"The hike in both pasenger fare and freight rate is inevitable as the financial position of railways is not so good. However, the quantum of hike is yet to be finalised," a senior Railway Ministry official said.
Asked whether the hike will be announced in the Rail Budget, the official said, "One cannot rule out its possibility. But at the same time it is not necessary to announce the hike in the budget only. It could happen before or after the budget also."
The UPA government had left passenger fares unchanged in the interim railway budget in February ahead of the general elections, presenting a vote-on-account leaving the difficult job of managing the national transporter's weak finances to the next government.
Railways had announced hike on May 16 in both passenger fares and freight rates by 14.2 per cent and 6.5 per cent respectively from May 20. However, the hike notification was put on hold later in the day leaving the decision to the next Railway Minister.
Railways was aiming to garner Rs 8000 crores through the increase in passenger and freight charges last month.
Currently, Railways is facing severe financial crunch with passenger subsidy touching Rs 26,000 crores.
Shortage of financial resources is a key constraint to railways following the desired path, said the official, adding the focus of the rail Budget will be on safety, security and service.
While the national transporter needs a huge investment to upgrade its signalling system and strengthening the track to prevent accidents, it doesn't have enough money to do that.
The operating ratio, a measure of expenses as a percentage of revenue, is seen deteriorating to 90.8 per cent in 2013-14 compared with a budgeted 87.8 per cent and 90.2 per cent in 2012-13. Railways have targeted to improve this to 89.8 per cent in 2014-15.