Financial Daily from THE HINDU group of publications
Wednesday, Jul 07, 2004
Go-by for Rakesh Mohan report again
New Delhi , July 6
IT looks as though the Government has decided to virtually dump the report of the Expert Group on Indian Railways headed by Dr Rakesh Mohan.
For the second successive year, there is no increase in passenger fares or a `rebalancing' of tariffs, currently seen as being highly biased towards lower classes.
Of the Railways' total budgeted passenger earnings of Rs 13,940 crore during 2004-05, the share of upper classes is expected to be almost Rs 3,531 crore, i.e., 25.33 per cent. This is an increase over the 22.85 per cent share two years back.
To put this in perspective, one must look at the share of upper class travel in traffic volume terms, i.e., in passenger kilometres.
For 2004-05, this is slated to be 7.64 per cent. Thus, while those travelling in upper classes would constitute only 7.64 per cent of the total passenger traffic, they will, however, contribute over 25 per cent of the overall revenue earnings.
Lower class commuters will, on the other hand, comprise over 92 per cent of the traffic that the Railways are expected to handle this fiscal and yet they will provide less than three-fourths of its passenger revenues.
In its report, the Expert Group had envisaged major tariff rebalancing through a reduction in upper class fares along with an increase in lower class fares over a five-year period from 2000-01 to 2005-06.
Real tariffs in AC classes were to come down by 5 per cent per year, while second class and sleeper fares were to go up by 2 per cent and 4 per cent, respectively.
In its exercise, the Group had basically taken into view the price elasticities of demand for the various classes.
By noting that the upper classes generally had elasticities above unity - which meant that price increases would be more than offset by reduction in traffic volumes - the Group had suggested lowering tariffs in real terms for these segments.
In the case of lower classes - where elasticities ruled below unity - it had correspondingly sought hiking real passenger fares.
But neither Mr Laloo Prasad Yadav's Rail Budget for 2004-05 nor the one for 2003-04 presented by Mr Nitish Kumar, have chosen to accept the Group's recommendations. Ms Mamata Banerjee's Rail Budgets for 2000-01 and 2001-02, too, had refrained from raising passenger fares.
Only Mr Nitish Kumar Rail Budget of 2002-03 had dared to undertake a significant tariff balancing exercise.
Again, just to get an idea about how much commuters pay, the Railways' average revenue per passenger-kilometre during 2004-05 is expected at slightly over 25 paise. An average passenger commuting by Second Class (Ordinary) would pay just 14 paise for every kilometre he travels, while these work out to 29 paise for Second Class Sleeper (Mail and Express trains), 76 paise for AC Chair Car, 77 paise for AC 3-Tier, Rs 1.10 for AC Sleeper and Rs 2.41 for AC First Class.
During 2004-05, the Railways are expected to transport 535.99 crore passengers, which translates into almost 1.5 crore people every day.
Simply put, it means roughly 1.5 per cent of India's population are everyday on the move in a train!
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