On a day of dramatic U-turns by the government on various issues, new railway minister Mukul Roy delivered the one that dealt the biggest blow to the coffers. Roy announced a complete rollback of the rise in passenger fares, proposed in the Railway Budget, for all classes except AC-1 and AC-2.
That would leave the ailing transporter with a paltry Rs 416-crore additional traffic revenue on account of the rise. Another Rs 5,766 crore proposed by Dinesh Trivedi has now been taken off the proposed kitty for 2012-13 by exempting not only suburban passengers but also those using AC chair car and AC-3 tier facilities on the railways. The railway surplus would now stand reduced to about Rs 10,000 crore for 2012-13, though still higher than the revised estimate of Rs 1,492 crore for the current year.
The rollback had been vociferously pushed by Trinamool Congress chief Mamata Banerjee, the biggest ally of the UPA government, by causing Trivedi’s resignation and anointing Roy. The passenger fare hike and additional passenger traffic was expected to garner an additional Rs 7,273 crore in total from both the hike and the rounding off of fares. A former railway board official said, “Keeping passenger fares low is Indian Railways’ way of not bothering about the quality of services.”
| DINESH TRIVEDI PROPOSES, MUKUL ROY DISPOSES The impact of the passenger fare hike rollback |
| TRIVEDI |
| Across-the-board hike on fares |
| ROY |
| Except for AC-1 and AC-2 classes, fares for the rest (general, second class, AC-3 tier and AC chair car) rolled back |
| IMPACT: Around Rs 5,766-crore hit for railways; social obligation of Rs 23,000 crore to balloon; extent of cross-subsidy between passenger/freight traffic to increase |
| TRIVEDI |
| Induct new board members for PPP/marketing and safety/research |
| ROY |
| Step withdrawn |
| IMPACT: Railways’ poor safety and PPP record likely to continue |
| TRIVEDI |
| Independent Railway Regulatory Authority to suggest the level of rates — both for freight and fares |
| ROY |
| Cancelled |
| IMPACT: Dynamic pricing of passenger and freight segments, according to the cost of input and market dynamics, put in cold storage |
Trivedi, who took the step of increasing fares after eight Budgets presented by various ministers including Banerjee, reacted by saying “the credibility of Indian Railways has taken a beating” and no private partner would look at investing in the railways because it was not viable. “Investments through the public-private partnership (PPP) mode will be hard to come by,” he said.
Roy even rejected the proposal of having a new PPP member on the railway board. Another post of member safety did not find favour either. The announcements came in the Lok Sabha in reply to a debate on the Railway Budget, later passed by the House. The minister later made similar announcements in the Rajya Sabha.
With the rollback, the railways would get Rs 339 crore from AC-2 and Rs 77 crore from AC-1. AC-2 is the class where the maximum concessional travel is made, so the actual inflow into the railway surplus will be less. The railways also face competition from airlines in AC-2, which remains unchecked with its hike untouched.
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The railway federation, too, seemed to have changed tack. It has now decided to approach the Prime Minister with a subsidy request. Shiv Gopal Mishra, general secretary of All India Railwaymen’s Federation, said, “All the unions will have a meeting with Mukul Roy next week. If we don’t get a response from the railway ministry or the PM, we’ll be forced to go for a sustained agitation.”
Freight rates had increased with effect from March 6 by around 20 per cent, making road transport more competitive in the 400-700 km distance segment.
With the freight rate hike, cement prices will rise by three per cent, steel by 1.5 per cent and power 3.5 per cent, as calculated by the railway board.