Home » Indian Budget » Budget 2008-2009 » Rail Budget 2008-2009 » Market Reactions on Rail Budget 2008

After the release of railway budget 2008-09 by Lalu on 26 Feb'08, different mixed opinions came from different sections.

Bihar Chief Minister Nitish Kumar's Views on Rail Bugdet 2008-09...

Nitish Kumar called the railway budget 2008-09 as utter "directionless" and a mere game of figures. In meeting with reporters, he said that Lalu has endeavored to make a delusion in the minds of people by calling himself to be the master of railway turnaround. He also added that he is misdirecting people and is just earning the benefits which NDA government made in its regime. He also reminded Lalu that railways was never in loss during his administration and NDA government not only cleared up the dividend but also squared up Rs.249 that was taken as loan from the exchequer.

He said that railways have earned profits not because of Lalu's efforts but because of country's enhanced economic growth. By increasing the "axle load" on tracks, railways has also minimized the safety norms, Kumar added.

Steel industry's Views on Rail Bugdet 2008-09...

The Indian Steel Industry expressed its satisfaction and joy after the release of rail budget 2008-09, by considering it to be quite balanced and visionary. Essar Steel Holdings CEO J Mehra expressed his good opinion by saying that " I commend the minister for efforts to make exclusive freight corridors for iron ore and coal in order to deal with the emerging demands of steel and power sector"

The industry is also very gratified with the proposed rise in investment on new railway lines and addition of 20,000 new wagons to the railway fleet that will take Indian steel industry steps ahead. Essar Steels also showed its ecstasy on the development of a special purpose vehicle for rail-port connectivity between Surat and Hazira.

Mingled Reactions from Various Political Parties...

Left Parties
The Left parties delivered its mixed reactions after the announcement of rail budget 2008-09. It raised an objection on the grant of huge concessions to the private sector. It opposed the decision to hand over the development of major railway stations in New Delhi, Mumbai, Patna and Secunderabad to private players.

However left party appreciated railways step to appoint the licensed as gagmen and other Group-D posts. Though, it expected more initiatives to fill the vacancies in the Railways numbering over 1.5 lakh and also absorption of the contract workers.

Bhartiya Janta Party's (BJP) Reaction
Vijay Kumar Malhotra, the Deputy Leader of the BJP in the Lok Sabha, called rail budget 2008-09 as highly "disappointing". He also said that MP's from different states started walking out amid Lalu's rail budget speech. He raised a point on Lalu's announcements and promises that he makes every year and leaves them unfulfilled. He alleged that not even one unmanned crossing had been converted into a manned crossing over the last one year. Due to which railway accidents have always seen a rise.

Congress Party's Reaction
Congress Party welcomed the rail budget by calling it an "aam aadmi" or common man's budget. They appreciated Lalu's move to step down railway fares along with the plans to introduce modern and advanced plans to enhance earnings in order to offer world class rail services to the passengers.

Impact of Rail Budget on Different Industries

Gaining Industries

Steel Industry
Announcement of rail budget 2008-09, has given steel industry a number of reasons to celebrate. As per the senior industry official, India's stainless steel consumption will see a hike of at least 140,000 tonnes in the coming year as the railway minister has declared its plans to develop new freight wagons and passenger coaches out of metal.

Railways minister Lalu Prasad Yadav announced in the Parliament while delivering the rail budget that 20,000 new freight wagons would be required in the year 2008/09 which would be built out of a stainless steel.

By aiming the target of more than10% rise in freight earnings during the next fiscal, Indian Railways claims that it has set to transport 200 metric tons of steel by the year 2011-12, which would be rise of 66.67 per cent from the present one.

Steel production is anticipated to rise to 110 MT from 55 MT by 11th plan, along with this many of the new dedicated iron ore routes would also be built or upgraded for 25-ton axle load and some routes will also be made for running 30-ton axle load trains.

Construction of Angul-Sukinda new line, Manoharpur-Goelkera third line and doubling of Padapahar-Banspani, Barbil-Badajamda and Dumitra-Champajharan have also been sanctioned.

The plan to build third line connecting Goelkera-Adityapur and doubling of Champajharan-Bimalgarh and Jhakhpura-Banspani would also be taken for necessary sanctioning on completion of survey.

Oil Industry
This section of industry is also likely to incur many benefits from the rail budget announced by Lalu on 26 Feb'08. State-run oil retailers are anticipated to save around Rs 930 million ($23.3 million) per year out of the declared 5 per cent cuts in petrol and diesel freight rates in the rail budget 2008-09.

Top oil marketing company, Indian Oil Corp is only awaited to make about Rs 200 million till the next fiscal year from April because it brings in use its own pipeline network for shipping fuels, as per the company spokesman.

Director finance of Bharat Petroleum Corp, S K Joshi commented that, "On account of the calculated numbers for the next fiscal, we would be able to save 80 million on petrol and 300 million on diesel:"

Cement Industry
The announcement of rail budget has also made cement industry to draw many lucrative gains. Lalu declared while presenting the rail budget 2008-09 that railways meet around more than100 MT traffic every year from the cement industry and now its aiming for a loading of 200 MT from the cement industry in the year 2011-12.

Cement production is estimated to rise from170 MT to 280 MT by 11th plan and minister also announced that there would over 10 big clusters of cement production in the country. The project of Daund-Gulbarga doubling and electrification of Pune-Guntakal line would be taken up to cater the demand of cement manufacturers in Wadi cluster.

Private Companies
In the rail budget announced on Feb 26' 2008-09 private companies were gifted with a basket of lucrative opportunities that can take them miles ahead. These private companies has got in its share a fair benefits. Container operators consisting of a minimum net worth of Rs 250 crore would now be able to lease wagons from the Indian Railways for a time period of 20 years.

These private companies after getting themselves registered after banking Rs 5 crore, would be able to lease special purpose wagons, high-capacity wagons and container wagons. This 20-year lease can also be stretched to another 10 if services offered by them remains satisfactory services.