The Indian Railways, the world's fourth largest network, runs into significant yearly losses, which have risen sharply because fuel prices have been increasing, while fares haven't.
In just the past year, losses have jumped 9%. With more fuel price hikes planned - half of the
train services run on diesel - the figure will only go up.
The railways' "operating ratio"- a measure of each paise spent towards Rs. 1 earned - has fallen to 88.8%, an indication of efficient spending, according to Tuesday's budget figures. Yet, there are steep challenges.
"The road ahead is long with many a winding turn," railway minister Pawan Bansal said in his budget speech.
Millions of poor who travel by rail want fares cheap. Low fares not linked to profitability aren't the only reason why the railways have been chugging along a financially difficult track.
Political meddling has contributed to losses. For instance, rail ministers have been accused of flagging services on unprofitable routes for political gains.
Bansal's predecessor Dinesh Trivedi had proposed a small across-the-board fare hike, including those for lower-class travel. He had to resign after presenting his budget, as the move had angered his political boss, Mamata Banerjee.
Not being able to make profits affect another critical area: safety. According to a report by the government-appointed Kakodkar panel, the railways was "at the brink of collapse".
"Passenger fares have not been increased in the last decade and the infrastructure is severely strained. All safety margins have been squeezed. This has led to a neglect of infrastructure maintenance," the report had said.
With little room for passenger fare hikes, the railways have only raised freight charges. Bansal, on Tuesday, said his ministry would accord priority to strict financial discipline.
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