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Fares, freight rates kept unchanged
The Railway Minister also announced introduction of 46 new trains. Highlights
If you are dying in a “major government hospital”, Lalu Prasad Yadav said in his rail budget, the railways would take you, or your mortal remains, to the railhead nearest to your hometown at a 50 per cent concession; reservation on a priority basis. Unannounced in the budget, but looming large over it, is another slow death — that of Indian Railways.
Low-end passenger fares (among the most subsidised globally) and freight rates (among the highest globally) weren’t, respectively, increased or decreased in a budget that looked more a job creation and job search scheme for the unemployed (Bihar has plenty of them) than a policy statement on the largest rail network in the world.
Jobs for boys were extended to girls — those studying in village schools and appearing in professional exams will get 75 per cent concession. Last budget’s full travel concession for Central government job seekers was extended to those applying for state government employment. Quarter price second class tickets for village students undertaking study tours, half price second class fares for farmers and milk producers on training trips and a wheel factory in Chhapra (Lalu Yadav’s constituency) rounded off the minister’s list.
All of these and the 46 new trains — 13 of them will run only after gauge conversion — drew approving table thumps in Parliament. The warning bells for the railways sounded when Lalu Yadav read out the numbers.
Lalu proposed “historic changes” in tariff rates: reclassifying 4,000 commodity groups to 80. That will bring down some rates, like LPG, kerosene and a few chemicals. But the big problem wasn’t addressed.
Although rail freight is cheaper than road transport, the latter has the advantage of point-to-point service and bigger carrying capacity.
The railways, therefore, need to reduce freight rates considerably to attract goods traffic. But high freight rates cross-subsidise passenger fares. If passenger fares were rationalised, or if the subsidy came from the general budget and not rail finances, average freight rates, assuming they were one rupee, can come down to 60 paise. This decrease will move back bulk commodities the railways are losing to road transport and transform rail finances.
A change in finances is more than urgent because, as budget figures showed, the railways cannot put money where the rail minister's mouth is. Lalu spoke of a five-year modernisation plan and allocated Rs 3,500 crore for rail safety. But he can spend only three per cent of earnings on safety and only two per cent on development.
The reason is the railways spend 30 per cent of earnings on salaries and allowances and 14 per cent on pensions. The organisation employs nearly 15 lakh people, 40 per cent of them unskilled. The burden of this combines with passenger fare subsidy.
The railways earned, by budget figures, 30 per cent of income from passenger fares. Earnings from plying people are spent on salaries of rail employees. More than 100 passenger trains lose money heavily. But 23 of the 46 new trains announced in this budget are passenger trains.
The budget promised a "Clean Station System", where trains will be cleaned at one station in every rail zone. The clean up act for Indian Railways needs to go a little beyond that.
