Indian Railways Passenger – Buying Ticket is not enough – Hereafter you have to pay for the Services too.

Date : 22.12.2016

Indian Railways Passenger – Buying Ticket is not enough – Hereafter you have to pay for the Services too.

Finance Minister Arun Jaitley on Tuesday spelt out the roadmap for the Indian Railways — two months before he is set to present the Union Budget that will comprise the rail budget for the first time in Indian history.

The Minister signalled that the Union government will resist populist measures, focus on improving the railway station infrastructure, monetise railway assets for commercial activities, outsource train hospitality and most importantly, make consumers pay for the services they receive.

Mr. Jaitley said the Indian Railways got “caught in the battle where populism prevailed over performance.”

“The first essential principles of running any establishment, particularly a commercial establishment, are that the consumer must pay for the services that they receive,” he said, while speaking at National Conference on Accounting Reforms in Indian Railways, organised jointly by the Confederation of Indian Industries (CII) and the Railway Ministry.

The power sector companies ran into debt as consumers were not paying for services in 1990s until sector reforms came in 2003. The highways sector was booming because consumers paid through toll taxes or cess on fuel, he noted.

“Therefore, world over only those services have succeeded where the financial model is — consumers must pay for services they receive. We turned this whole theory upside down by self-imposed indiscipline that populism requires consumers do not pay for the services they receive,” he said.

At present, the Indian Railways recovered 57 per cent of the travel cost on passenger tickets. This meant if it spent Rs. 100 on a train journey, it recovered Rs. 57 from passengers and the rest went as subsidy.

Even though the Indian Railways had monopoly over the rail network in the country, it faced competition from alternative modes such as air and road. The pressure of maintaining highest standards to compete with the alternative modes of transportation had “started reflecting” on the railways’ earnings. “Normally, people don’t give up their turf so easily but because of this pressure, the railways is keen that the Finance Ministry takes over the Railway Budget itself because the burden of supplementing what is left behind becomes our problem,” the Minister said.

Praising the “world class” facilities provided by some airports in the last one decade, Mr. Jaitley said there was no reason why railway stations “cannot really develop up to that level” with huge real estate in possession.

“The core competence of the railways is to drive trains, and hospitality may not be its core competence. Therefore, the principle of outsourcing, which is accepted world over, can be a logical addition to the activities of the railways in areas not within its core competence,” he said.

Source: The Hindu