Rail freight support for fares hits 10-year high

The Indian Railways has been using what it earns by moving goods to pay for not charging passengers the full price of ferrying them. This year, this freight support has hit a 10-year peak.

The widening gap between the average revenue per unit of freight and passenger moved shows up the high cross-subsidisation level.

By moving one tonne of cargo over one km the Railways earned Rs 1.21 in the first half of 2012-13, which is 61 per cent higher than what it did 10 years ago. By ferrying a passenger over one km, it earned 28 paise, about 16 per cent higher than what it did 10 years ago.

The average freight-to-passenger fare ratio touched 4.32, which means an average freight user pays over 4.3 times the average passenger.

CROSS-SUBSIDY WIDENS

The gap between freight and fare has been consistently widening since 2004-05, the year the Congress-led UPA took over. This means with each passing year, freight has been paying more to ferry passengers.

In fact, 2003-04 was only year when the average freight-to-passenger fare ratio dipped over the preceding year. That was the year the BJP-led National Democratic Alliance was defeated at the hustings.

Confirming the trend, Railway Ministry officials said the gap had widened even more after March, when a 22-26 per cent freight hike was put through.

Brakes could have been applied on the cross-subsidisation had the fare hike by former Railway Minister Dinesh Trivedi not been rolled back; he had to quit office for the move that did not get the blessings of his party, Trinamool Congress, chief.

Congress’ C. P. Joshi, who now holds the Railway portfolio, has supported the setting up of a railway tariff regulator to help arrest the cross-subsidisation.

http://www.thehindubusinessline.com/industry-and-economy/logistics/rail-freight-support-for-fares-hits-10year-high/article4038566.ece?ref=wl_industry-and-economy

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