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Freight hike to hit food

Pulses, cement, coal and steel prices may get affected
New Delhi: Prices of food grain, pulses, cement, coal and steel are likely to go up following the proposal to hike rail freight by up to 10 per cent for various commodities.
The Railway Budget proposals, presented by Union minister Suresh Prabhu in Parliament on Thursday, proposed a hike in freight rates for 12 commodities in the range of 0.8 per cent to 10 per cent. The increase in freight charges by 10 per cent on urea is also expected to add to the subsidy burden.
“With the increase in freight, the subsidy paid for movement of urea will increase by another Rs 300 crore from current level of Rs 3,000 crore,” fertiliser association of India (FAI) D.G. Satish Chander said.
The proposed freight hike for cement, coal, iron and steel, grains & pulses, groundnut oil, LPG and kerosene is 2.7 per cent, 6.3 per cent, 0.8 per cent, 10 per cent, 2.1 per cent, 0.8 per cent and 0.8 per cent respectively.
“Our cost of production will go up in the range between Rs 2 and Rs 4 per bag of 50 kg cement,” Dalmia Bharat cement group CEO Mohendra Singi said. When asked whether they would raise the prices, he said, “The price is a factor of demand and supply. So we will take a call on this later.” Further, a leading cement maker said the prices of cement bags may go up in the range of between Rs 5 and Rs 10 per bag following the hike in freight rate on coal, steel and cement.
Meanwhile, there was a mixed response from steel companies which said the proposed Rs 8.5 lakh crore investment in the railways in the next five years would spur demand for steel, but they were a bit disappointed as the minister did not lower freight rates despite lower diesel prices now.
“The freight hike in the Budget on iron and steel will have little impact on us,” spokesperson of a leading steel firm said.
Mr Prabhu has also proposed to raise freight rates for iron ore meant for domestic use by 0.8 per cent. On urea, fertiliser minister Ananth Kumar said despite the increase in freight rates, there will not be any increase in urea prices.
“We will continue to provide urea at the same rate of Rs 5,360 per tonne. It will only increase subsidy on urea”.
Budget fails to enthuse Dalal Street:
The railway budget failed to cheer Dalal Street as the lack of any specific proposals on FDI and PPP projects triggered profit booking. Adding to the market woes was the expiry of February derivative series due to which the traders squared-off their long positions in the futures and options segments pulling the markets further down.
The shares of rail infrastructure developers came in for heavy selling as the budget proposals failed to live upto the expectations.
While the shares of Texmaco and Kalindee Rail Nirman slumped 2.51 per cent and 4.05 per cent respectively on the BSE, the shares of CONCOR, Stone India and BEML dropped 3.47 per cent, 6.07 per cent and 1.65 per cent respectively.
“The budget was largely a vision document. The market had expected some big bang reform announcement in areas of FDI and PPP, which did not materialise,” observed Ambareesh Baliga, market expert.
The Sensex slumped 261.34 points or 0.90 per cent to close the day at 28,746.65 while the Nifty fell 83.40 points or 0.95 per cent to end the day at 8,683.85.
Indian Inc welcomes Rail Budget, terms it pragmatic:
Despite the displeasure of stock markets, India Inc welcomed the railway budget of the Modi government presented by railway minister Suresh Prabhu on Thursday as pragmatic.
“The budget has introduced a number of innovative measures to increase revenue. The roadmap laid for attracting private investment for the sector through tapping low-cost long-term funds from insurance and pension funds, multi-lateral and bilateral agencies among others will go a long way in boosting the cash strap-ped sector and facilitate completion of many crucial rail projects,” said industrialist Adi Godrej.
Sunil Kant Munjal, Hero Motor Corp joint MD, said that by initiating measures to improve the operational efficiency of railways as also introducing innovative financial mechanisms, the rail budget has sought to improve the competitiveness of the railways. “Similarly by making an attempt at resource mobilisation by strengthening of PPPs and through acquisition of new technologies, the minister has attempted to effect a much anticipated turnaround in rail operations,” said Mr Kant.
“The railway minister has unveiled a comprehensive plan for modernisation of the railways,” said Ajay S. Shriram, president, CII.
( Source : dc correspondent/pti )
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