Finally, rail fares hiked modestly after a decade

Jan 10 2013, 06:14 IST
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SummaryA decade-long stalemate over railway passenger fares came to an end on Wednesday with railway minister Pawan Kumar Bansal announcing an across-the-board hike in fares of all classes from January 21 midnight to net an additional R6,600 crore a year, which includes R1,100-1,200 crore expected in the remaining period of this fiscal.

A decade-long stalemate over railway passenger fares came to an end on Wednesday with railway minister Pawan Kumar Bansal announcing an across-the-board hike in fares of all classes from January 21 midnight to net an additional R6,600 crore a year, which includes R1,100-1,200 crore expected in the remaining period of this fiscal.

Bansal announced the hikes in the range of 2-6 paise per kilometre at a press conference — there is no precedent of the passenger fare being hiked between two annual railway budgets even though freight rates get revised more frequently — and justified this break from tradition, saying: “If we waited for another two months (for the presentation of the railway budget), our fiscal crisis would have worsened.”

Terming the new fares “reasonable”, the minister said the losses in the passenger segment,which stood at R1,059 crore in 2004-05, rose to R19,964 crore in 2010-11, an increase of 18% annually. The losses are likely to go up to R25,000 crore in the current fiscal.

Thanks to the refusal of successive railway ministers to hike passenger fares, the national transporter’s financial health has deteriorated — it needs to spend 95 paise to earn a rupee now, a situation that left it with little surplus for investment. This is at a time the railways needs huge funds for expansion and modernisation. The Sam Pitroda and Anil Kakodkar panels had estimated that the world’s third largest rail network will need a cumulative investment of Rs 9 lakh crore over five years for its network expansion, modernisation and safety upgrade.

There has been a widening of the differential between passenger fares and freight rates over the years as a result of the no-fare-hike policy of former railway ministers. The cross-subsidisation in Indian Railways is so huge that it earns 30 paise for carrying a passenger for a kilometre, while it gets Re1 per km for carrying a tonne of freight. The national transporter needs funds far in excess of what it could generate internally and from the budget outlay to meet its ambitious expansion plans, and is trying to aggressively pursue the public-private partnership model in many areas.

According to sources, with the interim fare hike, the railway budget slated for next month is now expected to be a populist exercise, with the announcement of new lines and trains and other sops for passengers. Bansal hinted that with Wednesday’s fare hikes, there might not be any further increase

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