In right direction

The new railway minister C P Joshi’s announcement that a railway tariff authority would be set up to rationalise passenger fares and freight charges is a step in the right direction to put the national transporter back on track. The formation of such an authority was part of the railway budget presented by the Trinamool minister Dinesh Chaturvedi earlier this year, along with an increase in passenger fares. But both proposals were withdrawn by Mukul Roy who replaced Trivedi after the latter was forced to resign by party leader Mamata Banerjee after the presentation of the budget. Now that the Trinamool is out of the government there should not be any major obstacle to taking some urgent steps to reform the railways which has suffered from populist policies pursued by successive ministers.

The railways’ financial position is very precarious now with hardly any resources left with it for expansion and improvement. The surpluses have dwindled over a period from over Rs 17,000 crore to about Rs 65 crore. The cost-return ratio is poor, pushing the organisation into the red. This will make it impossible to undertake any capital expenditure on new lines and other infrastructural needs. Even the routine operations are in danger of being affected. Two high-level panels led by Sam Pitroda and Anil Kakodkar have made recommendations for modernisation and improvement of safety standards and measures. Both are imperative and need huge investment, with modernisation likely to cost about Rs 5.6 lakh crore over the next five years. The committees have suggested ways to raise resources also and what is needed is political will to implement the suggestions. Passenger fares have been stagnant for the last ten years and there is a case to bring them in line with the costs. The recent diesel price hike has made the situation more difficult. Freight hikes have been undertaken periodically to increase the revenues, but this had the effect of making the railways less competitive vis-a-vis road transport.

Therefore it is necessary that fares and freight are reviewed to effect a better balance between commercial principles and the railways’ responsibilities as a means of public transport. So far the policy has been heavily tilted and lopsided in favour of the latter. The tariff committee should be able to redress this imbalance. It is not known whether its recommendations will be advisory or binding on the government. While the status needs to be clarified, the work at hand is urgent.

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