Except for a marginal increase in fares last year for AC First Class and AC 2-tier, there has been no rise in basic passenger fares in the Indian Railways for a decade now.
Except for a marginal increase in fares last year for AC First Class and AC 2-tier, there has been no rise in basic passenger fares in the Indian Railways for a decade now. By any yardstick, this is an unreasonable and economically unviable situation. Content at playing to the gallery, the previous occupants of Rail Bhavan — Lalu Prasad, Mamata Banerjee and her Trinamool Congress proxy — chose not to raise fares all these years. At least Mr. Prasad was helped by an economy on a roll, which enabled the Railways to mop up substantial funds from freight traffic. Unfortunately for ‘Didi,’ the economic downturn began around the same time as her tenure, and competition from road transport was also formidable. Consequently, freight movement targets could not be reached. Despite the growing deficit, she was adamant in not wanting to increase fares even marginally to cope with inflation and the rise in input costs, especially diesel. Consequently, the Railways had to take the entire burden on itself. Last year, when the Trinamool’s Railway Minister, Dinesh Trivedi, presented his budget, he did propose a fare increase. But an angry Ms Banerjee forced him to resign. She nominated Mukul Roy to take his place and rolled back most of the budget proposals. Only a marginal increase in First AC and AC 2-tier was allowed to be retained.
When the Trinamool walked out of the UPA government, the Congress made sure it retained the Railway portfolio. When P.K. Bansal took over the ministry last October, he made it clear that a fare increase was imminent. Since then, the huge shortfall in the movement of coal gas further hit the Railways’ bottom line. In Wednesday’s across-the-board increase in passenger fares, the two premium classes have got away with a lower hike because they were hit last year. But Second Class ordinary and AC 3-tier fares will rise substantially — from 12 to 30 per cent on an average, with those travelling longer distances forced to pay more. Even suburban passengers have been taxed, leaving only Ms Banerjee’s Kolkata Metro out of the net. The Opposition lost no time in slamming what it described as “another anti-people decision,” and called for a rollback. That may not happen this time. Given that the loss on account of passenger fares was set to reach Rs. 25,000 crore this fiscal, this steep increase — which will yield Rs. 6,600 crore in a full year — may be inevitable. Nevertheless it is worth asking whether the Minister should have come up with his announcement now when the annual Railway budget is hardly six weeks away. It is nothing new for governments to raise administered prices on budget eve. But it is still a wrong approach.