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Thursday, 08 March 2012 00:00
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Railway freight up again, nothing on passengers

With the Railways hiking freight rates by around a fifth, a week before the Rail Budget, this suggests that, in keeping with Mamata Banerjee’s wishes, railway minister Dinesh Trivedi’s budget may not have any proposals on tariff hikes, and certainly not for passenger services. In which case, it will be interesting to see how he balances his budget, especially the R1 lakh crore that the Anil Kakodkar Committee estimates he needs for expenditure on critical safety needs. Under Banerjee, contributions to the Depreciation Reserve Fund fell to R5,800 crore in 2010-11 as compared to the budgeted R7,000 crore and other funds were also drawn down, and it’s possible Trivedi may have no option but to follow his leader—the Railways’ operating ratio has worsened from 76.3% in 2007-08 to 92.1% in 2010-11, and chances are it will be worse this year. How bad things are can be gauged from Trivedi’s statement at the Express Group’s Idea Exchange that he needed the extra revenues from the freight hike just to balance his FY12 budget.

Trivedi is right when he says that just hiking passenger tariffs is of little help—passenger services account for just R26,000 crore of the total revenue of R89,000 crore in 2010-11—compared to what he needs (R14 lakh crore till 2020), but a hike in passenger tariffs will at least get the freight-to-passenger tariffs back to the levels they were in the early 2000s. Keep in mind that while freight rate per tonne kilometre rose from R80.83 to R94.77 between 2005-06 and 2009-10, earnings per passenger kilometre rose from R24.53 per passenger kilometre to just R25.96 per passenger kilometre. Consequently, losses on passenger and other coaching services crossed R15,000 crore in 2009-10. While suburban services accounted for 53.5% of the passengers and 14.5% of the passenger kilometres in 2009-10, they accounted for just 7.1% of Railways’ passenger revenues. The most subsidised segment of the railway passengers are the second-class passengers on the ordinary trains who account for 31.8% of the total passengers, 28.1% of the passenger kilometres and just 16.8% of the passenger earnings. As a result of this, the ratio of passenger tariff to freight tariff in India is 0.33 in comparison with 1.3 for China, 3.07 for Germany and 11.06 for the US. In other words, there is little room for more hikes in freight rates. Higher rates will drive away freight traffic to roads.

Trivedi’s solution to this is to move towards swanky, modern PPP-based railway stations where top-class eateries and hotels and multiplexes coexist with railway services—with separate levels for incoming and outgoing trains. Over 30% of Japan’s rail revenues come from ‘other’ services and so it should be in India. That’s a great plan, and he says his Cabinet note is ready. But till he gets to implement it—and the Railway bureaucracy has stymied every PPP attempt over the last few years—can we get some token reforms like hikes in passenger fare and a ban on new trains?


Last Updated ( Sunday, 11 March 2012 12:02 )

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