Railways' muddled priorities

Problem with premium trains is not their occupancy levels, which are fairly high by any yardstick

The Indian Railways has just put out its grand plans for launching high-speed railway projects to connect Mumbai with Ahmedabad and Delhi with Varanasi. Their political significance can hardly be ignored. But perhaps more important is the disconcerting message they convey about the misplaced priorities of the Indian Railways. 

Announcements of new projects will certainly get the railway ministry many newspaper headlines. But these newspaper headlines alone won’t address the crying need for improving the Indian Railways’ overall services for transporting passengers. You may argue that high-speed railway projects are as important as the need to make existing passenger services better and more efficient. But that is precisely the problem that is yet to be fully addressed. 

In its fixation with high-speed railway projects, the Indian Railways has either failed to appreciate the evolving transportation dynamics in an increasingly aspirational India or ignored the need for improving existing services. And when it has tried to do so, its priorities have been misplaced and policy responses have been inadequate. Consider some of the recent initiatives to understand what may be going wrong with the Indian Railways. 

But first let us look at the proposed fare structure for the high-speed railway projects. According to reports submitted to the Railway Board, the proposed fare for the Delhi-Varanasi or the Mumbai-Ahmedabad project is expected to be Rs 4.5 per kilometre. This is slightly lower than the average per-kilometre cost of flying. In India, airlines charge an average fare of Rs 5 a kilometre on most sectors. High-speed railway travel will be marginally cheaper than a flight. But the problem is that the advantage will be more than neutralised by the many pluses of air travel. 

A shorter travel time, a superior experience (compare the conditions of railway stations with those of the airports) and the lure of enjoying upward social mobility as reflected in flying instead of travelling by train would make air travel a preferred choice even when compared with a high-speed railway service. Already, the government has tried to tap into the potential offered by an increasingly aspirational India by launching a scheme – UDAN — to facilitate low-fare air services between small towns. 

The political mileage from enabling an ordinary Indian to fly from her town to another destination would be no less than what is likely to be obtained from a high-speed train service between Delhi and Varanasi or between Mumbai and Ahmedabad. Also consider that the 10-15 years of gestation period for the high-speed train projects will mean a long wait by which time low-fare air services would have made deep inroads into this market. In short, high-speed railway projects will have serious hurdles to cross before they can make headway. 

Instead, the Indian Railways may do well to identify some low-hanging fruits that could be plucked to bring about positive outcomes by way of better and more efficient passenger services. So, what are the key priority areas the Indian Railways should focus on? Let us begin with its suburban networks in many parts of country that by the volume of passengers account for almost 28 per cent of the total passenger traffic carried by the Indian Railways. But the problem is that these suburban networks account for only 14 per cent of the Railways’ total traffic revenue. 

This huge gap is because the fare structure for the suburban railway services is heavily subsidised with few revisions to reflect the costs incurred by the service provider. With no government subsidy available, the Indian Railways bears this burden. As a consequence, the quality of these services has deteriorated over time and the hole in railway finances has been getting bigger. Populist policies of successive governments have ensured that these fares remain largely unrevised. The first priority area, therefore, should be to start the process of rationalising suburban rail fares so that these services are not a drain on the Indian Railways’ finances and the quality of suburban railway services could get better with improved infrastructure. 

The second priority area should be to take a closer look at all the explicit and hidden fare subsidies that the Indian Railways offers to different categories of passengers. Why, for instance, should a tax-paying senior citizen (over the age of 60 years) enjoy a 50 per cent fare concessions on all trains? Is it not time to restrict such concessions only to senior citizens below a specific income level? Or why not review all railway fare concessions to employees and retired employees so that their actual costs can be accounted for with a view to phasing them out or plugging the leakage? Even the fare concessions granted to parliamentarians should be reviewed. 

Finally, the Indian Railways seems to be unduly worried over the need for improving occupancy levels in its premium trains like the Rajdhani and Shatabdi services. It is puzzling that an occupancy level of 95 per cent in the Rajdhanis or 75 per cent in the Shatabdis should be a cause for concern for the Railways. Worse, this level of occupancy seems to have encouraged it to consider reducing fares by offering discounts and other concessions. The idea is to improve the occupancy level and shore up revenues. 

This is a wrong focus. The problem with the premium trains is not their occupancy levels, which are fairly high by any yardstick. Instead the focus should be on how the overall railway experience in premium trains can be improved — with better amenities in railway stations, faster speed, greater adherence to punctuality and ensuring cleanliness in the trains as also in the stations and on the tracks. Some steps in this direction are being undertaken, but the wrong focus on improving occupancy levels by reducing fares or providing discounts is worrisome. If anything, the Railways should first consider improving the services and then raise the fares to address the age-old problem of cross-subsidisation of passenger fares with relatively higher freight rates for goods.