As for freight, the six-monthly fuel cost adjustment was reflected in rates in March 2013 and later in October. The UPA government was planning to effect further hikes in passenger fares and freight May last year, but could not do so because of the electoral code.
The new railway minister Sadananda Gowda after discussing the matter with the PM Narendra Modi, allowed the Railways to go ahead with the fare hikes,even before the Railways Budget slated for early July was presented.
Friday's freight hikes includes not only the fuel adjustment component (FAC) but additional fare increases over it, although the railways has not given a break-up. The additional traffic revenue mop-up expected is to the tune of Rs 8,000 crore.
Existing fare | Revised fare
AC 3- Rs 1514 | Rs 1728
AC 2- Rs 2197 | Rs 2508
AC 1- Rs 3813 | Rs 4354
AC 3 - Rs 1416 | Rs 1617
AC 2 - Rs 2064 | Rs 2357
AC-1 - Rs 3567 | Rs 4073
AC 3 - Rs 1856 | Rs 2119
AC 2 - Rs 2740 | Rs 3129
AC 1 - Rs 4755 | Rs 5430
AC 3- Rs 1924 | Rs 2197
AC 2- Rs 2864 | Rs 3270
AC 1- Rs 4989 | Rs 5697
The cement and steel and other decontrolled industries which use the railways for transportation of their products have opposed the freight hike, saying it will inflate their costs at a time when the demand in the economy is sluggish and they are experiencing severe pricing pressures. The coal industry, the single biggest source (40%) of freight revenue for the railways, is relatively in a better position to pass on the extra cost to consumers due to the lack of competition in the sector, but the consuming industries like power and cement, already hit by the strained availability of the fuel, would doubtless resist it. As for the fertiliser industry, another key user of railways for transporting its products, the burden of fare hikes would partly come back to the government as the prices of these products are heavily subsidised by it.
The railways which had reported an operating ratio of 90.4% last year, is expecting the freight revenue to come to its rescue this year as passenger volumes have been keeping below projections over several months and has even shown a dip lately. Passenger fares is cross-subsidised by the freight segment (to the tune of Rs 26,000 crore) and needless to say that even with Friday's fare hike, that would hardly be corrected.
The railways' Gross Traffic Receipts for FY15 is projected at Rs 1,60,775 crore.
The national carrier expected its passenger bookings to be around 8,800 million in FY 15 as compared to 8,535 million in the last fiscal. However, it is already clear that the estimate is unachievable. In April-May 2014 (in any year, these months are normally the peak season for railways), passenger bookings stood at 1,377.82 million compared with 1396.03 million during the same period last year.
In the interim budget for FY15 presented by the UPA government, the passenger revenue was seen at Rs 45,255 crore, up Rs 7,500 crore over the revised estimate of FY14. It may be noted the revised estimate for last year was 11% lower than the initially budgeted Rs 42,210 crore.
Freight wise we are looking very comfortable as we carried 180.63 million tonne of revenue-earning freight during April-May 2014, an increase of 8.79 million tonne over the same in the corresponding period last fiscal. Going by the trend we are expecting that the freight revenue could be higher than the budget estimates, the railway official had told FE earlier.
It was the UPA government that began the practice of announcing passenger fare hike outside the railway budget when it announced the 20% hike in January 2013.
Nitish flays Modi Govt for announcing rail hike before budget
Former Railway Minister and JD(U) leader Nitish Kumar today criticised Narendra Modi government for promoting a "bad tradition" of announcing hike in Railway fare and freight before presentation of Railway budget in Parliament.
"They are promising the country that 'Achye deen aa gaye hain' (good days have come) and promoting bad tradition," Kumar told reporters.
His reaction came in the wake of Narendra Modi government increasing railway passenger fare by 14.2 per cent in all classes and freight by 6.5 per cent with effect from today.
Kumar, who served as Railway minister in the NDA government of Atal Bihari Vajpayee, said, "I presented five Railway budget and always followed tradition of announcing roadmap of railway including proposal for increasing fare and freight in Parliament through budget."
"When UPA government in the recent past had announced increase in Railway fare and freight before presentation of Railway budget it was the same BJP which had made hue and cry....Now they are doing the same and promoting a bad tradition," he said, taking a potshots at BJP-led government at the Centre.
Kumar described 14.2 per cent hike in fare and 6.5 per cent in freight as a "big increase" which he said would further lift prices of essential commodities.
Lalu slams Modi government for rail fare salvo on common man
Former railway minister and RJD Chief Lalu Prasad today slammed the Narendra Modi government for announcing "big" hike in rail fare and freight, which he described as the "first salvo on common man".
"The BJP befooled people in the general election by promising Achee din...they have fired the first salvo from toop (tank) on common man's chest by announcing big increase in rail fare and freight," Prasad told reporters.
Prasad, who served as railway minister in UPA I and earned praise by not raising fare for five years during his tenure and generating surplus for the Railway, said the BJP government showed its "real character" by announcing the hike within days of coming to power.
"I do not remember any government in the past had announced such a big increase in Railway fare and freight in one go," Prasad said reacting on the 14.2 per cent increase in fare across all classes and hike in freight charge by 6.5 per cent with effect from today.
Prasad took credit for decreasing the rail fare every year during his tenure as minister in the UPA I.
Narrating his 'success' story, the former Bihar Chief Minister claimed, "Around 14 lakh employees of Railway were not sure if they would get salary when I took over the charge. But, I gave them bonus also."
Prasad said that the BJP and NDA had been known for increasing prices of essential services. "This is their character from the beginning and Narendra Modi government has lived up to that," he said.
Calling for an immediate 'rollback', Prasad threatened to take to streets for an "all-out agitation".
"I demand immediate roll back of the hike otherwise we will come out on the streets and launch an all-out agitation. The public will not accept any such dictatorship in the country," said Prasad.
"This will spike the inflation like anything. Prices of everything, articles of daily consumption to others things will increase putting extra burden on the public. It seems the BJP has brought their Ram Rajya and the 'good days' they promised," Prasad said in jest.
He went on to allege that the fare hike was just an indication of what the Union budget would have in store. He accused the BJP of playing in the hands of the corporate houses.
Left parties slam NDA for rail fare hike, demand roll back
Condemning the "unprecedented" hike in rail fares and freight charges, Left parties today attacked the Narendra Modi government for pursuing the same policies of the previous UPA government and demanded a roll back.
"This is a cruel blow to the working people who have been victims of relentless price hikes in the years of Congress misrule. Instead of bringing them some relief as promised in his election campaign, the Modi government has put a huge burden on the mass of people who use the Indian railways," the CPI(M) Politburo said in a statement.
"The increase in freight rates will have a cascading impact on prices of essential commodities which are transported by rail across the country," it said.
Maintaining that the Railway Budget is to be placed in Parliament in a few days, the CPI(M) said, "The government has taken such an anti-people step behind the back of Parliament.
Earlier the BJP used to condemn pre-budget hikes of the UPA government as anti-democratic. The Modi government has followed the same path."
Demanding a rollback of the hike, CPI National Secretary D Raja said, "Within a month, the Modi government has started showing its true colours. On the one hand, it is siding with the corporate houses and taking stark anti-people measures on the other."
He asked how the new government was different from the UPA as the BJP regime was "pursuing the same policies of de-linking the hiking of rail fares from the budget. The government is yet to face Parliament for the budget."
"Such a huge increase will bring more burden on the common people. Where is Modi government's promise of good governance or good days," Raja said.
Both CPI(M) and CPI have asked all their state units to organise protests across the country on the issue.