“Railways is losing revenue to the tune of Rs 3,000 crore annually, courtesy all the fare-cuts made during the past five years,” ministry sources told The Indian Express. The quantum of the “losses” has all of a sudden assumed much significance, given the fact that the Railways is struggling to meet its revenue generation target due to the ongoing economic slowdown. Insiders point out that the forthcoming Rail Budget on July 3 may not report high cash-surplus figures, as was the case with the previous Rail Budgets.

The fact that the Railways will have to shell out Rs 14,000 crore this year to meet the recommendations of the Sixth Pay Commission is not likely to help matters further. “There will be little to show in terms of cash surplus,” senior officials admit. Nevertheless, Railway Minister Mamata Banerjee is expected to go the politically correct way in doling out some reductions in fares here and there, which would further hit the revenues.

Lalu had made it a policy to announce “conditional” or “token” fare-cuts during his tenure. In 2008, he had announced a reduction of 7 per cent and 4 per cent, respectively in the AC 1 and AC 2 tier class fares. In 2007, he had announced 4 to 8 per cent reduction in fares for the newly designed high capacity AC 3 Tier and AC Chair Car coaches. Another 2 per cent cut was made on the fares for these high capacity coaches in 2008.

In the February 13 Interim Rail Budget this year, Lalu had announced a 2 per cent cut in the fares of AC first class, AC 2 tier, AC 3 tier and AC chair car. Lalu had gone on to claim that he had reduced the fares for AC first class by 28 per cent and AC 2 tier by 20 per cent during his tenure.

Railways’ Operating Ratio (which signifies the sum of money spent to earn a sum of Rs 100), is expected to worsen further. In the Interim Budget, Railways had projected an Operating Ratio of 88.3 per cent for this fiscal. This figure, say officials, could go up further. Significantly, Railways’ Operating Ratio had dropped down to 75.9 per cent last fiscal making it the best in four decades.