Lok Sabha Question No. 617 (UNSTARRED), answered on 2026-02-03
Subject: Freight Equalization Policy
Ministry: COMMERCE AND INDUSTRY
Asked by: Shri Arun Bharti

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE

## LOK SABHA

UNSTARRED QUESTION NO. 617.

TO BE ANSWERED ON TUESDAY, THE 03 RD  FEBRUARY, 2026.

## FREIGHT EQUALIZATION POLICY

## 617.   SHRI ARUN BHARTI:

## Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य एवं उद्योग मंत्री

- (a) whether the Government has ever conducted a formal assessment of the longterm negative economic impact of the Freight Equalization Policy (1952-1993) on States like Bihar;
- (b) whether the policy led to a flight of capital and the de-industrialization of the mineral-rich eastern region by eliminating its geographical advantage, if so, the details thereof;
- (c) the  total  estimated financial  and  industrial  production  loss  incurred  by  Bihar during the four decades the policy was operational;
- (d) whether the Government is considering any compensatory industrial package or special incentives for Bihar to address this historical disadvantage, if so, the details thereof; and
- (e) the steps being taken to ensure that new industrial policies, like the PM Gati Shakti, actively promote industrialization in backward regions like Jamui?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री णिणिन प्रसाद ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI JITIN PRASADA)

- (a) to (d): The Freight Equalization Policy (1952-1993) was a Government of India policy aimed  at  removing  regional  disadvantages  in  industrial  development  by equalizing  the  transport  (freight)  cost  of  essential  raw  materials  across  the country.  The  Freight  Equalisation  Policy  was  reviewed  from  time  to  time  to assess the impact of the same vis-a-vis its objectives. The review was done by  the  National  Transport  Policy  Committee  (Pande  Committee,  1980). The Committee recommended the following:-
- i. It was not the only instrument for achieving balanced regional development. Other measures such as licensing policy, appropriate fiscal and  credit  policy  and  provision  of  essential  infrastructural  facilities  are equally important.
- ii. The beneficial effect in terms of regional dispersal as a result of freight equalisation was more than offset by the increase in real transport costs.
- iii. Freight equalisation had little impact on generating employment activity in back ward regions. There is a  case for phasing out  the existing  freight equalization scheme.
- iv. Freight equalisation for commodities of mass consumption will not make a significant  difference  in  the  final  prices  paid  by  the  consumer.  This  can better be achieved through a comprehensive distribution system.

The Government accepted the recommendation of the Pande Committee. For cement, the scheme was gradually phased out with the decontrol of cement w.e.f 28.2.1989. In the case of Iron and Steel the Government as a part of the liberalisation  package,  abolished  the  price  control  on  Iron  and  Steel  w.e.f. 17.1.1992 while retaining partial distribution control in respect of some sensitive sectors  alike  small  scale  sector  exporters  of  engineering  goods  for  North Eastern Region and for Railways and Defence. Thus, the freight equalisation scheme was totally abolished. The Government had also decided not to extend the freight equalization scheme to any new item.

- (e): PM  GatiShakti  -  National  Master  Plan  (NMP)  is  a  Government  of  India initiative  launched  in  October  2021  to  improve  the  country's  infrastructure planning and execution.It is a Geospatial data based integrated digital platform that  brings  together  all  sectors  (infrastructure,  social  and  economic)  for development of multimodal infrastructure. The plan uses a GIS-based platform with more than 1700 data layers of Central Ministry and States/UTs to enable data-driven decision-making.

An  institutional  mechanism  of  Network  Planning  Group  (NPG)  under  PM GatiShakti National Master Plan (NMP) evaluates infrastructure projects on the basis of PM GatiShakti principles such as integrated planning, multi-modality, inter- modality, whole of Government approach, and last-mile connectivity.

So far, 34 infrastructure Projects, of total cost of about Rs. 1.73 Lakh Crore, falling in the State of Bihar, including adjoining regions of Jamui, have been evaluated through NPG mechanism under the PM GatiShakti . Details are given at Annexure-I .

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## ANNEXURE-I

## ANNEXURE REFERRED TO IN REPLY TO PART (e) OF THE LOK SABHA UNSTARRED QUESTION NO. 617 FOR ANSWER ON 03.02.2026.

Details of 34 Projects evaluated by NPG, falling in the State of Bihar

|   S. No. | Project Title                                                                                                                                                                                                                                                                                                                                                          | Ministry / Department                 | Project Cost (in Crore of Rs.)   | State(s)                          |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------|----------------------------------|-----------------------------------|
|        1 | New 6-Lane H.L./Extra Dosed Cable Bridge on River Ganga Parallel to Western Side of Existing Digha-Sonepur Rail- Cum Road Bridge at Patna in Bihar on EPC mode                                                                                                                                                                                                         | Ministry of Road Transport & Highways | 2,860.05                         | Bihar                             |
|        2 | Doubling of Katihar - Kumedpur section and Katihar -Mukuria section on North East Frontier Railway (64.14 km)                                                                                                                                                                                                                                                          | Ministry of Railways                  | 942.64                           | Bihar, West Bengal                |
|        3 | Doubling between Gorakhpur Cantt.- Valmikinagar on North Eastern Railway (95.95Km)                                                                                                                                                                                                                                                                                     | Ministry of Railways                  | 1,120.00                         | Uttar Pradesh, Bihar              |
|        4 | Construction of Four Lane Highway from Gazipur-Ballia- UP/Bihar State Border (Greenfield) section of NH-31 1. Package I [from Hridaipur (km 0.000) to Shahapur (km 42.500)] 2. Package II [from Shahapur (km 42.500) to Pindari (km 78.150)] 3. Package III [from Pindari (km 78.150) to Rawalganj Bypass (km 117.120)] 4. Package IV [Buxar Spur of length 17.270 km] | Ministry of Road Transport & Highways | 3,554.28                         | Uttar Pradesh, Bihar              |
|        5 | Gorakhpur-Siliguri Corridor                                                                                                                                                                                                                                                                                                                                            | Ministry of Road Transport & Highways | 27,545.00                        | Uttar Pradesh, Bihar, West Bengal |
|        6 | Indo Nepal Border - Haldia Corridor                                                                                                                                                                                                                                                                                                                                    | Ministry of Road Transport & Highways | 30,233.00                        | Bihar, Jharkhand, West Bengal     |
|        7 | Provision of Automatic Signaling with CTC in New Jalpaiguri - Guwahati (via Rangiya) & Katihar - Mukuria sections under HDN route of NF Railway                                                                                                                                                                                                                        | Ministry of Railways                  | 542.43                           | Bihar, West Bengal and Assam      |
|        8 | Sonnagar - Andal 3rd & 4th Railway line                                                                                                                                                                                                                                                                                                                                | Ministry of Railways                  | 12,333.57                        | Bihar, West Bengal                |
|        9 | New Line Between Bikramshila - Katareah (Pirpainthi - Naugachia) (26.22 km) of East Central Railway                                                                                                                                                                                                                                                                    | Ministry of Railways                  | 2,171.33                         | Bihar                             |
|       10 | Sasaram Arrah Patna                                                                                                                                                                                                                                                                                                                                                    | Ministry of Road Transport & Highways | 3,364.00                         | Bihar                             |
|       11 | 4-Lane Greenfield Highway for Parsarma to Araria NH- 327E                                                                                                                                                                                                                                                                                                              | Ministry of Road Transport & Highways | 4,890.47                         | Bihar                             |
|       12 | Construction of bulb line at Nabinagar ( Ankorha) (17.49 km)                                                                                                                                                                                                                                                                                                           | Ministry of Railways                  | 611.73                           | Bihar                             |
|       13 | Anishabad - Aurangabad - Hariharganj Road                                                                                                                                                                                                                                                                                                                              | Ministry of Road Transport & Highways | 1,210.00                         | Bihar                             |

| 14   | Doubling of Narkatiaganj- Raxaul- Sitamarhi- Darbhanga&Sitamarhi- Muzaffarpur Section (255.5 Km)                                 | Ministry of Railways                                           | 4,080.00   | Bihar                         |
|------|----------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------|------------|-------------------------------|
| 15   | Development of Integrated Manufacturing Cluster (IMC) at Gaya in Bihar under Amritsar Kolkata Industrial Corridor (AKIC) Project | NICDC, Department for Promotion of Industry and Internal Trade | 1,862.00   | Bihar                         |
| 16   | Bihta Airport                                                                                                                    | Ministry of Civil Aviation                                     | 1,413.00   | Bihar                         |
| 17   | Bakarpur-Manikpur- Sahebgunj- Areraj-Bettiah                                                                                     | Ministry of Road Transport & Highways                          | 5,644.22   | Bihar                         |
| 18   | Aluabari - New Jalpaiguri Quadrupling                                                                                            | Ministry of Railways                                           | 1,633.22   | West Bengal & Bihar           |
| 19   | 4 lanes + PS of Kishanganj - Bahadurganj from Km 0+000 to Km 23.649                                                              | Ministry of Road Transport & Highways                          | 1,117.01   | Bihar                         |
| 20   | New BG Line (52.810 Km) from Bhagalpur to Jamalpur                                                                               | Ministry of Railways                                           | 1,094.60   | Bihar                         |
| 21   | Rampurhat - Bhagalpur Doubling                                                                                                   | Ministry of Railways                                           | 2,999.57   | West Bengal, Jharkhand, Bihar |
| 22   | MMLP Patna                                                                                                                       | Ministry of Road Transport & Highways                          | 1,008.18   | Bihar                         |
| 23   | Bhaktiyarpur Tilaiya doubling                                                                                                    | Ministry of Railways                                           | 2,017.39   | Bihar                         |
| 24   | Mukama -Munger                                                                                                                   | Ministry of Road Transport & Highways                          | 2,010.34   | Bihar                         |
| 25   | Development of Patna-Punia 6 Lane expressway                                                                                     | Ministry of Road Transport & Highways                          | 28,415.63  | Bihar                         |
| 26   | 3rd and 4th Line Between Bhaktiyarpur to Fatuha Station                                                                          | Ministry of Railways                                           | 875.72     | Bihar                         |
| 27   | Construction of 4-Lane Divided Carriageway from Khagaria to Purnia                                                               | Ministry of Road Transport & Highways                          | 3,975.02   | Bihar                         |
| 28   | Construction of a six-lane elevated road along with Six lanes at Grade with a service road in Anisabad- Deedargunj.              | Ministry of Road Transport & Highways                          | 4,063.38   | Bihar                         |
| 29   | 4-Laning of Muzaffarpur- Sitamarhi-Sonbarsa                                                                                      | Ministry of Road Transport & Highways                          | 3,590.73   | Bihar                         |
| 30   | 3rd and 4th line from kiul to Punrakh                                                                                            | Ministry of Railways                                           | 2,513.92   | Bihar                         |
| 31   | Jamalpur Munger Sabdalpur Double line including bridge over Ganga including Jamalpur avoiding line                               | Ministry of Railways                                           | 1,797.09   | Bihar                         |
| 32   | 3rd & 4th line Barharwa- Bhagalpur                                                                                               | Ministry of Railways                                           | 3,885.42   | Jharkhand & Bihar             |
| 33   | 3rd and 4th line between Danapur (DNR) to Pt. Deen Dayal Upadhyaya (DDU) station                                                 | Ministry of Railways                                           | 7,406.28   | Bihar & UP                    |
| 34   | 3rd line between Kiul to Jhajha station                                                                                          | Ministry of Railways                                           | 902.56     | Bihar                         |
|      |                                                                                                                                  | Total Cost                                                     | 173,683.78 |                               |

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