New Delhi, July 6: After the success of the ‘Give-It-Up’ campaign on cooking gas subsidy, the government has drawn up a similar plan for rail fares, giving passengers the option to voluntarily forego the subsidy on tickets. The railways plans to launch the scheme next month.
A similar mission launched by the ministry of petroleum was an instant hit with more than 10.5 million liquefied petroleum gas (LPG)-consuming households opting out of the subsidy, saving more than Rs 4,000 crore for the government exchequer. Confirming the development, a senior railway official said, “The scheme will be launched from August. Through this, the passengers will have the option to forego either 100 per cent of the subsidy or 50 per cent or to avail the subsidy. It will be a voluntary decision that we leave to the customers.”
According to the Railways, the idea came to minister Suresh Prabhu when a passenger, Avtar Krishen Kher, sent back a cheque in the name of IRCTC for the differential amount of the actual fare and the subsidy, which was around Rs 950 for his trip. The national transporter recovers only close to 57 per cent of the cost of travel on each ticket, while on suburban tickets it comes to around 40 per cent. This has led to a huge subsidy burden of more than Rs 30,000 crore on an annual basis for the railways.
The Railways is already in talks with two financial institutions, including the National Institute of Public Finance and Policy, to devise ways to reduce its subsidy burden. This is part of the Narendra Modi government’s strategy to run the Railways with a more corporate mode of approach, based on a report submitted by the Bibek Debroy Committee in 2015.
The Railways had posted its worst operating ratio in 16 years at 96.9 per cent in 2016-17. This was mainly due to the impact of social burden and the seventh pay commission. The operating ratio is gauged on the basis of money spent on every hundred rupees. In fact, it has already appointed an international consultancy firm to come up with a new performance index other than operating ratio. According to estimates, the subsidy for senior citizens, sports persons, and women alone comes to the tune of Rs 2,000 crore.
The biggest drain on the railways exchequer is subsidy on suburban travel segment. Suburban passengers pay only 36% of the ticket cost, while the remaining amount is subsidised, which is much cheaper than comparable bus fares.