Diesel Slick

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SummaryRailways finds around half of its bold fare hike has been eaten up by the sharp rise in diesel price.

Railway minister Pawan Kumar Bansal scored big when, last fortnight, he attempted to make a beginning into cutting the Rs 25,000 crore passenger fare losses by hiking fare by 12-13%. By doing so, Bansal proposed to raise around R6,000 crore in a full year—incidentally, Trinamool MP Dinesh Trivedi lost his job for proposing less bold hikes. Problem is, more than half of this is going to be eaten up by the sharp hike in diesel prices last week—about 25% in one shot for bulk users such as the Railways.

So Mr Bansal either has to go back to the drawing board, and the Congress party, to figure out how he can make good the extra expenses. If not, he has to live with the passenger losses which are growing at around R2,000-3,000 crore each year. Compared to the Rs 14 lakh crore the Railways needs to invest over the next decade, the passenger fare hike is insignificant. But if more private players are to be brought in as PPP investors—that is the only way out eventually—or as lenders, Bansal needs to stop the Railways from haemorrhaging. For that, another passenger fare hike is critical.

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