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Tuesday, February 27, 2001

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No indication of big ticket reforms: Industry

By Our Special Correspondent

NEW DELHI, FEB. 26. Major industry associations today expressed disappointment over the Railway Minister, Ms. Mamata Banerjee's inability to pilot big ticket reforms introduced in other sectors of the economy. Against the backdrop of poor financial health, the industry felt the Minister should have phased out cross subsidisation, carried out fundamental reforms and commercialised idle property.

The industry also doubted the Minister's ability to raise the projected amount of resources to meet the expansion and modernisation needs. Its only hope is that at least the ``cosmetic changes'' promised in this budget will be implemented.

Although freight fares have been hiked by two to three per cent, the revision left the industry unsatisfied. ``Rail freight rates are already high and the present hike, though marginal, is not welcome. The two per cent increase in freight rates for coal and iron and steel is bound to impact industrial growth,'' complained the FICCI chief, Mr. Chirayu Amin. The railways have been needlessly flogging freight traffic and this is showing up from the fact that the target for good earnings this fiscal might be short by over Rs. 100 crores.

The Confederation of Indian Industry President, on the other hand, expressed concern at the virtual wipe out of internal resource generation and accruals with the unsustainable operating ratio of 98.8 per cent budget. ``This clearly reflects the urgent need for restructuring of the railway system and lay stress on fundamental reforms,'' said Mr. Arun Bharat Ram. Passenger fares were not revised for the second year while the already high freight rates were further increased. He feared that this trend would speed up the increasing marginalisation of the railways in national commerce.

However, the CII has complimented Ms. Banerjee for unfurling new measures such as decentralisation of powers, continuation of the volume discount scheme, offering of goods sheds for warehousing and special rates for merry-go-round schemes.

Speaking for the steel industry, Mr. Arvind Pandey, SAIL Chairman, struck a different note. While the increase in freight rates will put further pressure on the embattled industry, Mr. Pandey welcomed several incentives such as the volume discount and merry-go-round scheme. Also the consolidation of existing projects rather than taking up new ones is likely to benefit bulk suppliers like the SAIL. However, Mr. Pandey said the budget will have an adverse impact of Rs. 30 crores on his company.

The Federation of Indian Engineering Industries of India (FEII) too differed with the major industry associations by pointing out that the three per cent increase in freight rates should not cause any heart burn.

The Assocham doubted the Minister's plan to raise Rs. 1,000 crores through non-traditional means and wondered how this attempt would be feasible this year when it failed to yield results during the current fiscal. The Assocham President, Mr. Raghu Mody, also expressed concern over the pensionary liability touching Rs. 5,800 crores in the next fiscal. In view of this and other liabilities, he said there was all the more compulsion for the Minister to have taken a practical view and introduced innovative but realistic measures to mobilise resources.

Exporters, on the other hand, regretted the railways' indifference. The three per cent hike would have some effect but the exporters would have taken it in their stride had there been commensurate steps such as greater efficiency, easy availability of wagons and high speed freight trains, said the Federation of Indian Export Organisations (FEIO) President Mr. K. K. Jain.

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