Rlys struggle to cope with competition, demands

With airlines cutting fares, Railway Minister Nitish Kumar may have to do a rethink on fare hikes in his Budget for 2003-04.

business Updated: Feb 24, 2003 13:03 IST

Seventy-nine years after India's first independent railway Budget was presented, the world's second largest rail network is facing tough competition from airlines and battling growing concerns over safety.

Domestic airlines have lowered fares to woo away a significant section of passengers travelling by railway upper classes, and this could well influence Railway Minister Nitish Kumar to decide whether or not to go for further hikes in this category when he presents his Budget for 2003-04 fiscal on Wednesday.

The largest employer in the organised sector with some 1.5 million employees, the Railways is projected to end the fiscal with an uncovered deficit of about Rs 1,000 crore (Rs 10 billion).

Designated a strategic service and governed by a seven-member board of directors, Indian Railways is under pressure to improve its infrastructure and safety record while continuing to meet its social role of providing affordable travel to people with low incomes.

The demands on the Railways have gone up manifold in the years since 1924, when the first independent rail Budget was presented.

Although high-speed trains like the Rajdhani Express and Shatabdi Express and long-haul trains like the Kerala Express account for 10 per cent of the passenger train segment, they contribute 75 per cent of the passenger revenue.

The bulk of the profits come from travellers in air-conditioned coaches.

But stiff competition from airlines has resulted in Indian Railways witnessing a dip in passenger traffic during April-December, leading to a shortfall of over Rs 3 billion in its targeted revenue.

Against a target of Rs 303.77 billion for passenger revenue for April-December, the Railways earned Rs 300.71 billion, a shortfall of Rs 3.06 billion.

Marking 150 years of Railways operation in the country, 16 Jan Shatabi high-speed trains were started last year to offer a cheaper alternative to the air-conditioned Rajdhani trains.

"Barring two of the Jan Shatabdis, none of them has been generating enough revenues. The most popular is the link between Mumbai-Goa," a senior official told IANS.

There is likelihood of some of these trains being rescheduled or redeployed.

Of around 13,000 trains the Indian Railways operates daily, about 8,000 are passenger trains carrying around 13.3 million people every day. About 50 per cent of these trains are suburban trains offering subsidised travel.

The political fallout of a steep hike in passenger fare to shore up resources has often acted as a deterrent to the Railways.

With its share of the central funding shrinking over the years, the Railways have been seeking alternate revenues to mobilise resources to undertake projects for modernisation, replacement and expansion of infrastructure.

While officials claim that accidents have fallen from 473 in 2000-01 to 414 in 2001-02 and to 304 between April-January this fiscal, there is scepticism about the safety and comforts of rail travel in comparison to air travel. But concerns over rail safety are high among the travelling public.

The Railway Ministry would come out with a White Paper on the safety aspects of Railways in the Budget session, Kumar said.

The Railways are also struggling to win back freight traffic from the road transport.

Some attractive packages and point-to-point faster movement of goods have enabled the Railways to be optimistic of achieving a 510 million tonne target.

Industry bodies have been pressing the Railways to reduce the freight charges.

The share of Railways in the total transportation sector has declined from a high of 89 per cent in freight in the 1950s, to 40 per cent now.

Seeking ways to cut down expenditure, the Railways is looking at options like production of cheaper bio-diesel in collaboration with Indian Oil Corporation, installing power plants in joint venture with state-owned National Thermal Power Corporation and adding infrastructure in collaboration with states.

First Published: Feb 24, 2003 12:31 IST