A fare for the poor

One aspect of the Railway Minister's annual budget that most Indians have got used to over the last six years is the absence of any passenger fare hikes; in the popular imagination a ‘good' railway budget is one that may tax freight but that leaves passenger fares untouched. Ms Mamata Banerjee's latest budget was no different even though she also maintained freight fares at the same level. Yet the Indian rail authorities have to find ways to not just offset the rising cost of ferrying an increasing number of passengers at ‘uneconomic' fares, but also to enhance its rolling stock and services to keep pace with an increasingly competitive environment; road freight is nimbler and quicker with its ‘door-to-door' advantage and the Railways have been losing ground even as they have to cross-subsidise passenger fares with higher freight charges.

This is inevitable in a country such as India, where, as Mr Samar Jha, the Financial Commissioner, Indian Railways, recently told this newspaper, 80 per cent cannot afford even the current fares; the irony is that those fares are unsustainable from the network's point of view. Passenger fares have, over the decades, become a politically sensitive issue and the Railway Ministers have got around this conundrum by introducing luxury, upper-end train services such as the ‘Duronto' trains that they would not feel guilty raising fares on. This hardly helps mitigate passenger service losses that are close to Rs 20,000 crore. Add to this the rising wage bill and the extra payouts to staff, such as that engendered by the Sixth Pay Commission of nearly Rs 900 crore, that left the network with a paltry Rs 75 lakh surplus and it becomes clear that some innovative schemes are necessary to meet both the objectives of increasing access to rail travel for the poor and keeping the railways afloat, as it were.

One way out of the passenger fare tangle would be to target subsidies that can enable the Railways to offer very low fares for the poor, most of whom cannot even afford current fares. The problem with targeting is identifying the right beneficiary; ration cards have not worked. Now help seems to be at hand by way of the UID project. As Mr Jha hopes, the UID will help identify segments just above and below the poverty line that could be eligible for subsidised train travel. This would free the railways from its current bind regarding passenger fares and facilitate the formulation of a tariff structure for the rest of the travellers based on economic calculations. The Indian Railways, therefore, might just be among the early movers to leverage the power of numbers.

COMMENT NOW