Rlys mulls fare hike to tide over financial crisis

Written by Rajat Arora | New Delhi | Updated: Dec 24 2012, 09:10am hrs
Finding it tough to even meet its operating expenses, railways is mulling a marginal increase in passenger rail fares. According to sources in Rail Bhawan, there would be an increase of 5 paise per km for general and sleeper class, whereas for AC fares, the increase would be between 10 and 20 paise. The announcement is expected to come in the next Rail Budget.

Recently, the railways had to slash its annual plan outlay from R60,100, announced for 2012-13, to R55,881 crore as it failed to generate sufficient internal resources to meet the Plan target. The railways was expecting to generate R18,050 crore in the current fiscal through internal resources, but was unable to meet the target due to the rollback in railway fare hike, which was effected immediately after it was announced in the last Rail Budget.

We are working on a proposal to generate R4,000 crore extra through passenger fares. This is necessary to keep the national transporter afloat. We are mulling an increase of 5 paise per km for general and sleeper class, whereas for AC fares, the increase would be between 10 and 20 paise, said a senior railway officer, asking not to be named. In the last Rail Budget, the then rail minister, Dinesh Trivedi, had announced an increase in passenger fares, which would have earned the railways around R4,000 crore, but the hike was rolled back after opposition from Trinamool Congress chief Mamata Banerjee.

This time, too, railways is working on the same formula of fare hike and it is expecting that it would be implemented without much opposition as the hike remains imminent.

The cross-subsidisation for passenger fares is very high, which is drilling holes in the transporter's balance sheet. The ratio of passenger fare to freight is 3 to 1, whereas in countries like China, it is 1.3 to 1, the officer added.

Rail minister Pawan Bansal had earlier admitted that there was a need for a passenger fare hike so that the structure of railways doesnt collapse.

According to the railways, its operating ratio this fiscal is around 93%. This means it spends R93 to earn R100, leaving it with little surplus to invest. However, the railways had expected the operating ratio to be around 85%.