Fare hike rollback puts spotlight on Railways future

The Railways loses about Rs 20,000 crore annually in passenger fares owing to the unchanged tariff slab for nine years. The rollback will cause a projected loss of Rs 7,000 crore, jeopardising its finances and safety.

Mamata Banerjee has railroaded the UPA government into announcing a substantial rollback in train fares, sending the transport sector behemoth back into the ICU a week after a pragmatic Dinesh Trivedi had tried to fast-track its financial recuperation. It is quite evident that bad politics has derailed good economics.

Trivedi's successor in the railway ministry, Mukul Roy - a diehard loyalist of his Trinamool Congress's populist boss Banerjee - announced the fare reversion in all classes barring the premium ones on Thursday.

According to Roy, the fare hike rollback would bring "much-needed relief" to the aam aadmi. Replying to the debate on the Rail Budget, which was passed by Parliament later, he said: "The proposal to increase fares by 2 paise per km, 3 paise per km and 5 paise per km in the second class suburban and non-suburban and sleeper class is a huge drain on the pocket of the masses. Similarly, the increase in the fares of AC chair car and AC 3- tier, which are now patronised by the middle class, is also quite severe. I intend to give relief to the already overburdened common man by not effecting any increase in these classes." Trivedi had proposed a hike of 10 paise per km each for AC chair car and AC 3- tier classes.

ANALYSIS - A bold step by Dinesh Trivedi

Roy, however, did not give relief to the AC 2- tier and AC first class for which his predecessor had proposed an increase of 15 paise per km and 30 paise per km respectively.

The flipside of the rollback is that it will cause the railways a projected loss of Rs 7,000 crore. As a result of the financial blow, passenger safety will take a backseat.

Significantly, Trivedi's budget speech had veered around two core points: safety and modernisation. He had stated that no new trains or lines would be unveiled till modernised tracks and safety devices were acquired.

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At the India Today Conclave on March 16, Trivedi had explained that he had proposed to hike fares because the money was urgently needed to improve the condition of the railways in the wake of several accidents in the recent past. In response to a query, the former railway minister had candidly quipped: "As a railway passenger you are safe, but not quite. Get yourself a bigger insurance policy."

On whether he would vote against his own budget in case of a rollback and in deference to his party leader Banerjee's wishes, Trivedi had said at the conclave: "If you roll back, you roll back on safety also. So take a call." Prime Minister Manmohan Singh - bound as he is by "coalition dharma" of which Trinamool Congress chief Banerjee is the high priestess - has taken the call. And the likely result of not having a prudent person steering the railways will be the public transporter continuing on critical lifeline support for his government's remaining term.

Petty politicking has taken a heavy toll on Trivedi's positive vision even though the PM as well as finance minister Pranab Mukherjee had almost instantly heaped praise on the no-nonsense Rail Budget presented by him last week.

All that is history now, as is the meagre hike in passenger fares Trivedi had proposed. The former minister had confessed to having daily nightmares on how to resurrect the railways and had termed its operations "sick and in urgent need of an overhaul". Trivedi's budget had sent another positive signal - that of making sensible investments to revive rusting projects. But that, too, has been consigned to the dustbin now, thanks to the histrionics of a politician who paints herself as the messiah of the common man.

The Railways loses about Rs 20,000 crore annually in passenger fares owing to the unchanged tariff slab for nine years. "Of the Rs 7,000 crore expected annually from the hike, the railways would now have to be content with just Rs 300 crore," a Railway Board official said.

The Railways is in dire need of at least Rs 1.25 lakh crore to complete 129 pending projects. Its operating ratio has sunk to an all-time low of 95 and it threatens to go plummet further. "For any investor, it's a no-entry zone as there are hardly any returns from the derailed and bleeding railways.

It is spending nearly its entire earnings in wages and fuel bills," the official rued. Trivedi was awake to the problem and had put his point across succinctly at the conclave: "If the railways is not the growth engine, India will not grow. It is not someone's property. If the railways is healthy, I guarantee you that Warren Buffet will invest in it." It is ironic that Banerjee's ' Vision 2020', when she was the railways minister, had envisaged an investment potential of Rs 14 lakh crore.

But three years after that "roadmap" was presented, there is not extra penny to spare on broken tracks, for buying critical spares and for routine maintenance. No wonder, the frequent accidents and the high death toll.

Roy has also eliminated further hope of recovery on the fares front by trashing Trivedi's proposal for a Railway Tariff Regulatory Authority.
"We are not in the telecom or power sector. I hold this proposal in abeyance," the new minister said on Thursday. "I intend to aggressively mop up resources through non- conventional means," he added, without elaborating on that innocuous promise.

Making railways more of a personal turf, where regional aspirations and party leadership reign supreme, Roy aborted two other proposals of Trivedi, additional Board members for safety and marketing as well as PPP projects, describing them as "uncalled for". Trivedi had rightly proposed the two posts in the Railway Board so that dedicated officials could oversee the operations and deliver.

The minimum PPP potential is estimated at Rs 1.25 lakh crore in the railways and the total investment potential for the 12th five year plan is pegged at Rs 7 lakh crore.

Perhaps, Roy failed grasp the larger picture behind the ideas mooted by Trivedi, who had said in his maiden speech: "It's time to perform or perish." The man whose head rolled because he took the bold step chose not to react but expressed concern. "I have enough to live modestly, but I pity Indian Railways and my country," he said.

This is the umpteenth time the government has bowed to the diktats of the petulant ally. Banerjee has earlier put the spanner in the works to stall key policy measures and legislations such as the proposed Food Security Bill, FDI in multi- brand retail, Pension Bill, the NCTC and state Lokayuktas.

Courtesy: Mail Today