Writing on Railways' Wall is clear: Fares must rise

New Delhi: If Railways Minister Dinesh Trivedi fails to bite the bullet and increases passenger fares, the railways will continue to sink into a morass. Especially since there are plans to increase recruitments in Groups C and D by 1,50,000. Experts say that the country’s largest employer also needs to look at innovative ways to generate funds so that its dependence on budgetary support is lessened. [caption id=“attachment_242870” align=“alignleft” width=“380” caption=“The railways’ surplus has fallen to just a third of its level four years ago. AFP”]  [/caption] The railways have sought as much as Rs 40,000 crore of budgetary support from the government this fiscal, double the money it had demanded just a year earlier. “Some amount of increase in passenger fares, even if it is nominal, is necessary. The railways’ surplus has fallen to just a third of its level four years ago -  from Rs 13,000 crore in 2007-08 to Rs 5,000 crore this fiscal. No appropriation has been made to the Railway Safety Fund this fiscal because of the dwindling surplus. And unless finances improve, the railways will find it tough to operate. So raising passenger fares is a must this budget,” says Soumya Kanti Ghosh, Director (Economics and Research), at the Federation of Indian Chambers of Commerce and Industry. Two different committees – one headed by Anil Kakodkar and another by Sam Pitroda – have recommended backdoor increases in fares without calling it one. While Kakodkar said the railways should levy a “safety cess” to improve the track system and improve the railways’ safety record, Pitroda called for a “modernisation surcharge” on rail fares. The panel said the railways needed to generate over Rs 2,00,000 crore over the next five years to part-fund a massive upgradation of the network, according to an Indian Express report. Ernst and Young’s Executive Director & PPP (public-private participation) leader Abhaya Agarwal echoed Ghosh’s sentiments on passenger fares but said that the railways need increased budgetary support for investment in new lines. He also listed out other industry expectations such as setting up a high-speed rail authority and a railway station development authority, increase in safety expenditure and announcement of new initiatives and projects on infrastructure and wagons. Ficci’s Ghosh pointed out that the railways have been unable to use the surplus land it owns for revenue generation apart from its inability to attract private sector participation. The railways’ plan to induct around 1,50,000 employees in Groups C and D is already expected to push its wage bill further up by around Rs 2,000 crore. With 1.36 million employees, the railways are the country’s biggest employers, says Business Standard. The railways spent around 42 percent of their earnings in wages and allowances and another 17 percent in pensions in 2009-10. In 2011-12, half the net working expenses (Rs 73,650 crore) was budgeted as staff cost.