Logistics

Trinamool impact: Rlys may lose 60% of incremental passenger earnings

Our Bureau New Delhi | Updated on March 12, 2018 Published on March 19, 2012

Passenger table

The Railways could lose almost 60 per cent of the Rs 7,273-crore incremental earnings from the passenger segment projected for 2012-13, if the proposed fare hike of second class, sleeper class were to be rolled back.

This is because the fare hike proposed in the Railway Budget of Mr Dinesh Trivedi is structured in such a manner that 78 per cent of the incremental earnings would be coming from non-AC passengers.

The increase in fares are steeper for the lower, non AC segments, with an aim to reduce the cross-subsidisation within the passenger segment of the Indian Railways system.

“The Railways stand to lose about Rs 4,300 crore in case the tariff hikes in non-air conditioned segment are rolled back entirely. This is 60 per cent of the total incremental earnings,” explained official sources in know. The Trinamool Congress has been demanding rollback of passenger fare hikes for the “common man”, particularly the users of non-AC segment.

The Rs 4,300-crore impact excludes earnings from non-AC first class segment though, which is not perceived as a service for “common man”. In fact, it is only the non-AC segment on which the Finance Minister, Mr Pranab Mukherjee, proposes to levy an effective 3.6 per cent service tax.

POLITICAL PRICE

The Trinamool Congress chief and West Bengal Chief Minister, Ms Mamata Banerjee, has demanded a rollback of the second class and sleeper class segment. She has indicated that she is willing to forgo her demand for a complete rollback if the hike in general/sleeper class fares is reversed.

Speaking to reporters at Parliament house, before a meeting with TMC MLAs, Ms Banerjee said the increase in upper class fares can be tolerated but not in general (second class) and sleeper class tickets.

In effect, the rollback will knock off some 27 per cent of the Railways' projected surplus of Rs 15,557 crore and worsen the operating ratio by about two percentage points. The operating ratio – which is the expenditure per rupee earned and an indicator of profitability – will drop to about 87 per cent from 84.9 per cent.

Lower surplus will mean lesser funds for capital expenditure and development-related expenditure. This translates to lower demand for steel to build rail tracks, amongst others.

However, this impact could be negated if the Railways were to get a higher budgetary support from the Finance Ministry that matches the extent of roll-back. This is something that the Railways' five federations have been demanding. Also, the exact impact of rollback could vary depending on its extent.

> [email protected]

Published on March 19, 2012
null
This article is closed for comments.
Please Email the Editor