The Committee chaired by Sam Pitroda, advisor to the Prime Minister has recommended a 25% hike in one go in railway passenger fare. It will help Indian Railways to raise Rs. 37,000 crore which will partly fund its modernisation programme. The sharp increase would have been avoidable if passenger fare had been increased every year. For eight years, passenger fares have been stagnant and rail is one of the problem sectors of the Indian economy. Railway finances have been adversely affected by a succession of populist budgets presented by Mamata Banerjee with an eye on capturing power in West Bengal. Indian Railways have no resources to modernize core assets, tracks and bridges, signaling, rolling stock and stations and terminals. For elementary safety precautions, the organisation has to focus attention on modernsation.
Railways are giving way to other modes of transportation—road and air. The freight market share dipped from 89% in 1950-51 to 30% in 2007-08. In China and the US, the freight market share of railways is almost 50%. The Railways’ operating ratio (money spent to earn Rs. 100) is estimated to have gone down to 91.1 in 2011-12. Four years ago it was 75.9. Freight rates have been hiked over the years to cross-subsidise passenger fare. The government has to ensure that railway operations are sustainable in the long run. Its gross revenue has been fixed at about 12% of the country’s GDP for the last ten years. Assets are deteriorating and demand is rising. Accidents in the last two years have been horrendous. Pitroda’s proposal merits serious attention.
