Has Haj Subsidy resurfaced in another format?

The Government of India tried to festoon itself with secular fabric by announcing a significant reduction in airfares for those going on the Haj. This reduction is an appeasement canard to woo Muslim votes. Modi government has jettisoned Haj subsidies a month back following a Supreme Court order of 2012.

The Haj subsidy was unremittingly proffered by all successive Indian governments since 1954 and the scrapping of such a long-term practice by all odds infuriates Muslim community. To compensate that, Modi government has donned the secular garb and announced reduction in airfares to pacify enraged Muslim community.

BJP has stultified itself by saying that this move is not about pandering to of minorities. The phoniness of BJP is exposed when it ended the subsidy four years ahead of that deadline set by Supreme Court. In May 2008, a bench of justices Aftab Alam and Ranjana Prakash Desai had passed a judgment [pdf] ordering the then government to phase out subsidies given to haj pilgrims in a timely manner and had set a deadline of 10 years.

Prima facie, it appears that Government in a hurry to appease Hindus ended the subsidy four years ahead of that deadline. The BJP smelt roses in the entire episode and vauntingly claimed that the move was a symbolic blow to the appeasement politics.

Successive  governments have been obligating Indians Muslims to travel by the state-run Air India. Currently, the flight to Jeddah and Medina is possible only through Air India, Saudi Airlines and Flynas and other cheap flight carriers are not allowed. If the government’s intention is help the pilgrims, then it should create incentives for them by permitting them to fly through different airlines.

Any airline would like to tap on unprecedented demand and would not like to lose its elephantine passenger base over price competition. Intense competition within the airline industry would trigger a price war and compels airlines to lower their prices and increase quality of service. The actual benefit, or subsidy if you will, will be much higher, benefitting the Haj pilgrims. The Haj Subsidy which was long sold as “financial aid” is a misnomer which did not significantly benefit Muslims, but in fact helped cash-strapped, ailing Air-India to survive.

Travelling of Haj Pilgrims via sea route was stopped after 1995 and air travel was made mandatory. Now, Saudi Arabian government has agreed in principle to allow the Haj journey from India by ships. The Indian government by now, should have chalked out the logistics of permitting Hajis via sea route to Mecca which would remarkably shrink the travel cost.

The air fares to Jeddah and Madina are substantially higher owing to the regulations imposed by the Saudi Arabian Authorities during the Haj period. The airfare for Haj per pilgrim was Rs. 47,675/- in 2010 and Rs. 54,800/- in 2011. This was almost double the airfare for the same route during non-Haj period. The normal air fare to and from Jeddah should have been around Rs. 25,000/ during non-haj period. The restriction imposed by Saudi Arabia was that the Airline should carry pilgrims to Jeddah and return with zero load and vice versa, thus forcing the Airlines to spike the fares.

During the Haj of 2011, each pilgrim was charged Rs. 16,000/-  towards airfare which is slightly less than 2/3rd of the otherwise normal fare. The additional fare of Rs.38,000/- per Haji is what is termed  “subsidy” is paid by the Government to  the airline, as the government did not want to burden the additional amount charged by the airline on the pilgrims. In reality the amount spent on subsidy is the amount paid to Air India to supplement the losses suffered due to rules imposed by Saudi Arabia.

The Haj pilgrims used to deposit a certain amount with Haj Committee of India (HCoI) towards airfare and the remaining airfare was paid by Ministry of Civil Aviation (MoCA) to airlines as subsidy. The subsidy given by the Government during last three years and the amount deposited to HCoI by each pilgrim towards airfare is as under:

Currently, Saudi Arabia permits 1,75,025 Indian Muslims for Haj. With the reduction in airfares, the  round fare this year from Ahmedabad will be around Rs. 65,015/- as against Rs. 98,750/- in 2013-2014.

The  prices of airfares will be reduced to Rs. 57,857/- from Rs. 98,750/- in 2013-14, if the flight is from Mumbai. The reduction will be applicable to passages on Air India, Saudi Airlines and Flynas to Jeddah and Medina from 21 embarkation Points across the country. Considering there is a price reduction of approximately Rs. 35,000/person in airfares, this reduction in airfares amounts to 612.58 crore which is more than the Haj subsidy given in the past three years.

Subsidy is gone but resurfaces in another format i.e. reduction in prices of airfares?

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