Railways leaves freight rates unchanged to retain mkt share

New Delhi, Feb 13 (PTI) Indian Railway Minister Lalu
Prasad Friday left freight rates unchanged in his interim
budget to keep traffic from shifting to road transport that
has become cheaper following cut in diesel prices.

The decision was influenced by the sharp drop in freight
traffic in October and November as the impact of the global
economic slowdown hit the Indian shores.

"In October and November, the growth in freight loading
was adversely impacted by the recession in the international
markets. There was a steep reduction in iron ore for export
and container traffic.

"The growth rate of steel traffic also reflected a
decrease. This resulted in a decrease in freight loading and
freight earnings...," Lalu Prasad said presenting the interim
budget, necessitated by general elections in the coming
months.

The Railway Ministry has targeted freight loading at 910
MT for 2009-10, which is over 60 MT from FY'09 numbers.

However, freight loading target for the full year ending
March 31 is likely to be retained at 850 MT.

Lalu Prasad said the freight situation in December and
January indicate some improvement. "We are not only hopeful,
but confident that the budget target for goods earnings set
for this fiscal will be surpassed."

Freight earnings increased to Rs 38,093 crore by the end
of December 2008, registering a growth of 14 per cent.

Based on this trend, the Railways have increased the
target for goods earnings for the current fiscal by Rs 1,593
crore.

The revised estimates for full year freight earnings have
been kept at Rs 54,293 crore.

Lalu Prasad said in five years of the United Progressive
Alliance (UPA) government, the Railways have stepped up the
annual growth rate of freight loading from an average of three
per cent during the decade of 1990s to an average of eight per
cent.

"The declining trend of Railways share in transportation
of steel and cement, witnessed during the past several years
has been arrested as the Railways increased their share in
transportation of these commodities over the last five years,"
he said.

Although the minister left the rates untouched in the
interim budget, he had raised rates for cement, coal and coke
to eight per cent a tonne in December by way of reclassifying
the products to class 150 from 140.

The hike came into effect just a day after the government
announced a four percentage point cut in excise duty to
stimulate the manufacturing sector.

Subsequently, the Railway Ministry hiked the freight rates
of food grains, pulses and flour by 8.3 per cent with effect
from February one.

The Indian government reduced diesel prices twice since
December 5 making the widely used motor fuel cheaper by Rs
four a litre. PTI IND