The Union railway ministry is fighting a last-ditch battle with the Planning Commission on the one hand and the Union finance ministry on the other on the issue of the Railways plan size and government budgetary support for the fiscal year 1997-98.
Unless the Planning Commission and the finance ministry change their respective stands, a hefty hike will become inevitable in both passenger and freight tariff.
In last years railway budget, railway minister Ram Vilas Paswan had put the entire burden of the fare increase on only three per cent of the rail usersthose travelling by upper classes, while 97 per cent of the total volume of passengers, who travelled by second class, were spared.
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However, the railway board has already told Paswan that it is simply not possible to avoid a hike for second-class passengers this year because of the financial compulsions.
Paswan has, therefore, been caught in a dilemma. If he levies a heavy hike in the second class passenger fare, it runs counter to his much professed pro-poor policy.
But, with a hike seeming unavoidable, he is now looking for a middle courseputting the maximum burden of the fare hike on affluent passengers and minimising the burden on others.
However, even the additional revenue that will accrue from a passenger tariff hike is unlikely to meet the funds requirement.
So the freight rate hike could be higher than apprehended.
Meanwhile, the Planning Commission has sanctioned a mere Rs 8,300 crore which is Rs 170 crore more than the 1996-97 plan outlay, or a growth of just 2 per cent against the Railways proposal for a 1997-98 plan size of Rs 11,000 crore.
The finance ministry is said to have sanctioned budgetary support of Rs 1,831 crore against Rs 1,269 crore in 1996-97.
But official sources say this is no cause for joy for the Railways. Superficially, it may appear that the amount has been raised by Rs 562 crore. But this is actually not the case.
The government had undertaken to bear the cost of the Baramulla railway scheme in Jammu & Kashmir in full.
The 1996-97 budgetary support was exclusive of the expenditure on this scheme. But ironically, budgetary support sanctioned for 1997-98 includes this cost, which comes to about Rs 600 crore.
Therefore, the real level of budgetary support has actually declined by Rs 38 crore, sources pointed out.
The parsimonious approach of both the Planning Commission and the finance ministry comes at a time when the Fifth Pay Commission report is likely to put an additional funds burden of Rs 3,500 crore on the Railways.
The impending petroleum price hike would further add to this burden. And there is likely to be a shortfall in resource mobilisation because of shortfall in the freight revenue as a result of slow offtake of goods and slower loadings.
The railway minister is expected to take up all these issues at the United Front steering committees meeting to seek a remedy so that the recourse to hike second-class passenger fares may not politically recoil on the government.