There is no isolated term like fare management for IR. Fare is just a part of the IR activity which depends upon the overall management of IR under a given external environment. Management of IR during 3 much talked about regimes:
(1) Laloo Regime: IR was in a stable financial condition in the beginning, with passenger subsidy around Rs 5000 crores. IR was flushed with huge incremental freight revenue like never before- The populist RM reacted to this by resorting toapolicy of no passenger rise for 5 years, rather token 1 Re reduction done!! As a result passenger losses swelled and IR financial condition getting from good to bad in 5 yrs. The extra revenue that the booming economy blessed to IR...
more... were getting drained in subsidies rather than going in badly needed augmentation in infrastructure.
(2) Didi Regime: With IR finances not very good, again no fare increase for another 5 years by Stub born RM(s) hell bent to get political mileage. As a result IR passenger subsidy swelled to 25000-30000 crore Rs per annum!! and IR defaulted in depreciation fund provisions i.e. funds meant for replacement of over aged IR assets (absolutely essential to ensure safety of trains) too drained in subsidies. Big unstoppable bleeding wounds were inflicted to IR by starting huge investment & projects (~Rs. 20,000 Crores!) in Kolkata Metro and making it a zone!
(3) Prabhu Regime: With IR finances in precarious condition with pax. subsidy above 33000 crores/annum and the politicians who did the above two jobs again vehemently opposing any fare rise. Today IR is very difficult to manage, hence PM rightly picked up the no-nonsense performing person as RM. He is trying to do much needed capacity augmentation which should have been done during the boom period, but is facing uphill task today.
The saying "Strike the iron when hot" is perfect. When the iron was hot (Mr. Lalu regime), the hammer was not struck (not much efforts done to augment the infra structure). Today Mr. Prabhu is striking hard but the iron is not so hot, as it has been cooled by the large quantity of water poured over it (fares not increased) by the past RMs.
With 7th pay commission enforced on IR, the RM has nothing to manage, but have to put efforts for survival of IR. He is just trying hard to keep head of drowning IR out of water i.e. just doing fire fighting for survival. What is appreciable, is he still puts a lot of emphasis on capacity augmentation, DFCs etc. which are absolutely needed for IR in long run and benefit of which shall be realised during the tenure of next RM/Govt!
Today there are 3 hard steps that IR need to take
(1) Take financially prudent and not populist decisions- Financial prudence is visible to some extent, but loss making projects under implementation need to be properly addressed to. Cost effectiveness and quality control in implementation of projects is required along with faster implementation.
(2) Control the losses incurred in passenger business, concessional/free travel, loss making lines/trains/stations- Some loss making trains DD etc are being discontinued, but much more needs to be done.
(3) Control the following losses
3a- pay-allowances-pension cost- Not much seems to be being done.
3b-Fuel cost (diesel, electricity costs)- Excellent savings to the tune of some thousands of crores of Rs has been made.
3c-Future losses in the implementation of projects with poor Rate of return- This needs tobe addressed to, else faster commissioning of project shall mean faster drowning of IR.
4) Control subsidies/ increase fares- Freight rates already high, any increase shall divert it to road sector. Increasing passenger fares is the only option left. Here the present regime has faltered, as they are resorting to profiteering from middle class by increasing drastically the effective fare of (ACC,ACIII,ACII, flexi/ Suvidha-SL) while not increasing the fares of highly under priced non ac reserved and reserved class. Even the decision ofnot introducing many new trains too has been diluted to considerable extent. The pressure of election has caused deviation from the desired path.
Any RM at this juncture can either pass his/her time comfortably without increasing fares by diverting fund from projects to payment of IR expenses, thereby killing the future of IR. Other route is most un popular one i.e. increasing fares generate more revenue and do a lot of capacity augmentation and modernisation for better future of IR. Mr Prabhu has chosen the second route and the kind of developments he has done so far in the adverse conditions is highly commendable.
