Years late, but Railways may need stronger reform shot

Written by Surabhi Rastogi | Surabhi | New Delhi | Updated: Jun 24 2014, 19:05pm hrs
Railway reformsFriday's passenger fare hike is the steepest in the past 15 years. (AP)
FRIDAYS passenger fare hike is the steepest in the past 15 years. The last significant change in fares happened in the rail budget of 1999, when the NDA government came to power. The

Railways have raised fares only thrice since then, of which one hike was reversed.

Over the same period, the wholesale price index rose by over 70 per cent. In 1999, Railway Minister Nitish Kumar kept second class fares unchanged but raised all higher class fares by 3 to 5 per cent. He again raised them marginally in 2002-03. But for the next 10 years, railway ministers Lalu Prasad and Mamata Banerjee allowed no increases.

Dinesh Trivedi of the Trinamool Congress raised fares by up to 30 paise per kilometre in rail budget 2012-13, a decision that cost him his job as railway minister. His successor was Mamatas close aide Mukul Roy, who rolled back the hike.

Railway officials said Fridays decision still falls short of the Railways requirement. To effectively target underrecoveries, fares should have been raised by almost 50 per cent, they said.

The officials, however, expressed hope that the Fuel Adjustment Charge (FAC) component introduced last year would allow them to change fares as international crude prices change, without having to make announcements. The Railways will spend about Rs 30,000 crore on fuel this year, against an estimated total traffic earnings of Rs 1,65,770 crore.

Former Railway Board chairman J P Batra said, This is the steepest rise in passenger fares in more than a decade. In this fiscal this will give the railways an additional Rs 6,500 crore of revenue.

In the interim budget for 2014-15, the Railway Ministry had budgeted for Rs 49,505 crore from passenger earnings. Ministry officials said they had factored in this hike, and any delay would have hurt the projections.