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19 May 2017

Safety cess- Indian Railways to hike fares again?

Centre to add safety cess to rail fares

Attempting to remedy huge losses and plagued by numerous derailments in the past few months, the Centre is currently discussing introducing a safety cess, which could marginally hike rail fares.

"A safety cess for passengers is under consideration", noted union railways minister Suresh Prabhu, while speaking to the media.

Officials further added that the cess could come up to 2% of the total fare.

In context

Centre to add safety cess to rail fares
Why is this being done?


Why is this being done?

Indian Railways have been plagued by heavy losses and a rising operating ratio, with a Rs. 32,000 crore debt burden, forcing it to take urgent measures to improve its revenue.

It has further been plagued by a number of derailments in the past few months, with hundreds of accidents claiming the lives of 3000 passengers between 1999-2009.

Huge losses

Indian Railways in April recorded an operating ratio of 96.9%, implying that it spent Rs. 96.9 for every Rs. 100 it earned. In 2016-17, it saw a mere increase of 4% in passenger earnings, while it suffered losses worth Rs. 4899 crore in freight transportation.

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What is it being done now?

The Rashtriya Rail Sanraksha Kosh (RRSK), a rail safety fund with a corpus worth Rs. 1 lakh crore was announced under Union Budget 2017. Under this, Rs. 20,000 crore per year for the next five years has been allocated for safety upgrades.

Under the present proposals, the fares of unreserved class and suburban trains, which hosts 94% of India's train passengers will be hiked.

What does this mean?


What does this mean?

Railways suffered losses worth Rs. 30,000 crore in passenger subsidies and hopes to limit the same. A hike up to 2% of total fare is not heavy on users and could help cut losses.

Railways is crucial in facilitating flow of people and services across rural and urban India alike. Removing passenger subsidies in the long term might make rail travel inaccessible to many.

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