With freight rates hiked, rail passengers may be spared

Mamuni Das New Delhi | Updated on February 18, 2011 Published on February 17, 2011

Burden on freight

Politics is what makes the trains run up and down, so the Railways is unlikely to hike passenger fares in the Rail Budget 2011-12.

Asked whether it was not time that the level of cross-subsidisation between passenger and freight services was reduced, several top Railway Board officials simply say, “This is a political decision.”

The Railway Minister, Ms Mamata Banerjee, who heads the Trinamool Congress, is all set for the West Bengal State Assembly elections, which are due in May.

There have been no significant passenger fare hikes in the last seven years with the Railways primarily depending on the freight services to meet the earnings targets.

But as always the Railways need money for capacity expansion, which will be all the more difficult given that they will take an incremental hit of Rs 15,000 crore a year because of the Sixth Pay Commission.

But there could be a turnaround beginning next fiscal, for two reasons.

First, the Railways will have paid-up the arrears of the Sixth Pay Commission by March 2011, completing a task it began almost two years back.

Second, the earnings projections are likely to get a boost after the recent hikes in freight fares. Freight services account for about 70 per cent of total earnings of the Indian Railways.

Where funding from the Government is concerned, the Railway Minister has been negotiating asking for higher budgetary support – be it through an increase in plan funding of almost Rs 40,000 crore, or through setting up of a dedicated fund for its capital expenditure requirement.

This dedicated, non-lapsable fund, could be somewhat like the Rs 17,000 crore special railway safety fund (SRSF) for renewal of over aged rail assets, which was operational since 2001 under the then Railway Minister, Mr Nitish Kumar.

Railways also hopes to raise more private funding for building last mile rail links. For the port connectivity projects, Railways hopes to be able to garner Rs 1,000-1,200 crore of investments to start with. They are also opening up the last mile linkages for coal and iron ore transportation for private investment.

There is likely to be special mention on building rail links in the Left Wing Extremist affected area, North-East as well as Kashmir.

This apart, there are some announcements which have to be made to give the Rail Budget a feel good factor. They include a whole list of stations to be modernised; higher expenditure on passenger amenities; new trains including the double-decker trains and Durantos; new factories to be set up; studies for high-speed rail links, more usage of IT for serving passengers, and the initiation of work on dedicated freight corridors.


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Published on February 17, 2011
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