CAG backs rail fare hike as operating ratio drops to lowest since FY2001
New Delhi: India’s national auditor on Tuesday recommended raising railway fares, terming 2016-17 as one of the worst years for the national transporter in nearly two decades with its operating ratio, a key measure of efficiency, falling to 96.5%.
Operating ratio (OR) represents the percentage of working expenditure to traffic earnings and is an indicator of the efficiency in railway operations.
In its report on rail finances presented in Parliament, the Comptroller and Auditor General (CAG) said the 2016-17 OR is the worst since 2000-01 when it was 98.34%.
The auditor said railways must take measure to improve competitiveness of its services and warned national carrier to reduce misclassification of expenditure and control unsanctioned expenditure.
The report said 2016-17 revenue receipts of Rs1,65,382.49 crore were 1.78% below Rs1,68,379.60 crore received in 2015-16. Freight earnings of Rs1,04,338.54 crore too were down 4.46% from Rs1,09,207.66 crore a year ago.
The auditor said the railway ministry needs to revisit passenger and other coaching tariffs to recover the cost of operations in a phased manner and reduce losses in core activities. The fixation of passenger fare and freight charges should be based on the cost involved so that it brings both rationality and flexibility in pricing, considering the financial health of railways and the current market scenario.
There is hardly any justification for not fully recovering the cost of passenger services in case of AC first class and AC 2-tier, CAG said.
However, since one of the factors for non-recovery of full cost from these classes could be the issue of free and concessional fare passes/tickets to various beneficiaries in good numbers; this practice needs to be scaled down, CAG said.
However, it seems the government is not keen on raising passenger fares.
It’s almost a year now when Union cabinet headed by Prime Minister Narendra Modi had approved setting up of Rail Development Authority, a nodal agency to recommend fare hikes.
However, the authority is yet to be formed.
A retired railway board chairman who didn’t wish to be named said, “Passenger fare revision is the only way to help the national carrier but the political bosses have been resisting it all through the years and it will deteriorate all the more if an effort is not put in on this front.”
Indian Railways is one of the largest rail networks in the world with 67,368km of tracks, 22,550 trains, carrying every day 22.24 million passengers and 3.04 million tonnes of freight.
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