Suspense built slowly over the afternoon, as both corporates and policy-makers tried to guess the contents of the package and the air nearly escaped from the baloon of hope. The railway Budget papers spoke of a special package that had already been granted to steel-makers, in an apparent reference to freight concessions granted to the industry in December.

At his press conference though, Railway Board chairman V K Aggarwal told newspersons that the board was talking to steel producers and had special rates in mind for the industry. Railway minister Nitish Kumar spoke of sparing industry of dual taxation.

He said he was talking to the finance minister and hoped to spare industry the burden of two-pronged levies. Industry has for long been demanding that exciseduties be levied post-freight.

At present, steel makers pay excise at the factory gates. While freight is automatically passed on to the consumer, excise duties are often not. At the end of the day, the steel package remains a nebulous goody, that the railway minister is yet to work out. Steel-makers, who have contributed to less and less revenue for the railways of late, did not see much of a carrot on their plates. ``With most industries, particularly the steel sector, reeling under the impact of the (economic) slowdown, we were hoping for a lowering in the freight rates,'' said Steel Authority of India Limited (SAIL) chairman Arvind Pande.

``The across-the-board increase of four per cent in rail freight, coupled with the re-classification of coal, will have an adverse impact of around Rs 80 crore on SAIL,'' he said. The SAIL chief said the freight burden would be difficult to pass on to the ultimate user, particularly in the present market conditions.

Pande's apprehensions were echoed by Essar SteelLimited advisor, J M Bhasin. ``In the present condition of the industry, even the nominal four per cent hike in freight will be difficult to absorb,'' Bhasin said.

Jindal Strips vice-president (corporate finance) Arvind Parakh felt that the freight hike may not impact stainless steel producers to that extent. Jindal Strips is the largest producer of stainless steel in the country.

``Ours is a very high value-added item, so the impact of the freight hike may not be that much,'' he said. Parakh hoped that the improved services promised by the Railway minister would cut short the time taken to transport steel meant for exports, to the ports.

A 25 per cent concession in freight announced for goods traffic meant for distances of less than 50 km, will benefit the Rashtriya Ispat Nigam Limited (RINL). The shore-based steel plant moves a sizable quantity of steel and raw materials to and from the Visakhapatnam port to its plant site. Industry sources estimate a saving of close to Rs 7.5 crore for RINL from thesop granted to short-distance goods traffic. Yet the Railways seem to have marketing gimmicks up its sleeve, to bait business from a sector that was slowly turning lackadaisical. Only yesterday, The Economic Survey revealed a 7.6 per cent drop in total revenue earnings of the railways from pig iron and finished steel in the first seven months of this year.

The railway ministry had granted a 10 per cent freight concession for incremental traffic in iron and steel in December. The concession was also available for incremental rail traffic in clinkers, cement and sponge iron.

The freight concession was a peace offering made to industry, protesting against the change in the taper of rates for coal, cement, iron ore and steel by one per cent to two per cent in last year's Budget.