Rail ‘Subsidy’
By Shivaji Sarkar
The Indian Railways is in a clever bureaucratic muddle. Neither is it in any kind of loss, nor is it giving any subsidy to the passengers. But a bogey and guilt complex is being created among the people to give up the “subsidy”.
Undoubtedly, there is no subsidy at any level whatsoever in the railways. But it has launched a well-planned propaganda on its tickets and other instruments cajoling the people to give up “subsidy”. A clear case is that of senior citizens, who are suffering heavy losses by reduction of interest rates, their savings are dwindling and mostly they don’t have any pension but whenever they book a ticket they are asked to press ‘forego’ button to buy tickets at higher fares.
The officials are certainly not giving the correct advice. In the entire concept of railways, no concession is given. To the senior citizens, terminally sick patients and some other categories “concession” given is neither a loss to the Railways nor does government end up paying for it. Instead there is a system of cross subsidisation. Freight pays for the supposed losses given for social welfare. The question which arises is whether we are now planning to give up the concept of social welfare?
In monetary terms is there any loss to the railways? Not really, though notionally it is. In 2016-17, the Railway Budget was merged with the General Budget, which should not have been the case. Till then the Railways was paying an annual dividend to the government, which was budgeted as Rs 9730 crore that year for the previous year. It claimed “subsidy” of Rs 4300 crore for loss-making routes and thus the net dividend was to be Rs 5430 crore, but it was given up that year.
This means the “total loss” in 2015-16 was a mere Rs 4300 crore. But now the Railways says that “every passenger is provided blanket subsidy, which amounts to Rs 35,000 crore”. This does not include the concessions to senior citizens, students, sick or defence personnel. However, the Railways is not explaining how this figure was arrived at. On the basis of statement of accounts till 2015-16, it is a hyper, possibly hypothetical, figure.
Railway Board member (Traffic) Mohd Jamshed has stated that “only 57 per cent of the cost of travel on an average and 37 per cent in suburban services is recovered” and “it would be reflected on tickets to create awareness by the people to give up subsidy (that does not exist as per 2015-16 and 2016-17 rail budgets)”. He has not explained how he has arrived at this questionable figure. The possible reason could only be a move at introducing high unaffordable fares.
A look at Suresh Prabhu’s Railway budget of 2016-17 shows that in 2015-16, the Railways achieved a saving of Rs 8720 crore and operating ratio was 90 per cent. Ordinary working expenses were 11.6 per cent after meeting 7th Pay Commission commitments. He had also made provisions for Rs 48,100 crore, 8 per cent growth, for capital expenditure, which was all from railway coffers and there was no government investment. It is thus difficult to understand how during the next two years, the Railways has gone into an abysmal situation.
Presenting the 2019-20 Interim Budget on February 1, Piyush Goyal said that capital expenditure is pegged at Rs 64,587 core, a mere rise of Rs 15,687 crore over Prabhu’s figures. Clearly, these figures vindicate what his predecessor had presented. It means even now after the merger of the Rail Budget with the Union Budget, the Railways is paying for all of it, which only means that the Centre does not have to bear the cost of investment in railways. It certainly is not in losses as is being projected and as mentioned the subsidy is a mere myth.
So why are the people being implored to give it up and for whom? The Railways has launched a massive propaganda on this subsidy myth. It has not announced the cost of the propaganda being carried out through various media, tickets and advertisements. That too is at the Railways’ expense. True, but it forgets that it is paid by the people, who find that their every cost, including that of travel, is being hiked at one or other pretext.
This calls for transparency and a national debate. Recently, the CAG noted that about Rs 14,000 crore shown in the budget is incorrect. Same is the case with the figures of the Railways. Prime Minister Narendra Modi needs to look at these figures for credibility and truthfulness, which his government is apparently known for. The lapse at whatever level, if so, must be taken seriously and those responsible must be taken to task. It interferes with the process of governance.
The Railways has a system of cross-subsidy. It means that what it earns from one section is used to subsidise the lower class or suburban travelers. Often it is said that passenger earnings are not enough, so freight earnings are used to subsidise it. This is happening since 1950s. Even Prabhu’s budget and presently Piyush Goyal’s is based on this premise.
This again proves that except for the bureaucratic jargonism there is no loss, and if at all, it may be minimal. Their entire effort seems to be to show their “efficiency” in raising revenue for a government that needs more money to pay for various pensions and populist programmes. There is no loss on premium trains including that to Vaishno Devi or T-18 –Vande Mataram or the Rajdhanis. So if at all the officials are targeting the trains used by the poor, which are famous for running five to 12 hours behind schedule.
If on this premise Indian Railways raises fares, on an average ticket cost would increase by 75 per cent. It is too high for poor working people who in Delhi even avoid the metro ride for its high fares.
Politically such a move would be disastrous for a Prime Minister, who has instilled confidence in the people. They look towards him for lessening their increasing burden of prices of commodities, services and travel. India needs to promote travel through affordable, low, costs. It helps economy boom all over. Prime Minister Modi has to intervene to end the myth of rail subsidy and trash the “give it up” campaign.—INFA