Citizens' Issues
Rot in the Railways -I: Wrong kind of passengers subsidised

Here some numbers that indicate how unreserved passengers subsidise the first class AC passengers, which include lots of freeloaders

Getting a railway ticket is a tough job unless you pay a premium and go through the touts. Most people who try the Tatkal route don’t get it. But often, I have discovered when travelling, that there were ample spare berths and seats available on the train itself, usually for a price. Can this be fixed? What is the real picture out there? Here are some numbers I have gathered after extensive observations, discussions and analysis.

•    The total number of paying railway passengers is around 17-18 million per day on an average for FY 11-12. And rising. There are no estimates available on non-paying passengers. The average rises during the peak seasons.
•    This number does not include passengers on the Delhi Metro (about 2 million per day) and certain other non-Indian Railways sectors, and there is a grey area on how passenger headcount and revenues are shared and accounted for on other Metro services and the Konkan Railway.
•    Out of the paying passengers, by numbers, approximately 6% travel on reserved tickets. Approximately 52% of the paying passengers travel as commuters. The balance about 42% travel on unreserved tickets on longer than commuter journeys.
•    The number of passengers travelling free, either ticketless or on a variety of ‘entitlements’ —this is a grey area. These are also not accounted for.
•    The total earnings from passenger ticketing for the FY11-12 is estimated to be around Rs28,000-Rs32,000 crore. There is a huge grey area on break-ups here, by class of travel. In addition, a solid Rs750 crore or so is earned simply from cancellation charges.
•    Just as it is true that earnings from freight subsidise passenger fares, it is also true that the lower class and unreserved class passengers subsidise the upper class fares.

Take a comparative of the potential revenue for the Indian Railways on a sample sector, Delhi-Bengaluru, on a typical superfast train, the Karnataka Express. Fares rounded off to the nearest rupee and passenger capacity varies as per configuration.
•    Unreserved 2nd Class—about 200 passengers at Rs550 each = Rs1,10,000
•    Reserved Sleeper—about 90 passengers at Rs600 each = Rs54,000 (plus day sitting plus Tatkal and taking into account part-journey passengers)
•    AC 3Tier—about 80 passengers at Rs1,480 each = Rs1,18,400 (plus Tatkal)
•    AC 2Tier—about 46 passengers at Rs2,400 each = Rs1,10,400 (plus Tatkal)
•    1AC—about 18 passengers at Rs4,170 each = Rs75,060

Please do the math. A typical configuration of a long distance train is 1 x 1AC, 2 or 3x 2AC, 3 or 4 x 3AC and up to 10-12 2nd Sleeper with 2-4 general coaches and a couple of high speed parcel vans. The railways have always known that a full 2nd class sleeper or 3AC Garib Rath configuration train makes far money for them than do these mixed trains, and that 1AC, especially, is a drain on railway resources.


a) Additional income from Tatkal charges are levied only on Reserved Sleeper, AC3T, AC2T and not levied on 1AC and unreserved 2nd Class.
b) Additional income from RAC and day passengers is earned only on Sleeper Class.
c) Additional income from RAC is earned only on Sleeper, AC3T and AC2T.
d) HOR and VIP passengers in 1AC are often entitled to non-revenue blocking off of the upper berth and therefore loss of revenue from the upper berth.
e) Passengers in unreserved and Sleeper classes have additional expenses by way of extortion from a variety of people, official and unofficial, which may or may not accrue to Indian Railways.
f) Some overflow from Unreserved General will find its way into the Sleeper Class, so that is undeclared revenue to the Indian Railways.
g) To provide support services to 1AC, the train will need to provide for an EOG (End on Generator coach) which could have been a revenue earning 2nd Class or Sleeper coach.
h) The pantry car, which could have been a hot-buffet re-serving coach, now has to provide facilities for fresh cooking of food for the 1AC pax)

It is not as though the officials and others in the Indian Railways do not know about this anomaly—that the 1AC passenger is directly subsidised by the unreserved passengers.

One solution was the introduction of the Garib Raths–fully air-conditioned trains with high density AC 3T and AC Chair Car configurations, operating at Rajdhani Express speeds and at fares placed lower than AC-3T, but still within reach of those travelling by Sleeper Class. There was a great demand that some of these “Garib Raths” be converted into point-to-point services, like no-frill airlines.

But these gave way to the more expensive and lower profit ‘Durontos’—where, once again, the infamous 1AC continues to be subsidised by the other passengers.

In addition, and here is another simple truth, a large number of berths in 1AC end up going most or all of the way on non-revenue basis. Or are simply kept vacant, unutilised—which the chairman and members of the Railway Board want to stand and apologise profusely in front of a Parliamentary Committee if a Member of Parliament (MP) does not get a 1AC berth?

Take a look at this report and see what happened to the chairman of the Railway Board when one MP was denied a 1AC berth; would any railway official henceforth take a chance?

Nothing makes me feel better than going through yet another railway experience, especially in India. At the same time, it would not be correct to ignore and remain blind to its short-comings and the blatant scams across all segments that appear to be growing by leaps and bounds on our tracks.

This, then, is the first of a series of articles on the subject. Comments, suggestions and queries invited. In the run-up to this series, the resources used included open and restricted railway documents, CAG reports, other government reports, first hand information from railway personnel existing and retired, responses to RTI applications  and personal observations as well as experience going back decades.

In the next article, I will take you through the numbers for the over Rs10,000 crore per annum ticketing scam. The street estimate of revenue earned on passenger tickets by touts, black marketeers, counterfeit tickets, reservation scams and similar is envisaged to be around Rs40-Rs50 crore per day on an all India basis during the holiday and peak seasons. Taking an annualised average of shade below Rs30 crore per day, this comes to about Rs10,500 crore per annum.

(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love-writing.)


RBI cuts RTGS deal threshold to Rs1 lakh till Saturday


The threshold limit in RTGS System transactions has been cut to Rs1 lakh from existing Rs 2 lakh until 9th June

Mumbai: The Reserve Bank of India on Friday said it has cut down the threshold limit in Real Time Gross Settlement (RTGS) System transactions to Rs1 lakh from existing Rs 2 lakh until 9th June due to some technical issues, reports PTI.
"To ensure that customers were not unduly inconvenienced, the Reserve Bank temporarily brought down the threshold limit in RTGS to Rs1 lakh from the existing Rs2 lakh. This arrangement would continue till Saturday, 9 June 2012," RBI said in a notification.
There was delay in processing of transactions of RBI's National Electronic Funds Transfer (NEFT) on 5th June due to some technical glitches that resulted into delay in transmission to destination banks.
However, issues were addressed to large extent by 6th June, RBI continues to monitor and address some residual issues, it said.
The NEFT which is operational since 2005 is a pan-India one-to-one funds transfer system used by individuals, corporates and governments. The transactions in the system are put through various bank branches across the country.
Around 18 million transactions are processed every month on an average through this system.
The volume of transactions processed in NEFT over the last three years has witnessed 100 per cent year-on-year growth, RBI said.




4 years ago

This is a great thing for India. I wish Square and or mPowa ( could bring their businesses there.

NHB to raise Rs120 crore for its mortgage guarantee company


According to the NHB chairman home loan rates are likely to come down by 25-50 basis points in the current financial year, given the probability of reduction in policy rates

Mumbai: Housing finance regulator National Housing Bank (NHB) has received nod from the Foreign Investment Promotion Board (FIPB) to float its mortgage guarantee company and will raise Rs120 crore of paid-up capital in the next two weeks for the same, a top bank official said, reports PTI.
"We have already received FIPB approval to float our mortgage guarantee company and will raise Rs 120 crore in the next two weeks," NHB Chairman & Managing Director RV Verma told reporters on the sidelines of the Skoch summit.
He said that International Finance Corporation (IFC) and Asian Development Bank (ADB) will partner NHB in forming the mortgage guarantee company.
A mortgage guarantee company provides credit guarantee to housing finance companies and banks on behalf of home loan borrowers.
Verma also said home loan rates are likely to come down by 25-50 basis points in the current financial year, given the probability of reduction in policy rates.
The NHB, which is likely to disburse Rs15,000 crore by the financial year ending in June, is hopeful of disbursing around Rs17,500 crore in the next financial year (July-June).
The bank also said it will look to securitise some of its assets in 2012-13, which will enable it get instant liquidity. The bank is also planning to provide Rs100-Rs150 crore to housing finance companies as part of securitisation, he said.
"Securitisation deals are less these days, due to some taxation issues. We are planning to provide Rs100-Rs150 crore to housing finance companies, as part of the securitisation deal in next fiscal," he said.


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