New Delhi, Jan. 9: The UPA government today shook off a 10-year-old burden of populism and raised railway passenger fares across the board by roughly 8 to 20 per cent in a desperate attempt to get the Indian Railways' finances back on track.
The fare hike is uncannily similar ' plus a few additions ' to the one proposed almost a year ago by Dinesh Trivedi, who was forced to resign as railway minister by Mamata Banerjee for ignoring her directive against raising fares.
The fare hike, which comes into effect from January 21, will yield Rs 6,600 crore in a full year and Rs 1,200 crore during the 10 weeks till the close of this financial year on March 31.
The latest fare increases come just over a month before the presentation of the railway budget when such decisions are traditionally announced. It also comes on top of the LPG and diesel price increases last September, indicating the UPA government's resolve to take tough decisions in order to put its messy finances in order.
The government may tomorrow take up a cabinet note that proposes to increase the price of diesel and cooking gas cylinders. (See Business)
Nitish Kumar had last raised fares in 2002 when he was the railway minister in the Vajpayee-led NDA government.
"The base fares haven't been raised for the last 10 years," railway minister Pawan Kumar Bansal told reporters while making the announcement. "The railways' internal revenue generation has been severely affected and we have had to scale down our expansion plans," he said.
The cash crunch had forced the railways to pare its plan size to Rs 51,000 crore from Rs 60,100 crore.
Bansal had taken over as railway minister last October. He said the fares ought to have been raised earlier. "But I took some time to understand the true state of affairs in the railways," he added.
Second-class suburban fares have been increased by 2 paise per km, ordinary second class non-suburban train fares by 3 paise, second class mail and express fares by 4 paise per km, sleeper class by 6 paise per km, AC chair car by 10 paise per km, and AC 3-tier by 10 paise per km.
Fares for first class, AC 2 -tier and first AC, which were raised last March, have been marginally increased by 3 to 10 paise per km. The increase in AC fares will yield Rs 1,000 crore.
In percentage terms, the increase in the AC 3-tier fares is among the highest. For example, the ticket price on the Howrah-Delhi Rajdhani Express will now rise by 16.5 per cent to Rs 1,483 from 1,273 earlier. Similarly, the AC 3-tier fare on the New Delhi-Dibrugarh route would rise by 18.4 per cent to Rs 1,982 from 1,674 earlier.
In contrast, the AC first class fare in the Howrah-Delhi Rajdhani will rise by just 7.2 per cent to Rs 3,680 from Rs 3433. But there is some justification for this: the fare increases that Trivedi had proposed last year in the upper class categories had been allowed to stand.
The Calcutta Metro ticket prices have not been touched. Platform tickets have also been spared. "The fares are being hiked in phases and the Calcutta Metro fares are likely to go up in the next round," said minister of state for railways Adhir Chowdhury.
However, it is difficult to say whether the fare increase alone will be enough to revive the fortunes of the shambolic, state-owned railway network that is rated as the fourth largest in the world and carried 5.7 billion passengers in the eight months between April and November last year.
Justifying the fare hikes, Bansal said the losses of the railways would mount to Rs 25,000 crore this financial year from just under Rs 20,000 crore in 2010-11.
He said the passenger fares would not be raised in next month's budget but refused to say whether freight rates ' which are traditionally kept high to cosset passengers through cross-subsidies 'would also be tweaked during the annual rite.
The railway minister said he would soon place a proposal before the Union cabinet to establish a railway tariff authority that would review and recommend passenger fares and freight rates at regular intervals.
A proposal to set up such a body had been made in last year's budget but has never been formalised.
Railway Board officials said the government had taken a conscious decision to de-link the process of setting fares and freight rates from the budget-making process. "Earlier, petro-product prices were taken out of the ambit of Union budget announcements. We want to de-link the railway fares and rates setting from the budget," an official added.
Expectedly, the Opposition parties slammed the government for raising the fares and demanded an immediate rollback. The BJP, Left parties and the Trinamul Congress were outraged that the Congress had opted to "bypass Parliament" and raise the railway fares.
Former railway minister Mukul Roy of the Trinamul Congress said party activists would hit the streets tomorrow across Bengal to protest against the hike.
BJP spokesperson Prakash Javadekar said: "The government goes on increasing fares and freight rates but they do not improve amenities and safety standards. This situation is absolutely unacceptable."
Railway Board officials said Bansal took the decision to raise fares after a meeting with Montek Singh Ahluwalia, deputy chairman of the Planning Commission, on Monday. The minister had been told that the cost of the dedicated railway freight corridor between Delhi and Mumbai would cross Rs 95,000 crore against an original estimate of Rs 27,000 crore.
The conclusion reached at Monday's meeting was that passenger trains needed to be self-sustaining while the profits from freight trains could be used to modernise and expand the 65,000km railway network.
Freight trains earn about 70 per cent of the railways' revenues and most, if not all, of its profits. Between April and end of November last year, the railways earned some Rs 78,868.17 crore. Out of this, freight trains contributed Rs 54,487.10 crore.