The industry today said it is necessary to bring the railways back on track and hike in rail fares would result into more safety measures and better services to passengers.
Industry body CII said rail fares have not been increased for the past 10 years and the move was necessary now, keeping in view the rising losses incurred by railways.
"This marginal increase is going to be important in helping the railways to reduce its losses. Also, this will lead to more safety and better services for passengers," CII Director General Chandrajit Banerjee said.
The losses in passenger segment, which were Rs 1,059 crore in 2004-05, rose to Rs 19,964 crore in 2010-11, an increase of 18 per cent a year. This is likely to go up to Rs 25,000 crore in the current fiscal.
Assocham President Rajkumar Dhoot said hike had become inevitable in the wake of rising cost of operations.
"Railway infrastructure was in dire strait and the increase in the passenger fare was necessary to bring the railways back on track," he said.
Railway Minister Pawan Kumar Bansal today effected an across-the-board hike in fares of all classes from midnight of January 21 to net an additional Rs 6,600 crore a year, the first such increase in a decade.
The proposals will rake in an additional Rs 1,200 crore between January 21 and March 31 this year.
Further, Assocham said, it has been for several years that no effective increase was made in the railway passenger fare for political interest that led to deterioration in services as well as compromise in safety measures.
"To make railway viable and a growing enterprise, the government should not shy away from increasing the tariff as and when necessary," Dhoot said.
