Railways mulling rationalisation of fares, seek finance ministry’s help in bearing pension cost

Indian railways is mulling rationalisation of passenger and freight fares in a bid to cater to its dwindling finances, Railway Board chairman Vinod Kumar Yadav said Thursday. The ministry of railways also plans to ask the finance ministry to bear the burden of nearly Rs 50,000 crore of pension liability, he added.

The organisation that employees nearly 1.3 million people, second only to the Armed Forces, runs nearly 22,000 trains per day out of which 12,000 are passenger trains carrying approximately 2.3 million passengers a day.

“We have requested the finance ministry to bear the Rs 50,000 crore annual cost of our pension liability previously also. We are the only ministry that meets its expenditure through its revenue. All other ministries’, including the defence ministry’s is borne by the Centre. At present we have more pensioners than employees and that is a huge burden on our finances. Our annual revenues are Rs 2 lakh crore so roughly 25% of our revenue goes in pensions,” Yadav said.

At present the national transporter, bears pension costs of nearly 1.4 million of its retired employees.

The move to merge the railway budget with the union budget in 2016 raised confusion over the pension bill of the national transporter.

The then Railway minister Suresh Prabhu requested the finance ministry to consider bearing the pension cost -- an idea rejected by the finance ministry on the grounds that Indian Railways generated revenue.

The centre is also mulling the revision of freight and passenger fares, Yadav said. “ Fare revision is something that is being thought about. We need to rationalize both fares. Freight fares are on a higher side and we need to bring down logistics cost and attract (business) from the road sector.”

At present, only 35% of the freight moved on land uses the railway network, according to the ministry of railways.

The national transporter, which has struggled with colonial-era infrastructure and rising debt in its passenger and freight systems, loses money in both its passenger and freight segment.

The Indian railways recorded its worst operating ratio in a decade in 2018 as per the Comptroller and Auditor General of India noted in report tabled in Parliament on December 3.

“Dwindling finances are a concern, we have a financial problem and if our pension costs are borne by the finance ministry we will comfortably be able to improve our operating ration. We have also taken a slew of reforms to reduce bottlenecks. The issue right now out of 68,000 km of our broad gauge network nearly 34,000 km carries nearly 96% of our traffic,” Yadav said.

“It is justified to ask finance ministry to bear the cost of pension liability because if you are treating railways like any other ministry it only makes sense to do. With the merger of the railway budget into the union budget the revenue earned by railways in going in the government’s kitty only so they can bear the cost of pension liability. It will also end up improving railways’ operating ratio,” said former Railway Board chairman S S Khurana.