Railway Budget 2012-13 : Will it succeed in saving Indian Railways from becoming next Air India?

Posted By: Religare
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Railway Budget 2012-13: Will Railways be next Air India?
Like many other government-run companies and sectors, Indian Railways has also fallen prey to a huge financial crunch. The only way that can pull the industry out of the gloom is a hike in the passenger revenue, which if remains unimplemented, will give birth to another Air India.

The state-run airline is currently striving for its survival following its cash strapped condition.

"Railways has no option but to raise passenger fares... But politicians, of course, have other ideas. If they continue resisting a passenger fare hike, the railways will go the Air India way," said Former railway financial commissioner Samar Jha.

The demand for the fare hike has been there since long in the manifesto of Railway Budget 2012-13. However, due to the pressure from the former railway minister Mamta Banerjee, the current railway minister Dinesh Trivedi has been unable to take any action in the same context. The railway fares were last revised in 2002-03.

Trivedi is to present his first railway budget on March 14, 2012, which will decide the future of Indian Railways.

As per the estimations, a nominal 10 per cent hike in the railway fares will help sector fetch an additional Rs 3,000 crore. As of now, in a bid to deal with the financial crunch, railways on March 6 announced a 20-25 per cent hike in freight rates for commodities such as coal, fertilizers and iron ore. The hike is expected to earn the national carrier an additional Rs 15,000-20,000 crore in the year ending March 31, 2013.

The hike in the freight charges was announced on the back of demand of the railway officials to link the freight charges with fuel prices.

"Freight hikes will take the railways only so far. If freight rates are raised any further, the railways will become uncompetitive as compared to roads," added Jha.

A similar proposal was suggested by Trivedi when he opined that the passenger fares is likely to be linked to cost of fuel, instead of an across-the-board increase. However, then he escaped from mentioning any specific timeline for the proposed move.

With the Railway Budget just a day away and the sector sinking down more and more with burden of losses, the entire nation is eyeing upon March 14, when the budget would be announced. Will the Budget give a new life line to the sector or will it fail to save the nation's lifeline?

Read more about: railways, union budget 2012
Story first published: Tuesday, March 13, 2012, 13:31 [IST]
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