Budget: Railways banks on FinMin for Relief from Subsidy burden, Pension outgo

The Railways is the only government department that pays for salary, pension and fuel bill from its revenues.

NEW DELHIAs the Railway Budget gets merged into the Union Budget, the national transporter is pinning hopes on a helping hand from the Finance Ministry. Some of the areas in which the Railways would require some relief is passenger subsidy, pension outgo and tax waiver on fuel, according to multiple sources.

The Railways, which expected ₹1.84 lakh crore revenues this year, has already lowered its revenue expectations to ₹1.7 lakh crore in the revised estimates. There are murmurs that even the revised numbers are proving to be a stiff target.

Lower freight charges

The national transporter is also trying to lower freight charges to prevent cargo from moving to other transport modes, and has reduced parcel sizes and average distances, Mohammed Jamshed, Member-Traffic, told. Freight fetches the Railways a larger portion of its revenue.

In addition, there has been a decline in net-tonne kilometre (NTKM), a unit that measures the average tonnage and distance travelled by cargo. This is significant, as rail revenues are dependent on the weight and distances for which commodities move.

On the passenger side, which has been traditionally loss-making, Jamshed said more trains were being run with dynamic fares, with a higher share in the AC-III segment. Special shorter routes, where buses are poaching customers, are also being identified and fares are being dropped in these segments.

The Railways is the only government department that pays for salary, pension and fuel bill from its revenues. Hence, it hopes that some portion of its huge pension bill will be absorbed by the Centre, as is being done for other Central departments.

Cost control

On the cost control side, while the Railways, where about 30,000 people retire every year, talks of rationalising recruitment as one of its goals, it also hopes to get some respite from the Finance Ministry by way of lower taxes in fuels.

Finally, faced with revenue pressure, it is important for the Indian Railways (IR) to plan for financially viable projects. “…Railways should be able to fund projects from its internal generation which it requires for its commercial business — those projects should be financially viable. For doing so, IR should at least break-even if not earn a modest profit in its passenger business by linking its fare to ‘Weighted Average Cost Index’ of IR… and they should be increased or decreased at least once in every year, say in December,” SB Ghosh Dastidar, former-Member-Traffic, Railway Board, said in a note submitted to various arms of government.

The former Member-Traffic indicated that this could be the only way to “depoliticise” passenger fares, and also ensure project viability.

With strong murmurs of imposition of a “safety surcharge” in the Budget, the extent of passenger segments on which this surcharge will be implemented is sure to reflect the extent of commercialisation or de-politicisation of the Railways.