‘Up Railways fares 25%,link to inflation’

A Sam Pitroda-led panel wants Railways to hike fares and index all fares to inflation.

Written by Priyadarshi Siddhanta | New Delhi | Published: January 23, 2012 1:34 am

A high-level committee on rail modernisation chaired by Sam Pitroda,advisor to the prime minister,has recommended that the Railways hike passenger fares one time by 25 per cent and index all fares to inflation to raise Rs 60,000 crore next year.

In a presentation to the Planning Commission ahead of the Railway Budget 2012-13,the committee has said the funds could be used to part-fund a modernisation programme costing Rs 9,13,000 crore over five years. A 25 per cent increase in passenger fares can mobilise Rs 37,500 crore,it said.

The Pitroda committee was set up by Railway Minister Dinesh Trivedi in September last year and its other members include HDFC’s Deepak Parekh,IDFC’s Rajiv Lall and Feedback Venture’s Vinayak Chatterjee.

While Trivedi has talked of the need to raise fares to bring the Railways back on track,his party leader Mamata Banerjee is opposed to the same.

Apart from an increase in fares,the panel has urged the Railways to “actively examine indexing passenger fares and freight with inflation to mobilise Rs 25,000 crore”,and to shift to market-oriented fares,which will improve earnings by

Rs 10,000 crore.

“The net internal generation under the 12th Plan base case is estimated to be less than zero and is therefore not being considered as a source of funds,” it observed,asking the Planning Commission for Gross Budgetary Support of Rs 3,54,000 crore over the next five years.

“Special re-development charges from users of re-developed routes and assets can be levied. Besides,a modernisation surcharge could be levied,” the panel said and asked the government to create a ‘Modernisation Fund’ outside the existing financial systems of the Railways to fund its fresh initiatives.

For executing its list of priority projects,the Railways needs Rs 53,827 crore,besides Rs 1,00,000 crore for laying new railway lines. The monolith needs another Rs 97,000 crore for its Public Private Partnership initiatives,including development of loco and manufacturing units,leasing of wagons and developing private freight terminals. It needs to invest an additional Rs 39,836 crore for safety-related issues,says the report.

Other recommendations

* Commercialise land and air space to mobilise Rs 50,000 crore.

* Cut operating costs to save Rs 15,000 crore.

* Enhance net freight revenues to earn Rs 40,000 crore.

* Levy fuel efficiency surcharge to mobilise Rs 10,000 crore.

* Explore Public Private Partnership to raise Rs 1,79,000 crore.

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