Railways plans to ‘link’ train fares to fuel

Railways plans to ‘link’ train fares to fuel

The Government is planning to “link” the train fares to fuel prices. Fuel component in the total fare will be explicitly mentioned in the tickets — as in the case of airline travel.



Nearly 30 per cent of total fare for a train journey is the fuel component and Railways is contemplating to make it variable and link to fuel prices that keep fluctuating. Railways’ annual diesel bill is pegged at around Rs 9,000 crore.

Diesel is a major component of Railways’ fuel bill as 66 per cent of railway network is non-electrified and caters to almost one-third of freight and half of passenger traffic. Railways is under tremendous pressure to hike passenger fare, which has remained untouched for nearly a decade now.

"I am concerned about Railways' financial condition. We cannot take the burden of fuel cost anymore. We need to show the fuel component, which is nearly 30 per cent. My exercise (for the new ticketing system) is complete. But in a democracy, decision should not be taken in a unilateral manner. There has to be transparency," Railways Minister Dinesh Trivedi said, clearly refusing to set any deadline for introduction of the new system.

The Ministry is also planning to look into the balance sheet of its freight services clients, private and PSUs both, to find out if they were making huge profits at the cost of subsidy by Railways. "We will also have to look at that," Trivedi said.

Between April and September 2011, Railways carried approximately 4120.8 million passengers, which is 5.4 per cent higher than the 3907 million passengers carried during corresponding period of last year.

The passenger earnings have been approximately Rs 14017.7 crore, which is 10.4 per cent higher than the originating earnings of Rs. 12688.8 crore during corresponding period of last year. The target for earning from passenger traffic has been set at over Rs 30,456 crore for 2011-12.

While Railways' receipts have grown by nearly over 10 per cent between 2007-08 and 2011-12, the much increased expenditure on account of hike in salaries, allowances and pension has severely hit Railways growth story making it difficult for the ministry to even generate sufficient funds for its ongoing projects.

The Railways are estimated to have made additional payment of over Rs 73,000 crore during the period from 2008-09 to 2011-12 on implementation of the 6th pay commission.

According to an estimate, Railways need nearly one lakh crore to complete its projects. As on date, Railways Operating Ratio (money spent to earn every hundred rupee) works out to 92.1 per cent, which would have been 72.8 per cent with pre-Pay Commission salaries.