Justifying the correction needed in fares, railway minister Pawan Kumar Bansal on Wednesday said the passenger fare to freight ratio, which is currently at 0.32:1, needs a re-look. The ratio means the railways have been using what they earn by moving goods to pay for not charging passengers the full price of ferrying them.
“Cross-subsidisation in our country is very high. In China, this ratio is 1.2:1. I am not saying that a passenger fare hike is the only make the railways financially sound. We also have to explore other options such as market borrowings and attracting more investment. But first, we need to depoliticise the rail fare issue,” Bansal said.
Though the minister didn't give any time frame for the hike, he said it could be independent of the rail tariff authority, which is still in planning stage. “The tariff authority is being planned and there's a long procedure before it comes into existence. The fare hike could be independent of this authority,” Bansal said.
Bansal said that growth in the sector would contribute to national GDP by 2 percent. “We are working on some revenue models including private investment. Railway finances have been a cause of concern as the transporter has been spending all its revenue on just running the network, leaving little for development projects.”
"We are trying to work out some revenue models, including involving private investment," Bansal said.
“There could also be a discussion on the scope of FDI in the participatory model,” a senior government officer said. Bansal also said the work on the high-speed rail network is on and reports are being made.