The railways is contemplating to pare about Rs 20,000 crore passenger subsidy by approximately Rs 4,000 crore annually over the next five years. The move, if implemented, will be indicative of a new phase where the railways will be following a scientific mechanism of determining passenger fares and services according to market dynamics.
The railways have not raised passenger fares for the last eight years. Last increase was in 2003 during Nitish Kumar’s tenure. Even freight rates have not kept pace with market dynamics. Populist measures have compounded the problem, straining the transporter’s finances.
“Lalu Yadav as minister of railways, though symbolically had reduced the 2nd class passenger fare by Rs 1 thrice but during his tenure, the railways earned extra money through increasing super-fast train charges along with increasing the number of super-fast trains by changing the norms of super-fast trains,” a Railway Board official said.
Railway employees are also backing this proposal in making a case for higher fares. According to Shiv Gopal Mishra, general secretary of All India Railwaymen Federation (AIRF), “The railways should maintain a balance between its social obligations and market dynamics. The rising diesel prices and input costs should be adjusted annually.”
If the railways is not able to sustain itself financially, then it would not be able to fulfill its social obligations towards the poor that it claims to stand for.
AIRF that represents 10,26,000 railwaymen favours subsidisation for passengers belonging to below poverty line (BPL) and some deserving sections of the society.
The Rs 3 a litre hike in diesel price last June has imposed an additional burden of Rs 720 crore on the railways. Even last year, the fuel bill of railways had increased by Rs 500 crore because of Rs 2 a-litre hike. The diesel consumption of railways is about 240 crore litres every year, which accounts for 16 per cent of its expenditure.
The operating ratio, which indicates how much is spent for every Rs 100 of traffic earnings, has risen from Rs 75.9 in 2007-08 to Rs 92.1 in 2010-11, pointing to the fact that investible surplus is declining over the years.
This has happened primarily due to implementation of 6th Pay Commission recommendations, which has resulted into a net outflow of approximately Rs 74,000 crore in past four years.
Less allocation in depreciation reserve funds(DRF) is actually a compromise on the safety and infrastructure augmentation works.
Freight and passenger earnings contributed approximately 64 and 28 per cent of gross traffic receipts in 2010-11. “Almost 22 million people travel on the railways daily, still the railways is facing a financial crunch and it is due to political indecisiveness that has caused non-revision of passenger and freight pricing based on actual cost of the service,” said a Railway Board official.
