New Delhi: One of the few services to remain unaffected by inflation over the past four years is rail travel.
In the three years and 10 months since the United Progressive Alliance assumed power, during which the average annual inflation rate peaked at 6.5% in 2004-05, the prices of railway tickets have remained largely unchanged.
Lalu Prasad, who will present his fifth and perhaps last railway budget on Tuesday, assuming the general election is held on schedule early next year, will, if he doesn’t raise fares, perhaps be remembered as the only railway minister who has served out full term and yet never raised ticket fares.
There are other things to remember Prasad, widely feted for his role in turning around the Indian Railways, and a former chief minister of Bihar, by but most analysts believe that the minister will once again announce a cut in fares across multiple passenger classes.
Officials who have worked closely with the minister say freezing ticket fares was a diktat laid down by Prasad.
“There was no question of raising fares. It was a given that the fares just could not be raised and the minister would not tolerate any argument on that. He wants to be known as the minister who did not raise fares and therefore was pro-poor,” says an official of the Railway Board who did not wish to be identified. The Railway Board is the top management body of the railways.
The railway minister’s office said he was not available for comment.
In two of the four railway budgets that he has presented, the 59-year-old railway minister has cut rates for rail travel for passengers travelling in air-conditioned coaches and on suburban routes.
According to a former Railway Board official, this has meant that the railways has had to absorb Rs7,000 crore in losses on its passenger business. This is subsidized by revenues from its freight business, which has grown 35% over the last four years on the back of an economy that has grown at more than 9% over the past two years. At the same time, the railways has added capacity to coaches and thereby raised revenues per train.
Some analysts view Prasad’s strategy as part of a larger design, where he has parlayed his concern for the poor into a reform initiative that has pushed through structural change in the system, including partnerships with the private sector for big ticket projects.
Prasad was the first railway minister to employ the concept of public-private partnership projects. As a result, the railways is now developing budget hotels and world class stations—which will be built on the scale of international airports—using the PPP model and leveraging surplus land to raise resources.
A similar approach has been adopted for involving private participation in production units, sanitation and several other services that are now being provided by the government. Prasad has managed to do these by arguing and convincing people within railways and the government that privatization and PPPs are not the same.
“Privatization and PPP are different things. We do not per se object to PPP, but feasibility of proposed PPP projects must be examined. Whether it is being sought in station-building or in new rail links, or train conducting services, must be made clear first,” said Prakash Javdekar, spokesperson for the Bharatiya Janata Party, the main opposition party.
It isn’t clear if Prasad will use his final budget to provide impetus to the showpiece Dedicated Freight Corridor project that ambitiously envisages linking the metros with railway lines that will be used by freight trains. Although it was announced in 2005, the project is yet to materialize with the railways unable to close the required funding, an estimated Rs28,000 crore.
Similarly, the plan to develop budget hotels in partnership with the private sector, too, is yet to be implemented in full as only about one-fifth of the 100 projects have been awarded so far, even two years after it was conceived.
Communist Party of India (Marxist) leader Basudeb Acharia, a member of Parliament who also heads the standing committee on the railways said that the ruling UPA and the previous BJP-led coalition have similar policies on privatization.
“There is no change in the previous government’s policy on privatization. That is why nobody opposes it. Now, the railways has proposed modernization of 22 railway stations, largely with private funds. This is nothing but privatization of an essential service and we will oppose it,” Acharia said.