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Should rail passenger fares be raised?

Business Standard 

The move will empower the aam aadmi to demand better services, but it is wrong to burden him in the process

R SivadasanR Sivadasan
Former Financial Commissioner (Railways)*

“The spiel of 'not increasing passenger fares' has provided the Railways a handy cover for not bothering about the quality of passenger services”

Railway fares should be raised. Not because Railways incur losses on passenger operations. Nor do I support insular Rail Bhawan’s belief that since 97 per cent of rail passengers travel second class (97 per cent of accommodation offered by the Railways is in second class in any case) all rail passengers are in the aam aadmi income group needing fare subsidies. The spiel of “not increasing passenger fares” has served political expediency and provided the Railways a handy cover for not bothering about the quality of passenger services they provide for the travelling public. Take the case of second-class unreserved Mail/Express passengers, packed often 300 to a coach, 10 passengers per square meter (sqm) of coach floor space, reminiscent of the way Nazis transported prisoners of war to concentration camps in cattle wagons. An increase in fares would give this deprived class the right to demand better quality of service.

Another issue is the heavy state subsidy given to railway passenger season ticket holders in the name of the urban poor. Should bankers, government employees, white collar/blue collar staff of private companies, institutions, IT/ITes professionals, traders, small-time businessmen, self-employed, rich farmers and so on be permitted to avail of the throwaway value of season tickets? The Railways would do well to follow the new-born Metro services in their approach to suburban pass holders.

What is required is a bouquet of differentiated rail travel services and fare structures. This would subtly restrain middle-income groups from smugly partaking of state-subsidised universal second class services meant for the vulnerable sections of the informal sector, unemployed, students and so on.

The Railways should also focus on the rationalisation of fares based on sqm of space occupied per passenger in coaches. In other words, passengers should pay in proportion to the coach floor space (including vertical space) they occupy. The price the Indian Railways pays to a coach-maker is based on sqm floor space, quality of furnishing and cost of maintenance including staff attention per passenger. There would be only two groups of passengers — those who command more floor space and facilities and are charged at Above the Line of actual cost of berth/seat km per train service (ATL) or at least at par. Those travelling in unreserved coaches at six to 10 passengers per sqm will pay Below the Line (BTL). The moment the Railways are able to provide a seat to the unreserved passenger, he will be happy to pay extra for his personal space.

If the intention of a fare increase is solely to balance the books of the Railways, a word of caution. First, remove operational and marketing inefficiencies such as:

(i) The inability to be a low-cost carrier by drastically pruning working expenses — high maintenance costs of rolling stock in the Indian Railways’ underperforming workshops and inexplicably huge cost of terminals imposed on passenger traffic.

(ii) Lack of marketing ideas for enhancing non-fare box revenues.

(iii) Deliberate resistance to maintaining records of the true cost of operating each train.

(iv) An accounts cadre not knowing how to fix each train’s breakeven cost.

(v) An incompetent commercial cadre that does not have a live inventory of berth or seat km available for sale actually sold (without this information they are unable to push-sale tickets to ensure maximum yield like the airlines do).

(vi) General managers/divisional railway managers not trained in marketing and sales.

(vii) Poor skills in innovative land use for commercial exploitation.

(viii) Avoidable competition with road transport and fixing predatory prices for short-distance rail travel.

(ix) The utter lack of imagination to create differentiated travel class markets through subtle supply-side interventions in train composition.

The list goes on. All these inefficiencies should not be laid at the doorstep of the ticket-buying rail passengers, labelling self-induced losses as the Railways’ social burden. Addressing the Railways’ inefficient ways itself would improve passenger revenues. It can then boldly resort to fare revisions and passengers won’t complain.


*The author is also ex officio Secretary to Government of India

Sultan AhmedSultan Ahmed
Lok Sabha MP, Trinamool Congress

"If the Government of India can bail out a 'sick unit' like Air India and then assist the entire civil aviation sector through different measures, why not the Railways?"

The Trinamool Congress (TMC) is opposed in principle to raising passenger fares in the Railways because it is an “anti-people” move. It is the aam aadmi that travels in general, unreserved and non-AC classes and any increase in passenger fares would be a burden on him and that is something TMC does not want.

The Railways, today, is in financial trouble and investments are essential for safety and infrastructure expansion. In such a situation, it is the responsibility of the Government of India to come forward and assist it.

The Railways has its own resources but it is not enough; if education, IT and tourism sectors can get financial assistance, then the railways should also get financial help.

If the Government of India can bail out a “sick unit” like Air India and then assist the entire civil aviation sector through different measures, why not the Railways?

This (the Railways) is a nation-building enterprise. When the airlines are in threat, the Centre is concerned and steps in. Should it not step in now, especially when the Railways is the lifeline of our country?

On a daily basis, more than 20 million people travel by rail, the government (Centre) must take responsibility for them. In addition to that, the Railways has a mammoth staff strength and responsibility of 1,400,000 employees, the Centre should also share the responsibility.

The importance of the Railways can be gauged from the fact that when trains in any sector come to a standstill for even an hour, it disturbs the entire zone and the ripple effect can be felt right up to Delhi.

Former Prime Minister Atal Behari Vajpayee’s initiative of strengthening the road network in the country through the Golden Quadrilateral project is still being expanded and his efforts are bearing fruit. If the Railways is similarly bolstered, it will help the entire nation.

According to the TMC view, the common passenger should not be burdened. The AC passenger is not in the same league, he can afford AC travel. So Rajdhani and Duranto trains (AC trains), which are upper-class trains, can absorb an increase in fares but not the second class and general class. People who travel in general class are from the underprivileged sections, belonging to the below-poverty-line group, so an increase in fares will hit them hard. That is not permissible.

It is wrong to say the Railways is not run as a professional organisation — the entire Railway Board comprises professionals and only the minister is a political appointee.

In any case, the Railways cannot be run like a corporate profit-making enterprise. There are backward regions in our country that need to be connected by rail. Even today, there are remote places where people have to travel 40 to 50 km by “tonga” to reach a rail head. These areas are still bereft of railway connectivity. There are areas that have not been electrified and where trains still run on diesel. These areas are not on the radar of any media or corporation. So the Railways, as a priority, has to serve these areas and cannot be asked to increase passenger fares to boost its revenue.

It is wrong to also say an increase of rail freight rates consistently will make rail freight unattractive; a comparison of the two rates, road and rail in any sector will show that rail freight is still viable, it is still competitive.

If we even consider the fact that due to lack of required number of trains, people who want to travel in AC classes most often do not get reservation and cannot travel by train; it only reinforces our stand that we need to run more trains for which the government of India has to help the Railways with more funds.

The Railways is in dire need of infrastructural expansion to benefit the people but today it is cash-strapped. For an organisation that is as old as the Indian Railways and is a structure that runs parallel to the road network, it definitely should not be neglected by the government.

We, in the Trinamool, will continue to oppose any anti-people measure and that includes increasing rail fares for general class passengers.


As told to Kavita Chowdhury

First Published: Wed, March 14 2012. 00:47 IST