Mar 9, 2010 3:00 AM AWST

Rail freight charges to be reduced in India

India’s state-owned railways, one of the largest and most profitable networks in the world, will cut freight charges for the transportation of food grains as part of an effort to cool rising food prices.

Mamata Banerjee, the railways minister, who presented the budget to parliament on Wednesday, said freight rates for food grains would be reduced by Rs100 per wagon, while leaving passenger and other freight fares largely unchanged.

Food prices have been rising in India their fastest for more than a decade. The effort to cool prices by the railway ministry is viewed as part of a wider strategy by the government to address a highly sensitive political issue that has in the past toppled administrations.

Indian Railways carries 20m passengers a day and employs 1.4m people. The rail network is one of the few mixed traffic systems, carrying both passengers and freight, in the world that generates a cash surplus. It ranks alongside rail systems in the US and Canada as a cash generator.

However, Ms Bannerjee ruled out any privatisation of the railway system in spite of ambitions plans to add 25,000km of new track in a decade. Instead, she promoted public private partnerships that have been slow to take off in the railway sector as a way to bring in the investment needed to modernise the network.

“Railways will not to be privatised and will remain with the government. While not privatising, railways have to develop business models for improving earnings,” said Ms Banerjee.

Akhileshwar Sahay, the president of the transport division of infrastructure company Feedback Ventures, said the budget was high on intention but low on delivery. He appealed for more clarity over private investment opportunities and was critical of plans to introduce more passenger services.

“More and more passenger trains on a clogged network, which has kept the average speed of express trains to 55-60km and that of goods trains to 25km/h for decades, are expressive of business as usual approach,” he said.

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