Is Indian railways moving to dynamic pricing of fares?

With railway finances under strain, Railway Minister Suresh Prabhu on Thursday left fares unchanged and assured independence of a proposal rail regulator for fixing realistic fares, raising questions on whether the transporter is moving towards dynamic pricing of freight and fare.

Presenting the Rail Budget 2016-17, Prabhu said the Indian Railways will ensure the independence of the Rail Development Authority proposed last year to enable fair pricing of services.

Apart from fair pricing, the authority has been envisaged to enable promotion of competition, protection of customer interest and to maintain efficient standards.

A government-appointed committee to look into railway finances has earlier suggested that a new format of dynamic pricing, on the lines of air tickets, for some trains designated as 'premium' could boost earnings.

The Indian Railways' average revenue per passenger km for ordinary second class is a mere 13.80 paise, 14.54 paise for suburban trains, 27.47 paise for second class mail and express trains, and 109.47 paise for upper class, making it possibly the cheapest rail transport system in the world.

The Bibek Debroy-led committee for the restructuring of Indian Railways has recommended improving accountability through commercial accounting, decentralising power and setting up an independent regulator.

With the implementation of the Seventh Pay Commission, railways' spending on staff and pension is expected to go up over the 56 percent of resources that it currently spends on this account.

In the rail budget, Prabhu proposed an operating ratio of railway working expenditure to revenue earned from traffic of 92 percent for the next fiscal. This ratio has consistently remained above 90 percent in the last few years, reflecting a lower capacity to generate surplus that can be used for capital investments.