The last few days of 2012 will show Congress Party’s, particularly Railway Minister Pawan Kumar Bansal’s mettle when it comes to hiking the fare for a large segment of passengers.
Bansal, taking over the Railway portfolio in October, has strongly favoured a passenger fare hike.
Though there are strong rumours in Rail Bhawan about an imminent fare hike, what everyone is waiting for is the final nod from Bansal. With over two crore Indians riding the Railways every day, fare hikes count high on the political meter.
FREIGHT RATE HIKE
For the Railways, the most important move in 2012 was an across-the-board freight rate hike of over 20 per cent effected in mid-February. Ironically, this was implemented by the then Railway Minister, Dinesh Trivedi, a Trinamool Congress leader.
Trivedi also tried to raise passenger fares across the board, but got ousted in the process.
While the hike was welcomed by many, from Prime Minister Manmohan Singh to Railway unions, Trivedi’s own party chief Mamata Banerjee was unhappy and insisted on a roll-back for all lower-end services. So, the proposed fare hike was rolled back on non-AC, chair car and AC 3 tier passengers, and Trivedi was replaced by Mukul Roy.
The partial roll-back wiped off potential earnings of Rs 4,300 crore for the current fiscal, and also insulated 85 per cent of reserved passengers.
REVENUE UP 20%
The Railways’ fiscal health is significantly better now, reflecting a 20 per cent surge in total earnings for the period till December 10, primarily because of the freight rate hike, supported by the hike in the passenger segment.
Freight revenue, which contributes over 70 per cent of Railways’ total earnings, soared 25 per cent during the period, despite a much lower growth of 4.7 per cent in freight loading.
ECONOMY SLOWDOWN
The slowdown in the Indian economy hit the Railways, leading to idle trains.
During July to September, the Railways lost earnings potential of Rs 600 crore, as several goods trains were idle for want of cargo. On an average, every day in September, 208 rakes were idle, causing the Railways a loss of four million tonne of freight loading.
CROSS SUBSIDY PEAKS
Historically, profitable freight services have paid for the subsidised passenger services, which record a loss of about Rs 20,000 crore a year. In 2012, the cross subsidisation from freight to passenger segment hit a 10-year peak.
Freight revenues, which contributed 72 per cent to Railways’ total revenue last fiscal, now contribute 75 per cent.
FOUR MINISTERS
The year 2012 also set a record of sorts because never in the history of the Indian Railways has the Ministry been headed by four Ministers in one year. The year started off with Trinamool Congress leader Dinesh Trivedi at the helm, followed by his party colleague Mukul Roy, who was replaced by Congress leader C.P. Joshi in September and finally, Pawan Bansal in October.
Some areas, though, have seen progress. Many investors bravely approached the Railways with over 30 proposals to build private freight terminals, despite going through a not-so-good experience by many entrant container train operators.
Also, the Railways said it would weigh the pros and cons of setting up a tariff authority. This move, both Congress Ministers maintain, is expected to depoliticise passenger fare movement. But, one is yet to see how this will pan out, unless the authority is an all-powerful body whose decisions are binding on Ministers.
The Railways also got a Cabinet nod for investment models for building rail links, a move that would help ports with private investment such as Dhamra, Dighi, Rewas, Jaigarh, Astranga and Hazira. They had approached the Railways with proposals worth Rs 3,800 crore.
Two days ago, Bansal allowed an increase in surcharge levied on suburban services in Mumbai, which will set in from January 1. The good thing is that the entire fare hike is in the form of a surcharge, which will be routed towards paying back World Bank, which is funding the Mumbai Urban Transport system.
With this, Bansal appears to be following Lalu Prasad’s strategy of increasing fares in bits and pieces to avoid attracting widespread criticism. Also, the more he delays the fare hike, the closer he gets to the 2014 general elections.
SIMILAR SITUATION
In a way, this December is similar to last December, when the Railways was almost ready to bring in the freight rate hike. But the Uttar Pradesh elections delayed the announcement by three months.
So, Trivedi announced the fare hike in February – immediately after UP elections and before Railway Budget. With the Gujarat elections over, Bansal faces a similar time window now. Whether he will act in the new year, remains to be seen.