Railway minister Lalu Prasad?s generosity to passengers in the form of ticket concessions and fare cuts are expected to cost the railways over Rs 300 crore in the coming fiscal. Rail Bhawan sources estimate that the fare and freight freebies announced in the Rail Budget last month will lead to revenue losses of anywhere over Rs 800 crore of which losses from fare reductions would amount to Rs 250 crore to Rs300 crore.
Prasad in the Budget has reduced fares significantly for AC first class cheaper by 7% and AC II-Tier by 4%. He also announced a 5% cut in passenger fares in second class and a symbolic Re 1 discount for tickets priced up to Rs 50 in non-suburban second-class. He has also given 50% concession to women senior citizens; fare discounts to Ashok Chakra awardees and AIDS patients travelling for their treatment. Free monthly season tickets have also been provided to students.
Railway officials however said the losses from fare reduction would be made up by leaving much of the freight rate unchanged. ?We decided to leave rates for iron ore and continue with some of the levies to make up for these losses,? an official source said.
But as a pointer to the fact that railways does lose out revenue by reducing fares Prasad informed the Parliament earlier this month that suburban rail services have incurred losses over Rs 600 crore every year since 2002-03 due to low second class ordinary fares and concessions granted in the case of monthly and quarterly season tickets.In 2002-03, suburban railway services incurred Rs 650 crore as losses while the amount increased to Rs 807 crore in 2003-04.