Social cost runs past Railways' growth

Loses Rs 13,365 cr on the obligation to provide cheaper services.

When Railway Minister Mamata Banerjee, at the very outset of her Budget speech this year, said it was an “acute” sense of social responsibility that scripted her approach towards railways’ growth, she was not exaggerating. Data indicate that Indian Railways’ outgo on net social service obligation over the past five years has increased faster than its revenues.

While the overall revenues of Indian Railways have grown by 50 per cent from Rs 62,731 crore in 2006-07 to Rs 94,840 crore in the current financial year so far, net social service obligation — the overall losses incurred on running services below operating cost — grew four times to Rs 13,365 during the same period.

Indian Railways suffered an estimated Rs 13,365 crore loss in the current financial year, around 14 per cent of its revenues, on account of its social obligation to provide cheaper service, including the suburban and non-suburban services, according to the explanatory memorandum of the Railway Budget announced by Banerjee on Friday.

The PSU behemoth is estimated to have suffered losses to the tune of Rs 19,080 crore on suburban and non-suburban passenger services, parcel and luggage, among others.

Besides, the railways incurred a loss of Rs 83 crore on essential commodities carried below cost of operation. Losses on account of carrying fruit and vegetable consignments at concessional rates worked out to Rs 56 crore, Rs 7.2 crore on bamboo and Rs 6 crore on paper, among others.

Staff welfare cost and law and order cost of Rs 5,798 crore were deducted from the overall “social” losses by the ministry to arrive at the net loss figure of Rs 13,365 crore for 2010-11.

The railways also suffered a huge Rs 1,198 crore of losses on account of 102 economically unviable branch lines. All narrow gauge lines and lines that join the main line network are termed as branch lines. Losses on account of running these lines were reported at Rs 732 crore last year.

Several high-level committees have recommended the closure of these economically unviable lines in the past to reduce the losses which accrue to the railways year after year. However, state governments are reluctant to close these lines.