Rail Safety Cess likely to be fixed at less than 2% of the total fare amount: says Railway Board officials

NEW DELHI: Passenger train tickets could see a marginal hike if the government decides to implement a ‘safety cess’ to shore up revenues of India’s biggest transporter, railway minister Suresh Prabhu has hinted. The cess could be fixed at less than 2% of the total fare amount, officials said.

The state-run behemoth is reeling under mounting losses, a Rs 32,000-crore debt burden and galloping operating ratio, the calculation of paisa spent against every rupee earned.

“A safety cess on passenger tickets is under consideration,” Prabhu told reporters on Tuesday. He, however, did not say when the cess was likely to be introduced.

An official told that the railways was considering various options “including the possibility of effecting an incremental increase, so that the pain (of raised fares) remains gradual for low-income passengers in particular”.

Indian Railways operates 19,000 trains daily and carries an estimated 23 million passengers, a number equal to the population of Australia, on its network of tracks running to nearly 64,000 kilometres.

But it also has a poor safety record with hundreds of accidents leading to the death of a total of more than 3,000 passengers in a ten-year period between 1999-2009.

A safety cess was last levied in 2002 during Nitish Kumar’s term as the railway minister to service a special fund of Rs 17,500 crore. The fund was set up to take up several tasks, including restoration of old bridges, besides signaling and track modernisation works.

Officials said passenger services have remained heavily subsidised, with losses in this segment estimated at Rs 30,000 crore this year.

While higher class fares – AC-I and AC-2 – have been gradually raised in the past few years, tariffs in the non-reserved classes and suburban trains have largely remained untouched.

Approximately 94% of the passengers travel in the unreserved second class.

“Volumes (in terms of revenue generation) can come only when fares of the unreserved class are hiked,” the official added.

In this year’s budget, finance minister Arun Jaitley announced a Rashtriya Rail Sanraksha Kosh (RRSK) or the Rail Safety Fund with a corpus of Rs 1 lakh crore, envisaging an annual spending of Rs 20,000 crore for the next five years on safety upgrade schemes.

For the current fiscal, the finance ministry sanctioned Rs 10,000 crore for the fund, while directing the railways to raise additional Rs 10,000 crore required for executing RRSK tasks this year.

Last fiscal, the transporter logged an operating ratio of 96.96%, the highest ever in the last decade. This means the transporter spent 96.96 paisa for every rupee it earned.

During the year, losses of Rs 4899 crore were reported in freight transportation, while passenger earnings increased by a mere 5%.