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Jotting: The Inflexible Flexi Pricing

The railway ministry took all by surprise when on 7 September it introduced flexi ticket pricing, a concept borrowed from the aviation sector, for 142 trains like Rajdhani, Shatabdi and Duronto

Photo Credit : Ritesh Sharma

The railway ministry took all by surprise when on 7 September it introduced flexi ticket pricing, a concept borrowed from the aviation sector, for 142 trains like Rajdhani, Shatabdi and Duronto. As a result, travellers in AC-II, AC-III, and Sleeper classes now have to shell out an extra 10 to 50 per cent on the base fare for 90 per cent of the total seats/births available on these trains. The fare meter begins ticking as soon as 10 per cent of the total seats available get sold.

Thereafter, the base fare rises by 10 per cent for every 10 per cent of seats sold going up by a maximum of 50 per cent. But unlike the dynamic pricing followed by airlines, which sometimes sees base fares going down as well, the base fares on these trains will remain fixed. The plan is to mop up Rs 500 crore of additional revenue from passengers. At a time when passenger traffic on trains has been going down and when Air India is offering air tickets at AC-II prices, can this move by the railways be described as a wise one?
— Ashish Sinha

More Pain Ahead?
State-run banks may be in pain for some time to come even if recent commentary seems to suggest that dud-loan pressure may be on the wane. That’s because banks got into stress before the full implementation of Basel-III norms and revised International Financial Reporting Standards — to that extent they have not had the benefits of this improved capital standard. Reserve Bank of India’s deputy governor N.S. Vishwanathan noted, “Rather as Basel III is being implemented during a stressed phase, Indian banks are under double pressure — to survive the current stress and implement Basel III.” While the Centre has stepped in to provide capital to state-run banks, risk aversion to corporate loans by these banks may see them shift priority to retail banking. Yet another possibility is the rise in the market share of private sector banks in India Inc. Read together, more tectonic shifts are in the offing.
– Raghu Mohan

Globe-trotting Government?

Cynics may term it as a waste of public money. But the NDA government’s move to allow its senior ministers to visit 68 countries that have never been visited by any minister is a unique outreach programme. Prime Minister Narendra Modi himself has been to 46 countries since taking charge. Each minister is expected to visit at least two countries. But all visits must take place before 31 December 2016. Come the Budget session and the NDA government will have the unique distinction of its ministers having reached out to 60 per cent of the countries on this planet.

Apart from building ties, attracting foreign direct investment is also on the menu. Surely, the Opposition party members would be keen to know the cost of these trips during the coming session of Parliament.
— Ashish Sinha

India’s Silicon Valley Sullied
Bengaluru, the Silicon Valley of India, came to a complete standstill recently after protesters called a statewide shutdown to protest the Supreme Court’s order asking the Karnataka government to release water from the Cauvery river to Tamil Nadu. Protestors went on the rampage burning buses and shops. The neon-lit city of Bengaluru wore a desolate look for several days, and IT/ITeS companies and e-commerce startups were among the worst hit. Online grocery store Big Basket, which deals in perishable items, reportedly suffered loses worth Rs 4 crore in two days after it was forced to shut its office. The entire IT/ITeS sector suffered huge losses as employees could not report to work. The city is estimated to have incurred losses up to Rs 25,000 crore due to the strikes and rioting over the Cauvery issue, as per industry body Assocham. Surely, the whole episode has tarnished the image of Bengaluru!
— Ayushman Baruah

Are You Out-classing The Economy?
To accurately measure progress — any progress — is to stand it up fairly against an established and well-known benchmark. And one of the finest benchmarks to measure your salary increase (real, not nominal) is to compare — or contrast — it with the growth in the economy. Over the last eight years, the Indian economy has expanded 63.8 per cent, that is, the GDP has increased by a little less than two-thirds. However, the average Indian salary in real terms (adjusted for inflation) has inched up by a mere 0.2 per cent, according to a recent survey by the Hay Group division of Korn Ferry. Against this broad benchmark, the salary of the average Indian employee has been pathetically under-shooting the general economy. A fund manager of a reputed fund house comments: “If your income growth cannot match or beat the economy it means there is something radically wrong with you — or with the business model of your workplace.”
— Clifford Alvares