which they felt will help the customers.
The industry associations have, however, decried the decision to hike the freight by as much as five per cent. The All India Association of Industries said that the proposed stiff five per cent hike in freight rates, to net an additional Rs 6 billion, will result in upward price revision of all commodities, except essentials and urea and ultimately affect the common man.
State janata dal (secular) spokesperson prof gopal dukhunde said, there is nothing much about mumbai. Through there has been no hike in suburban fare, the old projects have been reiterated in the budget. There is nothing new in the budget for mumbai, he said and added, commuters continue to face problem and there was no measure to improve the suburban services.
Run-up to the Budget 2000-2001
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