Rail tariff is likely to go up after Assembly elections to five States, though the final modalities are only being worked out.

The recent stance by the Finance Minister and top Railway Board officials indicate that they are building up a case for phasing out the subsidy provided to passengers, although the ongoing elections in various States have led to its deferral.

The average passenger subsidy stands at 57 per cent: there are segments which pay much more than the average and some that pay much less, absorbing a higher level of subsidy. Passengers who travel in the AC segment already pay higher sums through various schemes such as dynamic pricing.

Safety fund

Even if the Railways were to reverse the trend and load more cargo over longer distances to mop up higher revenue, the national transporter has not set aside enough funds for the ₹20,000 crore non-lapsable railway safety fund or the Rashtriya Rail Sanraksha Kosh (RRSK) announced in this year’s Budget.

Against ₹5,000 crore, which is the Railways’ share of the fund, it has set aside ₹1,000 crore, reflecting a ₹4,000-crore shortfall. The Finance Ministry is to provide the remaining ₹15,000 crore.

Easy way out

In the normal course, the Railways would have resorted to the politically viable route of hiking freight charges, which, apart from being inflationary, tends to drive away freight customers. The ambitious target for the improvement in freight revenues next year has led many officials to question whether they can be met.

While the Railways has budgeted for a marginally lower per-unit income from its goods services in the next fiscal against the present fiscal — indicating a drop in charges — it has increased the physical output targets. This, despite missing the same by a large margin in the present fiscal.

In physical output terms, the Railways has revised its margin downwards to 6,21,247 million net tonne kilometre (NTKM) for this year, down five per cent from 6,54,481 million NTKM in 2015-16. For the next year, it has set a physical target of 6,75,622 million NTKM, up 8.75 per cent against the present fiscal. Similar data for earning per NTKM is a tad lower for the next fiscal against the revised estimate this year.

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