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Rail Budget fails to rise above short-term focus:PHDCCI

Written by: Staff

New Delhi, Feb 24 (UNI) The PHD Chamber of Commerce and Industry (PHDCCI) today expressed disappointment with the Rail Budget 2006 saying it had failed to carve out a strategy for long-term investments, particularly through generation of internal surplus for investment purposes.

Considering that the railways are the only high capacity transport mode that can meet the long-term growth needs of the Indian economy, PHDCCI Secretary General Bibek Debroy said it had not done enough to rise above the populist and short-term focus in announcing new initiatives.

Strategic measures to capture a substantially larger share of the growing goods traffic and the railway's entry into a renewed growth phase were missing, in the Rail Budget, he said.

Dr Debroy regretted that the Rail Budget 2006, lacked commercial orientation and did not include adequate measures to improve the financial health of Indian Railways.

PHDCCI expressed disappointment that the practice of high freight tariff subsidising the passenger segment is expected to continue.

Even the setting up of an independent Railway Tariff Regulatory Authority to rebalance the tariff structure has not been announced.

According to the chamber, the Rail Budget 2006 fails to move towards corporatisation for improving the operational efficiency of the railways.

PHDCCI is of the opinion that there is an urgent need to further bring down the Operating Ratio (percentage of working expenses to gross earnings) of Railways from about 65 per cent and to check its operating cost. This leaves little money with the railways to provide for depreciation, expansion and badly needed modernisation.

According to PHDCCI, it is a matter of concern that the Railway Minister has neglected reforms in the railways including rationalisation of freight rates and has continued to move on the populist path. An inadequate attempt has been made to rationalise goods tariff structure by reducing the number of commodity groups from 80 to 28, the chamber said.

More freight would come to Indian Railways only if they become price competitive, provide economical rates, adequately address capacity constraints on the high density corridors, improve terminal management, upgrade rolling stock and importantly move goods with speed and safety.

The major focus of the Railway Budget continues to be on adding more passenger trains without creating the required additional infrastructure. It does not adequately focus on introduction of new high-speed goods trains, particularly on high-density corridors.


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