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dna edit: Rail fare hike hullabaloo

Monday, 23 June 2014 - 9:44am IST Updated: Sunday, 22 June 2014 - 6:44pm IST | Place: Mumbai | Agency: dna

Government needs to demystify the railway fare revision mechanism instead of seeking political and administrative alibis

There are two aspects to the rail fare hike decision on Friday of the BJP-led NDA government. There is the technicality of administrative accounting and procedure. And then there is big picture —the political meaning of it all. The technicality is this: the previous UPA government in its interim railway budget had the hike component, 10 per cent for the passenger, and 5 per cent for freight, fares. It was not implemented apparently because of the elections and later because of the electoral defeat. The plea of railway minister Sadananda Gowda and his officials is that they are implementing a decision taken by the previous government. The railway ministry issued a further clarification saying that the 14.2 per cent hike in passenger fare comprises 10 per cent as per the decision already taken and an additional 4.2 per cent fuel adjustment component (FAC) which brings it to 14.2 per cent. Similarly, the FAC for freight is 1.5 per cent, which brings it up 6.5 per cent. The other part of this technical procedure is that rail fares are to be market-determined to an extent in the manner of air fares, which will rise and fall according to the fuel rates. And therefore they need not wait for the annual budget ceremony. Fares are to be adjusted from time to time and on the basis of the assessment of the input costs and on the push and pull of supply and demand.

The technical details are important and interesting. It shows that governments whatever their populist compulsions cannot ignore economic imperatives. The UPA, had it come back to power, would have had to announce the hike. The NDA had no option but to implement the previous government’s decision because the economic reality of the railways was staring at it in the face. Successive railway budgets have not been transparent enough to reveal the real state of the economic health of the only viable public transport system which is accessible to hundreds of millions of people across the country. The budgets focused on the popular aspects of raising or not raising fares, of announcing new trains and expansion of lines. Most railway ministers spoke ritually of the need to modernise the stock as well as the tracks, and increase safety and there were no concrete measures to match the promises.

There is also the big picture, which includes the politics of the decision. With Gowda and his officials admitting that they are only implementing a decision taken by the previous government, it will not be possible for the BJP and NDA spin doctors to claim credit for having taken a tough decision. It was not their decision at all. The tough approach of the new government to challenges of the day is yet to be seen.  What the railway minister and his officials should be doing is to explain the rationale of the hike: there will be regular fare adjustments, and it will not always be an upward revision. If the oil prices go down, and if demand picks up on the freight front, the fares should be revised downwards as well. This fare revision mechanism has to be made transparent. The annual rail budget should not be only about fares though it will have to include that as well to reflect the revenue and expenditure statement. It should now focus on the big picture of making railways the effective and adequate transport network which keeps the country on the move in the literal and metaphorical senses. 

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