No increase in freight rate in the Rail Budget has come as a welcome move for the steel industry which is now increasing its focus on strengthening the domestic market, with exports taking a hit due to global slowdown.

Considering it a welcome move for the economy after the onslaught of the global recession, JSW Steel vice chairman and MD Sajjan Jindal said, “Overall the budget will provide for inclusive growth and ensure expansion of railways. However, elaborate steps and proposals are somehow missing for massive modernisation of railways to take it on par with modern management of railways. And also no loyalty has been given to the steel industry as steel is the largest revenue providers for the railways.”

The steel industry was expecting some downward changes in freight rates for minerals, especially iron ore and coal. Also doubling of tracks in Orissa’s Keonjhar district was needed to remove the bottlenecks in evacuation of ore from the mines.

Essar Business Group Steel CEO J Mehra said, “The Railway Budget is heavily focused on passenger services with virtually nothing new for cargo services. The expansion of rail network, upgradation and the proposal to acquire 18,000 railway wagons is a welcome move which will give a boost to steel demand.”

However, industry watchers believe that the increase in the wagons will not give significant boost to the steel demand, also movement of these increased wagons will be an issue because of availability of rakes.

“The Railway Budget is more reformist than populist. Rather than the giveaways in form of lower passenger tariffs, the focus is on productive utilisation of spare land and develop infrastructure railway infrastructure under the public private participation model. No increase in freight tariffs is also positive for many core sectors like steel, cement,” said Sharekhan Ltd head-research Gaurav Dua.