The Railway Budget had a mixed reaction from India Inc. with industry bodies cautioning that the hike in freight charges would increase inflation, while other chambers suggested that some proposals if implemented could set the growth multiplier in motion.

Presenting the budget on Tuesday, Railway Minister Pawan Kumar Bansal proposed to raise the freight charges across the board by an average 5.8 per cent.

“I agree with the freight hike on industrial products but the Railway Minister should withdraw the hike on urea and farm products as this will hit aam aadmi [common man],” said Assocham president Rajkumar Dhoot.

The CII said the move is likely to impact consumers. “It will push up prices and will have an impact on consumers as they have to bear the huge cost. Inflationary pressure is expected to remain high,” said Member, CII Railway Equipment Division, Rajeev Jyoti.

A. Didar Singh, Secretary General, FICCI felt that the key to moving forward will be execution of the projects announced by the Minister in his budget speech.

Mr. Dhoot cautioned that, “capacity constraints of the Railways remain the primary issue to be addressed, more so in the wake of the mounting pressure on passenger and freight services. The budget could have put more focus on this aspect.”

India Inc. remained sceptical of the projection of Rs. 1 lakh crore to be raised from public private partnership (PPP), Rs. 1.05 lakh crore through internal resources in the 12th Plan.

“The projections, however, do not look achievable on some accounts [such as Rs. 1 lakh crore through PPP] and the budget states that some form of ‘paradigm shift’ is required in tariff policy, commercial borrowings and private sector participation and stops at that. Linking tariffs to fuel prices is a step in the right direction and if followed up by setting up of tariff authority as stated in the budget, it may lead cost reflective pricing in future,” president, Financial Advisory, Feedback Infrastructure Services Private Limited, Dhruba Purkayastha said.

Mr. Purkayastha argued that the key issues somehow remain unaddressed, such as increasing trains with no commensurate increase in line capacity, slow progress on separate freight lines, and rationalisation of freight rates.