Business Today
Railway Budget 2012: Hike in passenger fares unlikely

Railway Minister Dinesh Trivedi, who will present his maiden Budget in Parliament today, is expected to maintain the blanket ban on hiking passenger fares. However, he could announce surcharges for upper-class passengers.

Railway Minister Dinesh Trivdei

Railway Minister Dinesh Trivdei

Railway Minister Dinesh Trivedi will present his maiden Railway Budget for 2012-13 on Wednesday amid concerns over the financial health of the world's second largest network. The minister is expected to maintain the blanket ban on hiking passenger fares.

Passenger fares have been on a freeze since 2002-03 as Trinamool Congress chief Mamata Banerjee, a former railway minister, is opposed to hiking fares.

A cash strapped Indian Railways, which runs 10,500 trains and ferries 22 million passengers daily over 64,000 km of track, is looking at an earnings shortfall of Rs 7,000 crore.

Poor financial management has left Indian Railways staring at an earnings shortfall despite gross budgetary support of Rs 20,000 crore last year and a Rs 3,000 crore loan approved by the finance ministry February 6.


Mail Today reports: Trivedi, facing flak for the empty coffers of the railways, could announce surcharges for upper-class passengers. The minister, who has been stressing on the need for "dynamic pricing of passenger fares" on par with the airline sector, may use these surcharges - under heads such as modernisation, safety and station development - to raise revenue.

The minister may toy with the idea of a surcharge as there are no major elections to be held this year and he has to face only one before the 2014 Lok Sabha polls.

"It is an unprecedented situation," a senior railway official commented on condition of anonymity while describing the financial crisis.

Recently, two expert panels, headed by former Atomic Energy Commission chairman Anil Kakodkar and prime minister's adviser Sam Pitroda, said the railways would need around Rs 9 lakh crore over the next five years to follow the safety and modernisation road map suggested by them.

No one knows where the money will come from.

With 19 members in the Lok Sabha, the Trinamool Congress is a crucial ally of the Manmohan Singh-led United Progressive Alliance (UPA) and has often shelved key reforms such as foreign equity in retail.


"Revision of passenger fares is long overdue. The railways need to invest in additional lines and build more rakes," former Railway Board chairman R.K. Singh said.

What bothers the railways is the fact that its operating ratio now stands at 100 per cent, up from 75 per cent in 2008-09. This means every rupee generated is spent on running the network, with no room for expansion.

"All big projects are at a standstill. The railways are unable to maximise earnings," said Singh, adding there was no money left to address crucial areas like the renewal and replacement of existing assets and taking up further development projects.

The Budget is expected to have a proposal for introducing a bullet train for Rajasthan on the Delhi-Jaipur-Jodhpur corridor. This corridor could be linked to the proposed Pune-Ahmedabad high-speed corridor.

With agency inputs

Get latest news & live updates on the go on your phone with our News App. Download The Business Today news app on your device
More from BIZ WRAP