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Saturday, 28 January 2012 13:16
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Lower passenger fare not the Railways only problem

Though his party chief Mamata Banerjee has made a big fuss over not wanting to hike passenger fares, railway minister Dinesh Trivedi is right when he says the problems of the Railways go far beyond just hiking passenger fares. Passenger fare accounted for R26,000 crore of the Railways’ R89,000 crore revenues in 2010-11, so even a massive 20% hike in passenger fare would yield just around R5,000 crore. This would ensure the share of passenger revenues to total revenues went back to the 32-33% levels of 2003-04, but would be a drop in the ocean compared to what the Railways need. Trivedi himself has put the amount at R14 lakh crore for capacity expansion by 2020, though an internal Railways group had put the needs at R47 lakh crore.

Clearly raising passenger fares in the coming Rail Budget has to be a priority since no organisation can afford to be bleeding year after year, but the big question is where the big money for capital investment is going to come from. The obvious solution is to bring in private investors to shoulder the burden in precisely the same way that is being done in other sectors. Forget about the aviation sector where all the big airports have been developed by private sector firms in a PPP scenario; in even the roads sector, PPP has been the norm except for stretches where, since there is virtually no traffic, the government will have to fund them completely. Much like airports, railway stations can easily be developed by private sector firms who could be given the rights to make money on land provided for commercial activity or from advertising rights—the Hyderabad metro is another good example of this. Though a similar plan was worked out for the New Delhi Railway Station several years ago, the railway bureaucracy managed to ensure nothing came of it. Similarly, attempts to get private sector firms to set up manufacturing plants, for both electric and diesel locomotives, also got scuttled on one ground or the other—in one case, the railway bureaucracy said there was just one bidder, never mind that the bid received was lower than what the Railways spent on procuring such wagons each year. Getting the railway bureaucracy to agree to allow privatisation to happen on the scale that is required will probably be tougher than even getting Banerjee to agree to a hike in passenger fares.



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