Indian Railways ||Tweak in Passengers || UPSC

Description

Context: A parliamentary committee has recommended that the Railway Ministry should undertake “prudent adjustment” of passenger fares to reduce the burden on freight segment, while highlighting that the Railways’ operating ratio has regularly deteriorated after 2015-16.

Details:

The committee, in its report tabled in Parliament also said the actual earnings of the Railways have fallen short of projected earnings for all years since 2016-17, indicating that either unrealistic projections were made or the Ministry’s efforts to actualise the accruals were not sufficient.
Noting that revenues from passenger services had deteriorated due to suspension of operations during COVID-19.
The tariff policy of the Indian Railways has traditionally followed the principle of cross subsidisation in order to offset the losses incurred in the heavily subsidised passenger and other coaching services through additional revenue from freight movement.
The Committee feels that both passenger fares and freight rates have to be demand-cum-market driven and fixed differently for different segments.
On the net revenues, the panel noted that over the past five years, Budget Estimates for revenues are being drastically reduced at Revised Estimate stage, and even the reduced targets nowhere matched the actuals.
Operating ratio indicates how much the Railways spend to earn a rupee. For example, an operating ratio of 98.36% for 2019-20, indicates that to earn Rs. 100, the Railways will have to spend Rs. 98.36.
The Committee observed that for the fiscal year 2015-16, the Railways Operating Ratio was 90.5%. In contrast in the succeeding years the Operating Ratio has regularly deteriorated.