Raise fares

A committee chaired by Sam Pitroda,adviser to the prime minister,has recommended a sharp one-time hike of 25 per cent in railway passenger fares. This will help the Indian Railways IR raise Rs 37,000 crore to part-fund its modernisation programme. This was completely avoidable had IR increased passenger fares in small measure every year. The railways have not touched passenger fares for eight years in a row. Like power,it is one of the big problem sectors of the economy. Mamata Banerjee and her populist rail budgets systematically destroyed the railway finances. It is left with little or no financial resources for undertaking a rapid and largescale modernisation of core assets comprising tracks and bridges,signalling,rolling stock and stations and terminals. For the railways to be a safe,affordable and quality transport mode,there is a great urgency for the organisation to focus on modernisation. It is not just about passengers.

The railways have been witness to growing competition from other modes of transport including road and air. It has seen a secular decline in freight market share from 89 per cent in 1950-51 to 30 per cent in 2007-08. The market share of railways in countries such as China and the United States is almost 50 per cent. In the last three years,IR must have lost a few percentage points more in freight share. In fact,the railways operating ratio amount spent to earn Rs 100 is estimated to have worsened to 91.1 in 2011-12. Just four years ago,it was 75.9. Over the years,the general political principle of increasing freight charges to cross-subsidise passenger fares has cost the railways dearly.

It is imperative that the government realise that railway operations must be sustainable in the long run. Its gross revenue has remained stagnant at about 1.2 per cent of the countrys GDP for the last 10 years. There is a compelling reason to raise fares,otherwise deteriorating assets coupled with rising demand may force the railways off the track.