ASSOCHAM to Suresh Prabhu- Show political courage & raise passenger fare

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ASSOCHAM_IndianBureaucracy
ASSOCHAM_IndianBureaucracy
Days ahead of the Railway Budget, ASSOCHAM said it has impressed upon the Railway Minister Mr Suresh Prabhu to muster political courage and go in for a hike in the passenger fares which have been kept low at the cost of freight traffic.
In a memorandum to the Railway Minister, the chamber said, “There is lack of political will to raise passenger fares even though the reluctance is not shared by passengers, who would be willing to pay more provided the hike is accompanied by better services including timely arrival of trains, cleanliness at stations, safety and improvement in food”.It said the fare increase would reduce the drastic losses on passenger traffic, now running at 68% of passenger earnings. Passenger losses (including suburban and non-suburban) have grown from 72% of social obligation cost borne by the railways in F1975 to 95% in F2014. The decline in passenger losses would also have a significant positive impact on railways’ finances. It might also enable the railways to stop whittling away their financial cost advantage over roads as a mode of transport, by creating the potential to reduce the over-recoveries on freight to make up for the under-recovery in the passenger segment.Commenting on the issue, Dr A.K. Agarwal, Chairman, ASSOCHAM National Council on Railway said, the Railway Minister would be presenting his budget in a subdued economic environment which has hit the prices and demand for coal, steel and iron ore, the milch cows for the Railways for its total revenue. “Even though the fuel costs for the Railways have come down, the business has surely come under pressure with low volume in commodity traffic, Mr. Agarwal said. Besides, the implementation of the Seventh Pay Commission may have an additional burden of something like Rs 40,000 crore by way of hike in salaries and pensions obligations.“But we need huge resources for large investment as well. While Mr Prabhu has been making some laudable efforts in finding alternative means of financing investment in Railways, outside the Budgetary support, additional burden of the Pay Commission and subdued demand for the bulk commodities and their movement have been hitting the bottom line of the largest public transporter”.  Railways are the single largest employer in India, with a workforce of 1.33mn

A historical perspective will help understand the size of the underinvestment better. In 1951 just after the British left India, its rail network was 53,596kms – yet 63 years later, today, it has only grown 21% overall, to 65,436kms. In 1951 India’s rail network was 2.3x China’s; today China’s is 1.6x India’s. “We believe that a rightsizing between roads and rail could result in a 10% decline in logistics costs, in turn leading to a savings of 120-150 bps of GDP, a potential 5-6% increase in trade, and a 100-120% increase in the range of products exported.

“The chamber has also sought removal of anomalies in the freight tariff and other charges for specific industries like aluminum, steel and iron ore, which are facing one of the worst crisis of global slowdown in demand”, said Mr. D S Rawat, Secretary General ASSOCHAM.

It has sought removal of port congestion charges on aluminium industry related commodities viz. alumina, bauxite, CP coke, caustic, furnace oil and even coal. Similarly the classification of these commodities should also be changed to bring the freight burden down on the crisis hit sectors. The ASSOCHAM has also pressed for vb encouragement of the private sector in introduction of more wagons and other physical infrastructure.

Moreover, the modernisation of the stations in the PPP model should be speeded up and the Swachch Bharat should be implemented in all earnest in trains and the stations.

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