Raising upper-class fares by 10 per cent
Flogging a dead horse
Chances are that meagre revenue from these classes would further fall
By Arabinda Ghose
SUCH a suggestion, raising the upper-class fares by 10 per cent in order to augment the railway revenue, can come only from people like Laloo Prasad Yadav, the present Minister of Railways, who is said to be a very committed friend of the poor. Since populism, and not hard economic reality, is the strong point of this gentleman, it is perhaps futile to make any effort to convince him that the year 2004-2005 may actually end with less earnings through passengers than that during the previous year.
Nevertheless, let us make an effort to analyse the pros and cons of raising the upper-class passenger fares in the context of the overall economy of Indian Railways (IR). The Railway budget for the 2004-2005 was presented to Parliament on January 30 this year by Shri Nitish Kumar. Although the budget had assumed certain estimates based on the 2003-2004 budget, it was actually an interim budget since the final one was to be presented to Parliament by the new government after the General Elections. We, therefore, do not have certain details regarding the number of passengers expected to make use of the Railways from April 1, 2004 to March 31, 2005, the revenue earned from passenger traffic with respect to each class of journey and certain other information. The following paragraphs are based upon the budget estimate (BE) figures of the year 2003-2004. The revised estimate (RE) for 2003-2004, the actuals for the same year and the BE for 2004-2005 for the full year will be known only on July 6, when Shri Laloo Prasad presents the Railway budget to Parliament.
The Explanatory Memoran-dum to the budget speech of 2003-2004 gives the BE figures for the year 2003-2004 with respect to passenger traffic. According to this document, the total earnings of IR during 2003-2004 from passenger traffic was placed at Rs 13,620 crores.
For the information of the ´friends of the poor´ politicians, like Shri Laloo Prasad, only Rs 3341.90 crores of this amount had come from passengers travelling by upper classes. The upper classes include first class air-conditioned (I-A class), AC sleeper cars (2-A class), AC three-tier (3-A class), AC chair car (ACC) and first-class mail and express (ME), as also ordinary first class.
The total number of passengers, who travel by I-A class, according to BE 2003-2004, was estimated at 0.84 million. The total revenue from this class of passengers has been estimated at Rs 203.75 crores only.
Nevertheless, the elite in this country is taking increasingly to air travel (even Indian Airlines runs almost hourly services between Delhi and Mumbai), seriously affecting the Railway revenue from the higher classes.
For the AC two-tier (2-A) class, this figure is 13 million and the revenue expected to be earned is Rs 1247.39 crores. The three-tier AC (3-A class) passengers were expected to total 17.42 million and the earnings from them, Rs 1297.40 crores. Only 7.74 million passengers were expected to travel by the air-conditioned chair-car class (ACC), yielding a revenue of Rs 306.85 crores.
The BE for 2003-2004 had placed the number of passengers travelling by first-class (mail/express as also ordinary) at 1.8 million and 175.30 million respectively. The revenue earnings from these passengers were put at Rs 1.18 crores and 175.30 crores respectively.
Thus the upper classes would have contributed by March 31, 2004, Rs 3,341 crores and the ´lower´ classes, Rs 10,178.10 crores. Now, if you raise the fares by 10 per cent across the board for upper classes, the total additional revenue would be only Rs 341.90 crores.
This is not a very negligible sum, one concedes. However, the catch lies elsewhere. Excepting during the summers, most of the I-A class coaches run empty-carrying only a couple of passengers on certain routes. At a meeting of the Railway Consultative Committee, sometime in 2002, members were presented with an estimate showing how occupation of higher classes in trains had been coming down and most of the Rajdhani and Shatabdi trains were running in losses.
This was the reason why Nitish Kumar, the former Railway Minister, had first effected a little reduction in AC first-class travel and, then in 2003, extended concessional fares in the higher classes for a limited period (during the rainy season only) in order to attract passengers for these classes.
Then Indian Airlines, a public sector undertaking, had aggressively advertised that its fares were less now than that of rail, somewhat dishonestly concealing the fact that the rail fares it had shown in advertisements had applied to the first-class air-conditioned classes only, and that too of Rajdhani Express. Nevertheless, the elite in this country is taking increasingly to air travel (even Indian Airlines runs almost hourly services between Delhi and Mumbai), seriously affecting the Railway revenue from the higher classes.
These classes, particularly the 1-A class, has become a burden on IR and an ´endangered species´ of rail travel. The need is to restructure the fares for the upper classes to make them market-friendly, offering certain sops in order to attract passengers and not to demonst-rate your ´socialism´ by ultimately making the Railways carry the extra burden of hauling empty upper-class coaches.
Most Railway Ministers so far having come from political parties that chant socialism, have contributed to the ruinous state of IR. For years on end, in the 1970s, passenger fares had remained static. Then for years, passenger fares were not touched. Instead, freight was targetted. No wonder, truck owners had become happy, as a consequence. Foodgrains from Punjab were seen to be transported by trucks to Assam, instead of rail.
One only hopes that this time, no one would advise the Railway Minister to raise the freight rates. Since there is a boom situation in the economy, freight loading during 2003-2004 had been more than 560 million tonnes, against the target of 540 million tonnes. If the freight rates are increased, this figure will come down and as a consequence railway earnings will suffer.
If at all revenue from passenger services is to be augmented, the only option left is to ensure punctual and hassle-free journeys by trains, which must be safe for every class of passengers. The security record of Indian Railways, particularly in the region from where the present Railway Minister hails, is deplorable, to say the least. In any case, Railway passengers have already been paying enhanced fares since 2002 for financing the Special Railway Safety Fund (SRSF) of Rs 17,000 crores, of which passengers would have to contribute Rs. 5,000 crores in five years.
There is thus no case for raising passenger fares for any class of travel at this point of time. Normal increase of passengers by three to five per cent and better results in drives against ticketless travel will certainly raise earnings through passengers.