He made a clean breast of his intentions when he said, "to make rail rates more attractive over middle and long distances, I propose to adjust the taper of rates for coal, cement and iron and steel," adding, "this I hope, will not only give a boost to the core sector, but will also enable this sector to offer more traffic."

The market savvy intentions of the railway minister are also apparent in the other big concession promised in the Budget, a scheme of discounts on "substantial offer of assured additional traffic." Wooing customers obviously weighed more with the Indian Railways this time, having lost business in terms of volume last year, after freight went up by 12 per cent.

Kumarmade a token contribution to infrastructure-building, by reducing freight rates by one per cent at distances beyond 2000 km for cement, coal and iron and steel. At short distances of up to 500 km, the freight on coal goes up by up to two per cent, opening up a small but new avenue for revenue.

The tapering rates of freight at long distances are the railways' last ditch bid to woo back traffic from competing modes of transport like roads or river routes. Coal, which contributes 43 per cent of the Railways' revenue from freight, was of late being moved more often by road.

The status paper of the railways also showed a considerable shift in traffic in favour of alternative modes of transport, like road, from the railways since 1950-51. To woo more traffic Rail Bhavan has reduced the classification of industrial inputs like limestone (input for cement plants) dolomite (input for steel plants) and gypsum.

The lower grading automatically reduces freight on these minerals. By a similar sleight of hand theRailway minister has increased his revenue from freight on raw materials like iron ore, manganese ore, caustic soda, crude rubber and timber. A temporary relief granted to the steel industry in a similar fashion, by changing the classifications of iron and steel, will continue. The freeze on freight on foodgrains, edible salt, urea, edible oils, kerosene and liquefied petroleum gas (LPG) will prevail.

The generous gestures all stem from the broad objective of wooing the prime source of revenue, freight, which had for years been cross-subsidising passenger fares. Last year the cross-subsidisation was to the tune of Rs 2800 crore.

Passengers take up 60 per cent of the carriage capacity of the Railways, but contribute 28 per cent of its revenue. Goods traffic, in terms of the number of trains, on the contrary, accounts for 40 per cent of the business of the Railways, but contributes the remaining 72 per cent of its revenue.

The increasing burden on freight, makes transportation by rail less competitivetoday than before. In 1996-97 the roads carried 60 per cent of the goods traffic, compared to 11 per cent in 1950-51. In the ensuing 40 years the preference for rail as a mode of transport dropped to 40 per cent from 89 per cent, even though the Railways are six times more energy efficient than road. Kumar is candid when he says that freight tariff had "reached a level" at which it threatened to rob the Railways of its market share, "a risk that is not desirable both for the Railways and the country."