Cabinet notes on this issue and PPP mode being prepared
Unable to make both ends meet and generate resources for development, the Railways are hurriedly preparing at least two Cabinet notes for ushering in investment through Public-Private-Partnership (PPP) mode and increasing freight and passenger fares in tune with the rise in input cost.
The objective is to ensure sustained income to meet sustained expenditure for sustained development, all of which have been eluding the Railways for more than three years. A sense of urgency was reflected in the freight increase ahead of the 2012 budget presentation but the move to increase passenger fares met with only limited success for political reasons.
Now the Railways have decided to make amends and increase fares for second and sleeper classes which would bridge the gap by Rs. 4,000 crore annually. Authorities are mulling over the propriety involved in this action as Parliament has approved withdrawal of a proposed hike in the fare for these classes.
The Cabinet note for setting up the Rail Tariff Authority is almost in the final stages, according to highly placed Railway Board sources.
The authority would suggest the guidelines on which cargo and passenger fares would be revised basically in proportion to the hike or reduction in diesel prices. The board will take the final call on such issues.
The Cabinet note on PPP mode is more complicated as the Railways are keen on retaining the operational function because it involves their land and assets. Moreover, efforts during the past three years to woo private investors have not yielded results.
Plan panel objection
The Planning Commission, however, is not amused by the proposed Cabinet note. Its senior officials are viewing it with suspicion as a delaying tactic on the part of railway officials wanting to maintain their stranglehold on the affairs of the Railways.
Besides viewing it as a general note, the Commission officials question the need for such an exercise when the Centre has already issued guidelines for the formulation, appraisal and approval of PPP projects.
They stressed that the Railways had only prepared projects based on the guidelines issued in 2005 and sought the approval of the Cabinet Committee on Economic Affairs or the Cabinet, if required.
Don’t count us out: union
But the Railways have also to contend with trade unions, whose leader Vivek Khare said they were not against induction of technology or development of the Railways through PPP mode but there had to be fair play.
The unions have suggested that bids be invited and joint ventures formed, and that the Railways use the land at their disposal as equity in the proposed business. The unions warned against bidding them out, underscoring that a union had opposed leasing of prime land at Bandra in Mumbai for which bids had been called.
The Cabinet note would ensure sustained income to meet sustained expenditure
The Planning Commission views the note as a delaying tactics by the railways