For one year, Rlys charged you what they were told not to

At the centre of the row is a Rs 1,000-crore sum which the Railways will end up collecting as development charge from passengers by the end of the current fiscal. Not a fresh levy, this development charge was essentially a change of name for the safety surcharge which the Ministry had levied since 2001 to raise funds for the Special Railway Safety Fund (SRSF).

Set up in October 2001 following recommendations of the Railway Safety Review Committee headed by Justice H R Khanna, the SRSF was a non-lapsable fund of Rs 17,000 crore to clear arrears in replacement and renewal of overaged safety related assets like tracks, bridges, signal and telecom equipment and rolling stock within a fixed time frame of six years — from 2001-02 to 2006-07.

While Rs 12,000 crore for the SRSF was to come as dividend-free budgetary support from the Central government, the Railways were mandated to mobilise the remaining Rs 5,000 crore through levy of a safety surcharge on passenger fares.

The Railways began levying a safety surcharge, ranging from Re 1 to Rs 100, depending upon the class of travel and the total distance travelled. For travel up to 500 km, a Sleeper Class passenger had to pay Rs 10 as safety surcharge. Similarly, AC-3 and AC-2 passengers invited safety surcharges of Rs 30 and Rs 40 respectively. Exactly double the amounts were charged in case of travel beyond 500 km. The move paid off, generating a substantial sum. For instance, against projections of Rs 750 crore, the Railways earned Rs 850 crore in 2006-07 through the safety surcharge.

With the six year period for SRSF works running out on March 31, 2007, the Railways were supposed to stop levying the safety surcharge beyond that date. But five days before the deadline, the Railway Board came out with a circular stating that the Ministry had decided to subsume the safety surcharge in passenger fares “on as is where is basis in the form of a development charge to fund the dedicated freight corridor”. The circular stated that receipts from the development charge would be included in “passenger earnings” starting April 1, 2007.

Slamming the move, the Parliamentary Standing Committee on Railways called it a “deceptive practice”. In its latest report tabled in Parliament in December 2007, the committee pointed out that the Railways went ahead “inspite of the committee’s repeated recommendations against such a move”.

Disagreeing with the Ministry’s view that imposition of a development surcharge on passenger fares will not result in any change in existing chargeable passenger fares, the committee said that “withdrawal of safety surcharge from the passenger fares would have certainly given some relief to passengers” and that “replacing safety surcharge with development charge has obviously denied this relief to the passengers.”

“The safety surcharge was levied for the specific purpose of raising funds for asset renewals. All the funds required for the Rs 17,000 crore SRSF have already been collected in the fixed tenure. When no extra funds are going to come from the Central exchequer, why should Railways continue to burden the passengers?” said Basudeb Acharia, chairman of the Parliamentary Standing Committee on Railways.

“Converting the safety surcharge into a development charge is an indirect way to earn revenues. It raises questions of propriety considering the fact that it was not mentioned in the last Rail Budget speech. While the Railways make claims of having reduced fares, they are indulging in deceptive practices like these,” he said, adding that the Committee had specifically recommended withdrawal of this charge and sought an Action Taken Report from the Ministry.

When contacted, a Railway Ministry spokesperson declined comment.