The Passenger Far hike is a bold decision by the NDA government that remained a work-in-progress by itself in its previous innings from 1998-2004. While the communists have already taken to the roads against the Railways decision (pun intended), the truth must be told.
What is the truth? Except for 2012, there has been no hike in passenger fare since 2002. India's largest employer - the Indian Railways - faces many battles even as it is constrained in capacity and resources. Expenditure on Railways as a share of transport expenditure has dipped from 56 per cent to 30 per cent by the Eleventh Plan. Share of railways in freight transport is down to 36 per cent from 89 per cent in 1961. Despite the highly subsidized passenger fares, passenger transport is losing out to alternative modes of transport - low cost airlilnes and road transport. Traffic is clearly moving away from Indian Railways due to poor quality of service already made worse by capacity congestion and extremely high rail freight tariffs. India's rail freight tariffs are among the highest in the world - perhaps the result of intense lobbying by the road and cargo transport operators. And how did we get there? Because freight revenue is used to cross-subsidize sub-inflationary and politically driven passenger rail fares. Indian passenger fares are 1/4th of those in China, 1/9th of those in Russia, and nearly 1/20th of those in Japan. Adjusted for purchasing power parity, they are at only 37 per cent of tariffs in China, 15 per cent of those in Russia, and 11 per cent of those in Japan. Whereas freight tariffs in China are only 72 per cent of the tariffs in India in nominal terms and 58 per cent when adjusted for purchasing power parity.
Now look at the other travesty. Because Indian Railways struggles to generate surpluses, coupled with the government's fiscal constraints, there has been significant under-investment in rail. Passenger trains, and more of them keep getting added in budget after budget use up nearly 65 per cent of network capacity (rail network that is) but contribute less than 30 per cent of the revenue. Every year, more and more unremunerative routes of passenger trains are added for various political appeasements. All this ensures IR keeps getting sicker by the day. And we now want bullet trains too at subsidized prices. According to Businessworld magazine article, I read a few years back, at current costs, a bullet-train ticket from Mumbai to Delhi will cost anywhere from $1450-1680 per head or thereabouts. And talk about so much pain with a passenger fare hike of 14.5 per cent, literally after a decade. There are more issues at hand that need redressal before Indian Railways gets up and going - get freight traffic back, stop subsidizing passenger fares, use the network to atleast 40 per cent (we are using less than 15 per cent) and have a collaborative approach to address intermodal transport issues and connectivity. According to one estimate, countries like Australia, Brazil, Canada, Germany, Japan, Russia and the US which collectively carry more than 90 per cent of the world's rail freight outside India, all now have unitary transport ministries. China too has consolidated all transport ministries except railways. But for now, the free lunch on passenger fares has thankfully stopped. This is one of the best key messages that the NDA government has given out - something that it has ducked itself from taking in 2002.
#Indian Railways #Passenger Fares #Railways #Fare Hike #Bullet Trains
What is the truth? Except for 2012, there has been no hike in passenger fare since 2002. India's largest employer - the Indian Railways - faces many battles even as it is constrained in capacity and resources. Expenditure on Railways as a share of transport expenditure has dipped from 56 per cent to 30 per cent by the Eleventh Plan. Share of railways in freight transport is down to 36 per cent from 89 per cent in 1961. Despite the highly subsidized passenger fares, passenger transport is losing out to alternative modes of transport - low cost airlilnes and road transport. Traffic is clearly moving away from Indian Railways due to poor quality of service already made worse by capacity congestion and extremely high rail freight tariffs. India's rail freight tariffs are among the highest in the world - perhaps the result of intense lobbying by the road and cargo transport operators. And how did we get there? Because freight revenue is used to cross-subsidize sub-inflationary and politically driven passenger rail fares. Indian passenger fares are 1/4th of those in China, 1/9th of those in Russia, and nearly 1/20th of those in Japan. Adjusted for purchasing power parity, they are at only 37 per cent of tariffs in China, 15 per cent of those in Russia, and 11 per cent of those in Japan. Whereas freight tariffs in China are only 72 per cent of the tariffs in India in nominal terms and 58 per cent when adjusted for purchasing power parity.
Now look at the other travesty. Because Indian Railways struggles to generate surpluses, coupled with the government's fiscal constraints, there has been significant under-investment in rail. Passenger trains, and more of them keep getting added in budget after budget use up nearly 65 per cent of network capacity (rail network that is) but contribute less than 30 per cent of the revenue. Every year, more and more unremunerative routes of passenger trains are added for various political appeasements. All this ensures IR keeps getting sicker by the day. And we now want bullet trains too at subsidized prices. According to Businessworld magazine article, I read a few years back, at current costs, a bullet-train ticket from Mumbai to Delhi will cost anywhere from $1450-1680 per head or thereabouts. And talk about so much pain with a passenger fare hike of 14.5 per cent, literally after a decade. There are more issues at hand that need redressal before Indian Railways gets up and going - get freight traffic back, stop subsidizing passenger fares, use the network to atleast 40 per cent (we are using less than 15 per cent) and have a collaborative approach to address intermodal transport issues and connectivity. According to one estimate, countries like Australia, Brazil, Canada, Germany, Japan, Russia and the US which collectively carry more than 90 per cent of the world's rail freight outside India, all now have unitary transport ministries. China too has consolidated all transport ministries except railways. But for now, the free lunch on passenger fares has thankfully stopped. This is one of the best key messages that the NDA government has given out - something that it has ducked itself from taking in 2002.
#Indian Railways #Passenger Fares #Railways #Fare Hike #Bullet Trains
