How tiny the hike is can best be seen from the fact that while it will fetch the Railways Rs 4,000 crore or so in a full year, passenger losses are likely to be Rs 25,000 crore in FY13. Given that these were Rs 19,964 crore in FY11, this suggests the R4,000 crore hike may just be enough to stem the rising annual losses. That too depends on what happens to diesel prices. One proposal the petroleum ministry is pushing is to decontrol diesel prices for bulk consumers who account for around a fifth of consumption in the country. While dual pricing of any fuel is not the most sensible policy option because of the arbitrage it creates for theft, it has important implications for the Railways. Since the Railways spend around R13,000 per annum on fuel, a 27% hike in diesel prices (thats what a decontrol will mean, should it be accepted) will imply an extra fuel cost of R3,600 crore. That is, the bulk of the hike in passenger fares could be eaten up by just the hike in diesel prices were the Cabinet to approve this.
But even if you leave that aside, keep in mind what is being proposed is a R4,000 crore hike a year against the Railways capital requirement of R14 lakh crore over the next decade. Nor is this money required for just expansionaround R1 lakh crore, according to the Anil Kakodkar committee, is required to address just basic safety issues. Which means, under Bansal, the Railways has to move very aggressively on other ways to raise revenues. Apart from finding ways to cut the huge passenger subsidies from time to time, the only way out is to move aggressively on getting PPP projects on trackin the current Plan, the Railways have to mobilise R2,29,000 crore from PPP, but the progress here has been zilch. Indeed, in Dinesh Trivedis scheme of things, 30% of annual revenue was to come from non-traffic services such as from hotels and restaurants at model railway stationswhich is why Trivedi had planned a member PPP post in the Railway Board. This is the blueprint the railway minister needs to keep returning to.