 "Rail budget may hike passenger fares")
Facing resource crunch, Railways is said to be mulling the possibility of effecting a five to ten per cent increase in the passenger fares in the upcoming Budget.
The proposal is being considered against the backdrop of a decline in both passenger and freight earnings and the additional burden of Rs 32,000 crore towards implementing the Seventh Pay Commission recommendations, railway ministry sources said.
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On top of this, the gross budgetary support for the 2015-16 has also been slashed by Rs 8,000 crore by the finance ministry due to low spending by the Railways.
The sources said while there are several possibilities, including a fare hike, nothing has been finalised yet.
The sources said a decision has to be taken whether to hike the fares and, if so, when. But, it is not necessary that it has to be done in the Budget, they said.
There is a feeling in Rail Bhawan that a fare hike in the Budget, to be presented on February 25, can be more beneficial as the Railways can utilise the peak season beginning in March.
Currently, AC fares are already on higher side. If they rise, they could even surpass the fares of low-cost air carriers in some sectors.
Similarly, freight rates are also at a high level and loading of steel, cement, coal, iron ore and fertiliser is on a downslide. That rules out any further increase in this area.
Railways had effected a 14-per cent across-the-board hike in passenger fares in 2014 during the National Democratic Alliance regime and a 10-per cent increase last year.
Railways' total earnings from freight and passenger fares were Rs 1,36,079.26 crore until January this year as against the target of Rs 141,416.05 crore, a shortfall of 3.77 per cent.
Acknowledging the decline in earnings, sources said various options were being explored to perk up revenue collections.
While one option is to raise the fares in selected routes, the other is to go for increasing the cost of services provided.
Meanwhile, Railways has undertaken steps for cutting the costs and for commercial exploitation of surplus railway land besides looking at higher revenues from advertisement, in a bid to tide over the crisis. The focus may be on improving non-tariff collection, the sources said.
Railways has conducted a study by Axis Capital which has recommended a 10-per cent hike in passenger fares and a five-per cent raise in freight rates to improve the state-run transporter's finances.
