Thursday, February 25, 2010

Indian Rail Budget Offers Little Help To Freight Groups

100 Days to Examine Privatisation and Most Rates Held Stable
Shipping News Feature

INDIA – The announcement of the Indian Rail Budget, as discussed here recently, was never going to please everybody but reactions are fairly muted and the budget covers some important areas. Freight rates will not rise and certain targeted products, particularly grain and kerosene, will see a slight reduction of around $2 per wagon. Shipping costs on other commodities will remain as now.

The budget inevitably is seen as slanted toward the minister’s home state of Bengal, which objectors say are due to receive an inordinately large slice of new rail infrastructure development projects but most observers are happy that a task force would be created to pass the relevant permissions for private rail initiatives within a guaranteed 100 days. Delays to such projects are seen to deter investment in the state run railways.

Critics say, as we predicted, that the passenger fares remain sacrosanct despite increasing overheads and shortages of equipment and this reflects badly on the freight sector which is seen to bear the brunt of these. As with many countries the amount of goods carried by the railways is minimal compared to years gone by and, holding freight rates steady and not developing multi modal depots and regenerating the infrastructure fast enough, is seen as stagnation for the industry.

Supporters point out that, provided it works, the 100 day agenda to promote faster private investment is an important step to obtain funds for development, they say there are environmental issues which are being addressed, not least the drive to reduce the number of unmanned level crossings plus economic features such as the setting up of local cold stores and an increase in the number of reefer wagons required for temperature controlled goods. As critics expected a hike in rail freight prices many are simply breathing a sigh of relief.

As is usual with these reports what matters is how the promised measures will be delivered not the rhetoric.