Do not yield any more to populist pressure on Rail fare hike: ASSOCHAM

The Railways needs big time resources and its implementation track record has been rather poor resulting in more than doubling of the costs of the projects it had to execute over a period of time.

June 25, 2014 12:02 IST | India Infoline News Service
The ASSOCHAM has impressed upon the government not to yield any more to populist pressures to roll back the hike in rail fares as the Indian Railways needs resources to modernise its operations even as it has piled up cost over-runs of Rs 45,600 crore on its planned projects.

While the political pressure on commercial decisions is expected in a democracy, especially when elections (Assembly) are round the corner in some states such as Maharashtra and Haryana, a stable government at the Centre must hold its ground and stick to its decisions for the long-term national interest, ASSOCHAM Secretary General DS Rawat said in a statement here.

The Railways needs big time resources and its implementation track record has been rather poor resulting in more than doubling of the costs of the projects it had to execute over a period of time.

Till March, 2013, the cost over-runs of 41 pending Railway projects had touched Rs. 45,600 crore. Against the original estimates of Rs. 28,000 crore, the cost projected had mounted to Rs. 73,500 crore. In fact, the Railways itself ran cost over-runs of near about 50% of the cost over-runs of all the 285 pending Central sector projects like steel, power, coal etc which were running excess cost estimates of Rs. 94,800 crore.

Mr Rawat said as per the interim Rail Budget for 2014-15, the Plan expenditure for the current fiscal has been pegged at Rs. 64,305 crore and the bulk of which has been provisioned for the General Budget. The internal generations have been pegged at only Rs. 13,500 crore just about one-fifth of the Rail Annual Plan.

Given the constraints on the General Budget itself, the Railways must raise higher resources internally to fund its expansions and reduce its dependence on the budgetary support, year after year, the ASSOCHAM Secretary General said.

He said the cross-subsidisation of passenger fares by freight charges is not sustainable any more with over two-third of the total Railway revenue of about Rs 1.60 lakh crore being accounted for by the freight receipts.

The task of the fixing passenger and freight charges should be left to the Rail Tariff Authority, as was proposed earlier. The autonomous authority should not only consider requirements of the Railways but also engage with different stakeholders for a transparent tariff regime. Such a thing would lead to rationalisation of fares and freight structures for improving the farefreight ratio and bringing down cross subsidization between different segments.

Besides rationalisation of the fares, the Railways must increase its operational efficiency in terms of Operating Ratio which is about 90%. The OR should be brought down to 85-86% in the short term and below 80% in the long run if we want to make the Railways world class.

Instead of going for further recruitments, the Railways should focus on training and re-deployment of its humungous work-force of 14 lakh employees and redeploy them. We are not against employees, but the Railways should primarily service its 14 million daily passengers and freight customers of business and industry. The focus should be on use of technology and not further increasing the headcount, the ASSOCHAM Secretary General said.

In a courageous move, the government had announced a hike in the railway passenger fare by 14.2% in all classes and freight by 6.5%. However, the hike in sub-urban fares upto 80 km had to be rolled back following political opposition.

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