When he hiked passenger fares in late January, railway minister Pawan Kumar Bansal had argued that the extent to which freight earnings had been used to subsidise passenger operations was unsustainable. On Tuesday, however, he said he would not affect any changes in passenger fares while imposing an across-the-board 5.8% increase in freight rates.
According to Bansal, losses on passenger operations are estimated to have risen from Rs 4,955 crore in 2001-02 to about Rs 24,600 crore in 2012-13. Considering that the earnings from passengers were Rs 32,500 crore in 2012-13, that suggests that the railways recover only about 55% of their costs on carrying passengers, the rest coming from the surplus generated in freight operations.
That explains why Bansal has bucked the trend of over a decade in recent weeks and announced measures that will yield him an estimated Rs 7,000 crore plus from passengers. Despite such a sizeable mop-up, Railway finances as projected for 2013-14 look only somewhat better than in the last couple of years.
The operating ratio - a measure of what percentage of revenues is used up in running expenses - is pegged at 88.8% for the current year and 87.8% for the coming year. In other words barely 12% of what the Railways earn will be available for investing in building future assets. While this is significantly better than the situation in the last couple of years when the OR had touched 95%, it is still a far cry from the 2007-08 scenario in which nearly 25% of earnings were available for investment.
The squeeze on resources was evident in the minister's lament that the 12th Plan target of investing Rs 5.19 lakh crore on the Railways with Rs 1.05 lakh crore coming from internal resources was beginning to look like an increasingly tall order. He pointed out that only Rs 10,000 crore had been contributed by internal resources in the first year. Yet, the budget for 2013-14 does not do very much better with Rs 14,260 crore of internal accruals contributing to an annual Plan size of Rs 63,363 crore.
Put together, therefore, the first two years of the Plan are now estimated to add up to investments of Rs 1.16 lakh crore with internal resources contributing just over Rs 24,000 crore. That means the Railways will have to invest over Rs 4 lakh crore in the remaining three years of the Plan and find nearly Rs 81,000 crore of that internally, clearly a tall order.
Budget 2013 > Rail Budget 2013 > Economic Survey 2013
Rail Budget 2013: Raising funds an uphill journey
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Rail Budget 2013: Raising funds an uphill journey
