With the recent hike in diesel prices putting an additional burden of Rs 3,300 crore on Railways, the PSU behemoth is considering to further increase passenger fares or raise freight charges.
Among various options, Railways is contemplating whether to introduce fuel adjustment component in the fare structure to increase fares in all classes or hike passenger fares by a few paise per km, sources said.
The ministry, which is in the process of finalising the Rail Budget 2013-14 to be presented on February 26, is likely to raise catering charges in premier trains like Rajdhani, Duronto and Shatabdi, which will be part of the fare.
Railways is already reeling under deficit of Rs 25,000 crore in the passenger segment.
It has hiked passenger fares by 21 per cent from December 22, aiming to mop up Rs 6,600 crore in a year, but the diesel price hike of Rs 10.8 per litre has put additional burden of Rs 3,300 crore annually.
Railway Minister Pawan Kumar Bansal did not rule out another hike when he was asked about it a few days ago.
"We have to form our view on this (increasing rail fare) within next few days. We are working on it," Bansal said. "Wait for 16/17 days," he had said when pressed if the fare hike was in the offing.
Bansal has met Prime Minister Manmohan Singh and Finance Minister P Chidambaram to discuss how the financial burden on Railways could be neutralised.
As far as freight rate is concerned, Railways had increased it by 20 per cent in March 7 last year with a target of additional earning of Rs 18,000 crore annually.
"Though revising the freight rate is an option but we do not want to outprice ourselves by increasing freight charges further as we have to offer competitive tariff to remain in the market," a Railway source said.
Railways aims to divert goods transportation from roads to rail by offering attractive rates as currently the national transporter has only 36 per cent market share as compared to about 50 per cent in the US and China.
Burdened with increased diesel cost and a large number of pending projects,