CAG pulls up Railways for its flexi-fare, GE diesel engine contract

The CAG, in its latest report, has also been also critical on the procurement of the high horse power diesel locomotives from General Electric, which it said would have no scope for productive utilisation in the Indian Railway network in future.

CAG by jacking up fares through the so-called flexi fare scheme, Indian Railways is only losing passengers to cheaper alternatives, including cheaper mail and express trains and low-coast flights. Passengers are choosing air travel over trains on routes where fares in Rajdhanis, Shatabdis and Durontos are higher due to the flexi-fare scheme, the CAG observed.

This has, in fact, resulted in less passengers opting for train travel, CAG said, adding that in the past four years there is a declining trend in passengers carried by Indian Railways.

Indian Railways carried 6.75 lakh less passengers in its premier trains post introduction of the scheme, despite a 3 per cent increase in berth potential, CAG said, adding that Railways’ passenger earnings, however, increased by Rs552 crore after the flexi-fare was introduced. 

Under the flexi-fare scheme, introduced in September 2016, passengers are charged a higher fare as the berths fill up. The fare increases by 10 per cent as every 10 per cent of the berths/seats get sold. 

There is, however, a cap of 140 per cent for AC-3 tier class and 150 per cent for all classes except AC First and Executive Chair Car.

CAG has examined data between 9 September 2015 and 31 July 2016, that is the pre-flexi scheme period and between 9 September  2016 to 31 July 2017, that is the post-flexi scheme period. 

CAG has point out that the flexi-fare scheme and the earlier dynamic fare, schemes have only helped to deter passengers. Under the `Tatkal’ scheme also 30 per cent of the seats/berths were allotted at enhanced fare of 30 per cent more. This, the CAG pointed out, has led to 5 to 23 per cent of such seats remaining vacant in the AC 2, AC 3 and CC classes of all the Rajdhani, Duronto and Shatabdi trains. 

When the Railways is unable to fully utilise 30 per cent of seats/berths under Tatkal scheme with enhanced fare, CAG  said the decision to allot 90 per cent seats under flexi-fare with higher fare up to 40-50 per cent was “not judicious”.

Compared the AC-2 tier fares of Rajdhani and Duronto trains in 13 sectors, the CAG found economy class air fares to be cheaper. When compared to the cost and time taken for travel by AC 2 and AC 3-tier, CAG said air travel by economy class was cheaper and hence the preferred mode of travel. 

CAG also carried out a survey among passengers and found that they expect better quality services commensurate with the enhanced fare.

On the diesel locomotives procured under an agreement with GE, the CAG said it is ill-planned and would have no scope for productive utilisation in the Indian Railways network in future.

When the Railways itself has decided to significantly reduce in-house production of diesel locomotives at Varanasi from 2019-20, the CAG asked what is the need for setting up a new infrastructure for production of diesel locomotives and incurring a huge liability of Rs17,126 crore.

The railway ministry proposed the setting up the Marhowra unit in September 2006. The contract was awarded to GE Global Sourcing India in November 2015, along with a maintenance depot at Roza and Gandhidham for $2.6 billion.

“Since a long time had elapsed, there was a need to reassess the necessity of setting up a new diesel locomotive manufacturing unit before awarding the contract. Audit analysis showed that diesel locomotives available with the Railways were sufficient in numbers,” CAG said.

The Indian Railways plans to complete electrification of its broad-gauge routes by 2021. It will also run freight trains in dedicated freight corridors on electricity. Even if the Railways do not go for 100 per cent electrification, it is expected that most of the high-traffic routes would be electrified and the need for diesel traction would remain only for low-traffic routes, for which high-powered diesel locomotives were not likely to be used optimally.