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Under the scanner is the move by the Railways to convert a safety surcharge on passenger fares into a development charge to raise money for its dedicated freight corridor project. This move, which drew adverse remarks from the Parliamentary Standing Committee on Railways in two successive reports, has even invited queries from the Prime Minister’s Office.
At the centre of the row is a Rs 1,000-crore sum which the Railways will end up collecting as development charge from passengers by the end of the current fiscal. Not a fresh levy, this development charge was essentially a change of name for the safety surcharge which the Ministry had levied since 2001 to raise funds for the Special Railway Safety Fund (SRSF).
Set up in October 2001 following recommendations of the Railway Safety Review Committee headed by Justice H R Khanna, the SRSF was a non-lapsable fund of Rs 17,000 crore to clear arrears in replacement and renewal of overaged safety related assets like tracks, bridges, signal and telecom equipment and rolling stock within a fixed time frame of six years — from 2001-02 to 2006-07.
While Rs 12,000 crore for the SRSF was to come as dividend-free budgetary support from the Central government, the Railways were mandated to mobilise the remaining Rs 5,000 crore through levy of a safety surcharge on passenger fares.
The Railways began levying a safety surcharge, ranging from Re 1 to Rs 100, depending upon the class of travel and the total distance travelled. For travel up to 500 km, a Sleeper Class passenger had to pay Rs 10 as safety surcharge. Similarly, AC-3 and AC-2 passengers invited safety surcharges of Rs 30 and Rs 40 respectively. Exactly double the amounts were charged in case of travel beyond 500 km. The move paid off, generating a substantial sum. For instance, against projections of Rs 750 crore, the Railways earned Rs 850 crore in 2006-07 through the safety surcharge.
With the six year period for SRSF works running out on March 31, 2007 , the Railways were supposed to stop levying the safety surcharge beyond that date. But five days before the deadline, the Railway Board came out with a circular stating that the Ministry had decided to subsume the safety surcharge in passenger fares “on as is where is basis in the form of a development charge to fund the dedicated freight corridor”. The circular stated that receipts from the development charge would be included in “passenger earnings” starting April 1, 2007 .
Slamming the move, the Parliamentary Standing Committee on Railways called it a “deceptive practice”. In its latest report tabled in Parliament in December 2007, the committee pointed out that the Railways went ahead “inspite of the committee’s repeated recommendations against such a move”.
Disagreeing with the Ministry’s view that imposition of a development surcharge on passenger fares will not result in any change in existing chargeable passenger fares, the committee said that “withdrawal of safety surcharge from the passenger fares would have certainly given some relief to passengers” and that “replacing safety surcharge with development charge has obviously denied this relief to the passengers.”
“The safety surcharge was levied for the specific purpose of raising funds for asset renewals. All the funds required for the Rs 17,000 crore SRSF have already been collected in the fixed tenure. When no extra funds are going to come from the Central exchequer, why should Railways continue to burden the passengers?” said Basudeb Acharia, chairman of the Parliamentary Standing Committee on Railways.
“Converting the safety surcharge into a development charge is an indirect way to earn revenues. It raises questions of propriety considering the fact that it was not mentioned in the last Rail Budget speech. While the Railways make claims of having reduced fares, they are indulging in deceptive practices like these,” he said, adding that the Committee had specifically recommended withdrawal of this charge and sought an Action Taken Report from the Ministry.
When contacted, a Railway Ministry spokesperson declined comment.
Under the scanner is the move by the Railways to convert a safety surcharge on passenger fares into a development charge to raise money for its dedicated freight corridor project. This move, which drew adverse remarks from the Parliamentary Standing Committee on Railways in two successive reports, has even invited queries from the Prime Minister’s Office.
At the centre of the row is a Rs 1,000-crore sum which the Railways will end up collecting as development charge from passengers by the end of the current fiscal. Not a fresh levy, this development charge was essentially a change of name for the safety surcharge which the Ministry had levied since 2001 to raise funds for the Special Railway Safety Fund (SRSF).
Set up in October 2001 following recommendations of the Railway Safety Review Committee headed by Justice H R Khanna, the SRSF was a non-lapsable fund of Rs 17,000 crore to clear arrears in replacement and renewal of overaged safety related assets like tracks, bridges, signal and telecom equipment and rolling stock within a fixed time frame of six years — from 2001-02 to 2006-07.
While Rs 12,000 crore for the SRSF was to come as dividend-free budgetary support from the Central government, the Railways were mandated to mobilise the remaining Rs 5,000 crore through levy of a safety surcharge on passenger fares.
The Railways began levying a safety surcharge, ranging from Re 1 to Rs 100, depending upon the class of travel and the total distance travelled. For travel up to 500 km, a Sleeper Class passenger had to pay Rs 10 as safety surcharge. Similarly, AC-3 and AC-2 passengers invited safety surcharges of Rs 30 and Rs 40 respectively. Exactly double the amounts were charged in case of travel beyond 500 km. The move paid off, generating a substantial sum. For instance, against projections of Rs 750 crore, the Railways earned Rs 850 crore in 2006-07 through the safety surcharge.
With the six year period for SRSF works running out on March 31, 2007 , the Railways were supposed to stop levying the safety surcharge beyond that date. But five days before the deadline, the Railway Board came out with a circular stating that the Ministry had decided to subsume the safety surcharge in passenger fares “on as is where is basis in the form of a development charge to fund the dedicated freight corridor”. The circular stated that receipts from the development charge would be included in “passenger earnings” starting April 1, 2007 .
Slamming the move, the Parliamentary Standing Committee on Railways called it a “deceptive practice”. In its latest report tabled in Parliament in December 2007, the committee pointed out that the Railways went ahead “inspite of the committee’s repeated recommendations against such a move”.
Disagreeing with the Ministry’s view that imposition of a development surcharge on passenger fares will not result in any change in existing chargeable passenger fares, the committee said that “withdrawal of safety surcharge from the passenger fares would have certainly given some relief to passengers” and that “replacing safety surcharge with development charge has obviously denied this relief to the passengers.”
“The safety surcharge was levied for the specific purpose of raising funds for asset renewals. All the funds required for the Rs 17,000 crore SRSF have already been collected in the fixed tenure. When no extra funds are going to come from the Central exchequer, why should Railways continue to burden the passengers?” said Basudeb Acharia, chairman of the Parliamentary Standing Committee on Railways.
“Converting the safety surcharge into a development charge is an indirect way to earn revenues. It raises questions of propriety considering the fact that it was not mentioned in the last Rail Budget speech. While the Railways make claims of having reduced fares, they are indulging in deceptive practices like these,” he said, adding that the Committee had specifically recommended withdrawal of this charge and sought an Action Taken Report from the Ministry.
When contacted, a Railway Ministry spokesperson declined comment.
To know the truth of Railways making huge profits:
All the Development Projects costs are borne by
The Passengers from 01/04/2007 onwards:-
A True Researched Report
A report printed only in Asian Age, Mumbai edition, dated 21/12/07 page no. 4, confirms my fears about the Railways grabbing money from poor passengers' (read here "aam aadami / aurat") pockets deeply and unethically, by replacing a 'Safety Surcharge,' being charged from 01/10/01, to a 'Development Charge' from 01/04/07, even though the concerned Parliamentary Standing Committee has disapproved and rapped the ministry saying that the withdrawal of Safety Surcharge from the passenger fares would have certainly given some relief to passengers but not so now, since it is replaced by a Development Charge.
It is with the utmost disgust that railway ministry has fraudulently converted the safety surcharge in 'Toto' grabbing the money from the poor passengers (poor because they can not afford to drive the cars) in the name of Development Charges replacing the Safety Surcharge.
The appeared news-
"This Safety Surcharge was created as a Non-Lapsable Special Railway Safety Fund from 01/10/01 , which lapsed on 31/03/07 , and has amassed to Rs.5000 crores in the ministry's kitty. The passengers and the public in general should know how this money is spent.
The Development Charge is for the dedicated freight corridor only and not for the benefit for any passenger related project."
The words Safety Charge is replaced by 'Development Charge,' in Toto (charges remaining same from Re. 1/- to Rs. 60/-) in Central Railway Suburban Time Table, page no.147, being operative from 01/07/07 (pl. also see 2006 time table, page no.100 for Safety Charge). No worthy NGO / electronic or print media has so far objected to this blatant misuse of public money, in the public interest. This is how the railway ministry makes huge profits.
I request to all the concerned to seriously oppose this development charge, said Mr. D.D. panse.
He also said that there is a reply from railway to me saying that the ministry has submitted and included the proposal in the last budget, but it was never publicly informed as was done neither in 2006 suburban railway time table nor to the users or Member of Parliament. It is with utter disgust that such a proposal was agreed by the MPs. Only the demand was made and as usual without hearing any public objection it is implemented the wrong decision. Even the railway authority was not aware of it till I pointed to them.
A report printed only in Asian Age, Mumbai edition, dated 21/12/07 page no. 4, confirms my fears about the Railways grabbing money from poor passengers' (read here "aam aadami / aurat") pockets deeply and unethically, by replacing a 'Safety Surcharge,' being charged from 01/10/01, to a 'Development Charge' from 01/04/07, even though the concerned Parliamentary Standing Committee has disapproved and rapped the ministry saying that the withdrawal of Safety Surcharge from the passenger fares would have certainly given some relief to passengers but not so now, since it is replaced by a Development Charge.
It is with the utmost disgust that railway ministry has fraudulently converted the safety surcharge in 'Toto' grabbing the money from the poor passengers (poor because they can not afford to drive the cars) in the name of Development Charges replacing the Safety Surcharge.
The appeared news-
"This Safety Surcharge was created as a Non-Lapsable Special Railway Safety Fund from 01/10/01 , which lapsed on 31/03/07 , and has amassed to Rs.5000 crores in the ministry's kitty. The passengers and the public in general should know how this money is spent.
The Development Charge is for the dedicated freight corridor only and not for the benefit for any passenger related project."
The words Safety Charge is replaced by 'Development Charge,' in Toto (charges remaining same from Re. 1/- to Rs. 60/-) in Central Railway Suburban Time Table, page no.147, being operative from 01/07/07 (pl. also see 2006 time table, page no.100 for Safety Charge). No worthy NGO / electronic or print media has so far objected to this blatant misuse of public money, in the public interest. This is how the railway ministry makes huge profits.
I request to all the concerned to seriously oppose this development charge, said Mr. D.D. panse.
He also said that there is a reply from railway to me saying that the ministry has submitted and included the proposal in the last budget, but it was never publicly informed as was done neither in 2006 suburban railway time table nor to the users or Member of Parliament. It is with utter disgust that such a proposal was agreed by the MPs. Only the demand was made and as usual without hearing any public objection it is implemented the wrong decision. Even the railway authority was not aware of it till I pointed to them.
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