The railways’ passenger earnings are set to rise a whopping 25.2 per cent, owing to fare increases announced in the Railway Budget on Wednesday. Of the projected increase of Rs 7,273 crore in the next financial year, about 85 per cent would be met through the rise in passenger fares, while the remaining would be accounted for through the rise in passenger numbers, expected to be about 5.4 per cent.
In his first railway budget, minister Dinesh Trivedi on Wednesday estimated total passenger earnings at Rs 36,073 crore for 2012-13, compared with a revised estimate of Rs 28,800 crore for 2011-12.
In Parliament on Wednesday, Trivedi said, “I propose to rationalise the fares to cause a minimal impact on the common man. I am only asking for an extra two paise per km for sub-urban and ordinary second class. Similarly, the increase for mail express second class will be of only three paise per km; for sleeper class, only five paise per km; for AC chair car, AC 3-tier & first class, only 10 paise per km; AC 2-tier only 15 paise per km; and AC-I only 30 paise per km.”
For 2012-13, the railways has projected a 20.3 per cent increase in upper-class passenger revenue and a rise of 26.8 per cent in second-class revenue, assuming passenger growth of 5.4 per cent. In 2011-12 (till January 31), with a 5.1 per cent rise in the number of passengers (against the Budget target of 5.9 per cent), the railways’ revenue is set to rise 10.2 per cent less than the Budget estimate of 16.5 per cent.
Even as the railways failed to achieve the Budget target for growth in number of passengers this year, scaling down passenger earnings to Rs 28,800 crore, it is likely to achieve the target with an increase in fares, passenger numbers and capacity. Trivedi said, “With the increase in the number of trains and higher occupancy, the number of passengers is expected to increase 5.4 per cent. Passenger earnings are estimated at Rs 36,073 crore, targeting an increase of Rs 7,273 crore over the revised estimate of Rs 28,800 crore for the current year.”
Analysts project a better year ahead. “An increase in passenger fares is progressive, and was much-required, as this is likely to help the railways improve its operating ratio and increase revenue. Unless the passenger pays, where would the railways invest the money from? Also, passengers on Wednesday want better amenities and safety, and are ready for the increase,” said Abhaya Agarwal, executive director & public-private partnership leader, Ernst & Young.
Trivedi also said a committee of experts would be appointed to discuss and decide on the need for setting up an independent authority to regulate tariffs. The move has been welcomed by analysts. “There has been a demand from several quarters for setting up an independent Railway Tariff Regulatory Authority, which would suggest the level of rates, both for freight as well as fares. However, I feel this is an important area and needs a serious debate. I am, therefore, appointing a body of experts with representatives of customers, passengers, trade/industry, and public representatives to examine this important issue,” the minister said.
“To let the railways progress, it should be kept at an arm’s length from politics and this independent regulatory would be able to do that job. We welcome the move to propose any such regulator,” Agarwal said.
The minister also ensured social welfare wasn’t left out. He extended 50 per cent concession in fares for AC-II, AC-III, chair cars and sleeper classes to patients suffering from ‘aplastic anaemia’ and ‘sickle cell anaemia’. The railways already extends travel concession to more than 50 categories, which results in additional revenue outgo of Rs 800 crore every year.
