The
dynamic freight pricing policy unveiled in this year's
Rail Budget is likely to hit the business of commercial
vehicle companies. But will that happen?
The
proposal for a dynamic freight pricing policy made in
this year's Railway Budget is seen as a rearguard action
on the part of the railways to retrieve the traffic lost
to road transport. What is also seen working in favour
of India's largest public undertaking is the recent judgement
of the Supreme Court, on the overloading of trucks.
This
ruling did lead to a spurt in the demand of commercial
vehicles. But now in the wake of the proposed new freight
regime, the business of the commercial vehicle companies
is likely to be adversely affected.
Cement,
steel, coal and oil companies are already celebrating
the sops announced by the railways minister on the freight
rates front. Till now, these companies have been relying
heavily on the road transport for the carriage of their
cargo. Their profits took a beating following the Supreme
Court ruling. So, with the new freight structure becoming
a reality, they are certain to shift to rail transport.
The
commercial vehicle companies acknowledge this fact. Says
executive director of finance of Ashok Leyland K Sridharan,
"There will definitely be an impact on the road transport
without doubt." But he believes that for shorter
distance like 500 to 600 km, road transport will continue
to be relevant. Further, he sounds doubtful regarding
the efficacy with which these announcements will be put
into action.
He,
certainly, has a point there, as this is not the first
time that the railways have come up with such policy initiatives.
Intent to win back the lost traffic was very much present
even in the past budgets. But that failed to translate
into action, thanks to the bureaucratic quagmire.
Given
this, if the commercial vehicle companies are casting
doubts about the implementation of this new freight structure,
they cannot
be faulted. But if the railways do manage to make it an
exception this time round, the commercial vehicle makers
will have their task cut out.
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