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Wednesday, 11 January 2012 00:00
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No fare hikes, want another dole from government

 

You have to hand it to Mamata Banerjee, even while threatening to severe ties with the UPA, her nominee railway minister (Dinesh Trivedi) has no compunction in petitioning the finance ministry for R10,000 crore so the people’s politician doesn’t spoil her track record by raising passenger fares. Since previous bailout requests have been rejected, Trivedi wants a permanent corpus to help build select projects—that will allow him to lower capital spending!—since “a sick Railways will hurt the country’s GDP growth aspirations” (a healthy Railways, he says, can add another 2 percentage points to GDP growth).

There’s little doubt a healthy Railways is vital, but Trivedi must know that while passenger fares are already hugely subsidised, the subsidy is rising each year. Between 2005-06 and 2011-12, passenger fares rose from just 24 paise per passenger km to 28 paise—that’s 17% as compared to 30% for freight. While passenger services use up 60% of the railway network, they contribute a third of earnings. In 2007-08, CAG pointed out last year, Railways lost R7,500 crore on passenger services against a R20,000 crore profit on freight—passengers are heavily subsidised while freight is overcharged, the reason why the Railways freight traffic share is steadily falling. Within passengers, while AC 1st Class passengers pay R2.5 per passenger km, the fare is as low as 15 paise for second class ordinary trains.

In 2010-11, Mamata cut contribution to the depreciation fund to R5,800 crore from the budgeted R7,000 crore and, instead of raising passenger fares in 2011-12, chose to promise 10,000 new homes for those living near railway tracks—the year before, she promised 552 hospitals, 50 Kendriya Vidyalayas and 10 residential schools. With passenger fare hikes ruled out, expect Trivedi to lower spend on depreciation and modernisation even further. Mamata’s politics always comes first.

 

 

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