Though Bansal had said last month when he announced the fare hike which entailed additional passenger revenue of R6,600 crore (21%) over a full-year that the rail Budget would not have any fare hikes, that is unlikely to be. What prompted the rethink is mainly an additional burden of R3,300 crore a year from the recent bulk diesel price deregulation.
Bansal is also looking at introducing a fuel adjustment component to address likely fluctuations in fuel prices, which account for 17% of the national transporters total spending.
There is scope for further hike in passenger fares, considering the railways earns 30 paise for carrying a passenger for a kilometre, while it gets Re1 per km for carrying a tonne of freight. Freight constitutes 65% of railways earnings while passenger revenue accounts for 27%.
Total revenue target for this fiscal (budget estimate) is Rs 1.35 lakh crore, but there is likely to be a 10% shortfall.
The railways is reeling under constant deficit in the passenger segment. Deficit which stood at Rs 1,059 crore in 2004-05, rose to Rs 19,964 crore in 2010-11, an increase of 18% annually. The losses are likely to go up to Rs 23,000 crore in the current fiscal.
Sources said with the Congress party taking over the rail ministry after a long gap, the reform zeal is back, and all possible ways are being explored to resuscitate the organisation whose operating ratio has deteriorated sharply in the last couple of years. Only political considerations can come in the way of implementing the proposals firmed up by rail ministry officials and so, the move to seek approvals of Gandhi and Singh for the fare hike.
The railways was expecting to bring down its operating ratio to 85% this fiscal, but is likely to end up with an unhealthy 90%, owing to falling freight traffic and non-revision in fares for most part of the year.
Meanwhile, to depolitise the decision on rail fares, railways has finalised the contours of the proposed Rail Tariff Authority on fare rationalisation. It is expected to be a five-member body headed by a chairman. The authority was mooted by former railway minister and Trinamool Congress MP Dinesh Trivedi in his rail budget 2012-13.