Railway Budget 2012: Raising freight charges is Justified; I don't agree with the views of Economic Times

 The government should these kinds of  bold steps; stop bothering too much about controlling inflation. The growth will ultimately take care of inflation

The Railways has erred in raising freight charges by 20-25% on most goods a week before the Rail Budget. Passenger fares have not been touched for eight years. That's ridiculous.
Traffic earnings have slowed down and railway finances are in a mess. Clearly, the Railways must end the practice of freight and upper class passenger fares subsidising lower class fares. The Railways has already lost a significant share of freight traffic to roads mainly due to inability to meet the transport challenge with speed, safety and predictability.
Operational inefficiency increases the proportion of freight cost to GDP and breaks the nation's competitiveness. A mere increase in freight rates, to cover a rise in input costs, could see more traffic move to roads and also stoke inflationary pressures.
Higher costs can be off-set only if the Railways offers efficient freight services - whether it is hauling imported coal to power plants, or goods from factories to ports or moving people across the country. And improving the quality of service calls for massive investments in modernisation such as buying new wagons, investing in electronic signalling and strengthening infrastructure to carry higher loads and allow for high-speed operations.
It should also rope in the private sector, in a big way, to build freight terminals. An expert panel steered by Sam Pitroda, advisor to the Prime Minister, is spot on to say that a modernised railway system can focus on efficient evacuation, movement, and delivery of coal that accounts for close 45% of the total freight traffic and other goods more effectively.
Further, it is bad practice not to take Parliament into confidence, even if the executive is vested with powers to change rail tariffs without Parliamentary sanction. Such a practice makes a mockery of the Rail Budget and should be shunned, unless the government does away with the Rail Budget itself.
The Railways should break new ground in freight as the conventional argument that the volume approach allows it to keep tariffs low and yet remain profitable does not hold good anymore. The government needs political will to implement vital reform. 2012 will be its best chance.

News Body: The Economic Times