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Thursday, 13 February 2014 00:00
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With the Railways losing even passenger traffic share, it needs to relook its entire strategy


Given how the losses on passenger traffic are skyrocketing—they rose 5 times between FY02 and FY13—it is no surprise the Railways FY14 operating ratio has worsened to 90.8% from the targeted 87.8%, a number that is also worse than FY13’s 90.2%. While this leaves precious little to invest in capital assets—R1,000 crore less was provided for depreciation in FY14—the Railways has a new problem. While its share in cargo traffic kept falling each year, it under-achieved on even its passenger revenues in FY14—as compared to a budgeted R42,210 crore, earnings were just R37,500 crore.

While the Railway minister has talked of how the Rail Tariff Authority will help fix the lopsided fare structure, there are two big problems with this. For one, it is still not clear if the regulator will have just recommendatory powers. Two, with even passenger traffic slowing, the regulator will find it tough to recommend a fare hike unless this is matched by a significant increase in the quality of service provided. Since even a 20% hike in passenger fare will generate just R7,500 crore per year compared to the R14 lakh crore required for even basic capacity expansion by 2020, the Railways needs to spend the maximum effort in getting PPP projects off the ground, including model railway stations that house hotels and commercial complexes within them. To begin with, as former minister Dinesh Trivedi had suggested, the Railway Board needs a Member PPP.


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