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Friday, 21 October 2011 00:00
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Hiking only upper-class railway fare is no solution


Railway minister Dinesh Trivedi has done well to talk of the need to introduce a dynamic passenger fare policy—like in the case of airlines, fares will go up and down based on demand and supply conditions. More so since passenger fares have remained largely unchanged for almost eight years. 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.

Trivedi’s plan to restrict the hike to upper classes only, however, makes the scheme a non-starter since it is suburban and lower-class traffic which is hugely subsidised—raise upper-class fares any more, and people will only migrate to low-cost airlines. 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. In non-suburban services, upper-class passengers constituted just 1.2% of the total railway passengers, 6.1% of the passenger kilometres and a substantial 24.2% of the earnings. Similarly, while second-class passengers on mail and express trains accounted for 13.6% of the total passengers and 51.3% of the passenger kilometres, they contributed 51.8% of the passenger earnings. 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. Railways can also raise revenues by ensuring that the state and central government meet the social services obligation cost of the Railways, which stood at R14,977 crore in 2009-10, including that on essential commodities carried below cost and the operation of uneconomic lines.



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