In contrast, the Federation of Indian Chambers of Commerce and Industry (Ficci) felt that the increase was not a matter of concern.

In a statement issued here, Ficci noted that the across-the-board increase in the freight by 4 per cent was below the rate of inflation. It felt that "increased freight may not lead to a cost push inflation".

Confederation of Indian Industry (CII) felt that increase, which has come at a time when the economy was facing a slow down, would have cascading impact.

"The impact would have been different if a rationalisation of freight rates had been attempted along the lines of passenger fares," CII stated here. This would have reduced the subsidy on certain commodities which is a long term objective of the railways, the chamber stated.

The Associated Chambers ofCommerce and Industry of India (Assocham) felt that the 4 per cent across the board hike in railway freight will further hurt the Indian industry. The chamber president K P Singh felt the power sector would be the worst affected by the freight hike as the coal comprise 40 per cent of the rail traffic.

Besides, the hike would cumulatively add substantially to the cost of power stations and steel plants, which are major coal consuming sectors, Singh observed.

Ficci felt that the 6 per cent shortfall in the freight haulage of the Railways which reduced its earnings by Rs 1,056 crore was a matter of concern considering the GDP is estimated to have grown 5.8 per cent by the Economic Survey. "Immediate steps must be taken to reverse this trend," Ficci president Sudhir Jalan stated.

On the Government's decision to phase out non-merit subsidies and to make the user charges equal to the actual cost, Jalan said: "This pre-supposes that the user should be given the value for money that they arespending."

Assocham's Singh cautioned that the entire burden of the hike will at the next stage devolve on the state governments and will subsequently impinge on the state finances.

The three chambers further felt that the railways would have to give urgent attention to improving the efficiency and reducing the operating ratio which is still high at 90.1 per cent.

CII has stated that there is an imminent need for efficient utilisation of existing assets, prudent spending on construction activities, purchasing of materials in a cost effective manner, checking wastage and leakage.

Ficci felt that the Indian railways need to restructure itself to become more responsive to the market conditions and attract commercial investment.

Assocham president felt that the railways minister has avoided carrying out any of the basic reforms which have high level of vertical integration from manufacturing rolling stock to operating trains. "While this was useful earlier, such vertically integrated mode of functioningis proving to be counterproductive." There is an urgent need, Singh said, for privatisation of several areas of operation. Locomotive workshops, for instance, can be easily privatised, the Assocham president suggested.

Pressing the case of privatisation, Singh further stated that privatisation would, besides reducing manpower, would also introduce efficiency in the functioning of the railways.