Monday, February 22, 2010

Indian Rail Freight Under The Microscope This Week

All Eyes on Bengali Minister's Future Financial Plans
Shipping News Feature

INDIA - Mamata Banerjee, the controversial Minister for Railways will announce her budget plans for rail freight on Wednesday and there will be many interested observers across the subcontinent. Ms Banerjee has never shied away from controversy with her schemes like the introduction of women only trains to alleviate sexual harassment and sweeping plans for international style quality stations.

The biggest problem for the Minister is that passenger fares are looked upon as sacrosanct and therefore even a small increase in the price of the 650 billion plus single journeys undertaken every year meet with resistance from the voters. This factor, together with geographical factors and a somewhat lacklustre road infrastructure account for the fact that around 70% of rail traffic revenue is for freight carriage.

Passenger and cargo carriage are both rising with some estimates putting passenger journeys set to increase, perhaps to exceed 850 million in the coming year or so. Freight tonnage has been rising by around 7% per annum and the fear is that, once again, that will be what is expected to pay for increased costs and planned improvements.

The inflation rate is another major factor as the increase in freight traffic revenues, with rates held steady, have been exceeded by rising inflation, which hit 11% at one point in 2008 and hovers between 6 and 8.5%. Critics claim the Minister is only concerned about improving the lot of her own Bengali voters. Wednesday may be an indication of how seriously she worries about voters nationwide with a zero rise in passenger rates expected by many which may lead to immediately increased costs for shipping customers.