Fares still 'too low', earnings estimate revised downwards

Passenger earnings: Revenues from this segment will be 19% more than last year's but still below interim Budget estimate

Despite the recent rise in passenger fares, Indian Railways revised downwards its estimates for passenger earnings in the current financial year by Rs 610 crore as compared to projections made in the interim Budget presented this February.

The passenger earnings' estimates are, however, higher by around 19 per cent over the revised estimate of Rs 37,500 crore for 2013-14. The Railways is now projected to clock Rs 44,645 crore in revenue from passenger traffic this financial year, against the target of Rs 45,255 crore in the interim budget announced by the earlier government.

The current estimates show the hit would come more from second-class passenger revenue (down Rs 421 crore over the interim budget estimate) than from those from upper-class passenger fares (also down, by Rs 189 crore, from the February estimate). Even so, passenger earnings in the upper- class are projected to rise 19 per cent to Rs 13,330 crore this financial year over revised estimates of Rs 11,176 crore for FY14. Those from second-class fares are set to increase 18.9 per cent to Rs 31,315 crore.

With the revision effected on Tuesday, the proportion of passenger earnings in railways' gross traffic receipts dips marginally to 27.9 per cent as compared to the 28.1 per cent projected earlier. In 2013-14, though passenger earnings fell 11 per cent from budgeted estimates, the proportion in gross traffic receipts had risen. Passenger earnings were 26.7 per cent of the gross revenue of Rs 140,499 crore in 2013-14, compared to 25.3 per cent in 2012-13.

The cash-short railways had announced on June 20 an increase of 14.2 per cent in passenger fares and 6.5 per cent in freight rates. These took effect from June 21. While a flat increase of 10 per cent was levied across all classes, an additional increase of 4.2 per cent was on account of the fuel adjustment component.

The Railways had then said the annual expenditure could not be met unless the revised rates were implemented. The annual subsidy on passenger fares was Rs 26,000 crore and huge investments were needed to modernise its safety system. The previous fare rise was in October 2013.

Minister D V Sadananda Gowda said the existing rates policy lacked rationality. "Passenger fares were kept lower than costs. This loss kept increasing, from 10p per passenger km in 2000-01 to 23p in 2012-13."

Even so, on June 24, the Railways had announced the rise of 14.2 per cent in passenger fares would not apply to second class suburban journeys up to 80 km. This was after MPs from poll-bound Maharashtra in the ruling coalition pressed for its rollback.