Tuesday, March 13, 2012

How Indian Railways Can Increase Profits, Yet Care For the Poor

By: Subhadeep Bhattacharjee

Does the title sound misleading? It might in a country which isn’t famous for streamlining costs and increasing profits. We have reached that time of the year when everyone is anxiously waiting for the Railway Budget and the Union Budget with the former setting the tone of the season. Not sure how many countries in the world do have a budget for a single entity. But such is the importance of the Indian Railways in our lives. Even the high flying people who might never have stepped into a station show some academic interest on the Rail Budget.

Over the years the Railway Budget has fallen victim to populist politics and diplomatic appeasement of different states and non-logic driven expansion. We have embarked on some challenging projects which have overrun costs and deadlines and ignored one of the most important things such as security. As 2012 budget approaches and there are talks of fare hike lots of arguments and counter arguments are emerging from different quarters. Let us look at some of the ways in which the Indian Railways can increase profits and yet not dent an Aam Aadmi’s pocket.
  • First things first, get populism out of this ministry and prevent lunatic people from helming affairs. To woe voters these people announce projects, start new trains, freeze fare hikes and give unnecessary discounts. The policies of Mamatas, Lalus and Paswans have restricted the Railways from evolving into a modern unit. All these have ensured that the fourth largest railway is below international standards. 
  • Increase the number of 2AC and 3AC coaches in the trains and reduce the number of sleeper coaches. This would sound anti-poor! Non-sense try booking any reservations 3 days after it opens and you find all the AC tickets booked. What does it prove? Most Indians where were used to travelling Sleeper Class a decade ago have upgraded, the brains which run railways have failed to take note of that. A 3AC ticket is approximately 2.5 times more than a Sleeper ticket and thus would increase the revenue (considering railways don’t incur 2.5 times hire expanses on operations and coach building).
  • Introduce full AC trains at par Rajdhani Express between important stations. For instance a busy route like Howrah-Chennai doesn’t have one. It’s funny that some railway planners think every Indian would fly and low cost airlines would kill the AC trains. The 3AC fare on this route is 1250 and minimum flight fair is of the tune of 3500. The maths shows the opportunity as this distance could be covered in less 24 hours with smaller (less coaches) Rajdhani like trains.
  • Hike fare on tourist trains such as the Darjeeling Toy Train, Kalka-Shimla Train. These are being run at huge losses. Such tickets are priced at one-fifth of what they should be. The logic behind this is that the locals should get a cheap transport. The fact is more tourists than locals use these trains. So hike fare and locals could be rather issues passes so as to not hurt their pocket.
  • Start selling space in trains, railway stations and along tracks. This is being done but such is the model that small advertisers are barred from entry. Outsource it to an agency which allows people to buy advertisement spaces bypassing license raj system of tenders, applications and all possible models which prevent fair play.
Such steps taken can increase the operational profitability of the Indian Railways substantially with marginal increase in fare. These measures aren’t anything out of the box but driven by logic. India is changing and so should the railways. We Indians should also be willing to shell out a few extra rupees for this entity which is the lifeline of the country. After all we have not seen any hikes in the past 8 years which itself is some sort of a record!


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