Saturday, Oct 25, 2014

Years late, but Railways may need stronger reform shot

Written by Surabhi | New Delhi | Posted: June 20, 2014 10:13 pm

Friday’s passenger fare hike is the steepest since 1999, when the NDA government came to power. The Railways raised fares only thrice in the next 15 years, and on one occasion the hike was reversed.

Over the same period, the wholesale price index rose by over 70 per cent.

In 2002-03, then railway minister Nitish Kumar raised fares marginally by up to Rs 6 in some classes. For the next 10 years, railway ministers Lalu Prasad and Mamata Banerjee allowed no increases.

Dinesh Trivedi of the Trinamool Congress raised fares by up to 30 paise per kilometre in Rail Budget 2012-13, a decision that cost him his job as railway minister. His successor was Mamata’s close aide Mukul Roy, who rolled back the hike.

Railway officials said Friday’s significant decision still falls short of the Railways’ requirement. To effectively target underrecoveries, fares should have been raised by almost 50 per cent, they said.

The officials, however, expressed hope that the Fuel Adjustment Charge (FAC) component introduced last year would allow them to change fares as international crude prices change, without having to make announcements. The Railways will spend about Rs 30,000 crore on fuel this year, against an estimated total traffic earnings of Rs 1,65,770 crore.

Former Railway Board chairman J P Batra said, “This is the steepest rise in passenger fares in more than a decade. In this fiscal this will give the Railways an additional Rs 6,500 crore of revneue.”

In the interim Budget for 2014-15, the Railway Ministry had budgeted for Rs 49,505 crore from passenger earnings. Ministry officials said they had factored in this hike, and any delay would have hurt the projections.

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