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Rail fares may go up
By Vinay Kumar
NEW DELHI, FEB. 8. Faced with dismal internal resource generation, the Railways has sought a higher budgetary support from the Planning Commission. If indications emanating from the Commission and the Railway Board officials are to be believed, the passenger fares, which have remained untouched in the past two fiscals, are likely to witness an across-the-board upward revision in the coming Railway budget.
With just a fortnight to go for the Railway budget 2002-03, long-drawn discussions between top Railway Board officials and the Planning Commission have been going on. Highly- placed sources said the budgetary support for the Railways' 2002- 03 annual plan has been put by the Commission at Rs. 4,900 crores, a reduction by Rs. 600 crores in the Railways' proposal.
Railway Board sources said highly-subsidised passenger fares were likely to be revised for all classes as the second class generated more volumes compared to the luxurious air- conditioned travel in second or first AC.
Several crucial factors have seen Railway earnings dwindle vis-a-vis the spurt in expenditure. The slower growth is being attributed mainly to the freight traffic failing to pick up due to the recessionary trends and the restraint in increasing the passenger fares.
According to a Railways internal study on the financial concerns, additional resource mobilisation and cost- cutting were needed to improve internal generation. The first of such steps is to progressively reduce the internal cross subsidy of passenger traffic by freight. Passenger fares will need to be raised significantly to ensure a much higher growth rate in revenue than in the past in order to reduce losses.
The element of internal cross-subsidy during 2000-01 in suburban and non-suburban passengers was about Rs. 3,500 crores which has had an adverse impact on finances. During the current fiscal, the Railways would be missing its targets of freight and sundry earnings by about Rs. 750 crores.
Also, the projected earnings of Rs. 700 crores from Railtel by leasing its optical fibre network along the tracks will not materialise. Similarly, against a target of Rs. 200 crores for land utilisation, only about Rs. 51 crores has been booked till October 2001.
Another major cost-cutting measure could be the reduction of staff strength every year by two per cent. It is proposed to be achieved by restricting recruitments to just one per cent of the total strength while natural attrition through retirements is projected at three per cent. In another seven to eight years the staff strength is likely to be stabilised from the current 15 lakh employees to about 12 lakhs.
Passing through a difficult financial phase at present, the Railways witnessed about 90 per cent increase in wages and pensionary liabilities. Pension has increased from Rs. 2,509 crores in 1996-97 to Rs. 5,800 crores in 2001-02, representing an increase of 131 per cent. It is estimated that by 2006, the railway pension bill would be more than the wage bill.
The Railways has also been losing about Rs. 350 crores on uneconomic branch lines despite exploring the possibility of offering such lines to private operators. In addition, the Konkan Railway debt liability has taken its toll. The total debt to be serviced is Rs. 4,000 crores between 2001-02 to 2008-09, prompting the Ministry to make noises about a bailout package.
The Planning Commission has expressed serious concern over the returns from railway investment. During a meeting with top Railway officials, it stressed the need to mobilise additional resources and wanted rationalisation of the tariff policy. The panel emphasised that uneconomic Railway projects should not be supported so that investment yielded a higher rate of return.
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