The Indian Railways, which is struggling with financial crunch, is mulling an increase in passenger fare in the next two months.
According to sources, the Railways has proposed an increase of 5-10 per cent in passengers fare in the upcoming Budget, which will be presented on February 25.
Sources said the Ministry is considering the proposal against the backdrop of a decline in both passenger and freight earnings and the additional burden of Rs 32,000 crore towards implementing the Seventh Pay Commission’s recommendations.
Moreover, the Finance Ministry has slashed the gross budgetary support for the 2015-16 by Rs 8,000 crore due to low spending by the Railways. The sources said while several possibilities, including a fare hike, are being looked into, but nothing has been finalised yet.
They said a decision has to be taken whether to hike the fare and, if so, when.
At present, AC fares are already on higher side. If AC fares are increased, then they could even surpass the fare of low-cost air carriers in some sectors. Similarly, freight rates are also at a higher level and loading of steel, cement, coal, iron ore and fertiliser is on a down side, which rules out any further increase in this area.
The Railways had effected a 14 per cent across-the-board hike in passenger fare in 2014 during the NDA regime and a 10 per cent increase last year.
The Railways’ total earnings from freight and passenger fare were Rs 1,36,079.26 crore until January this year against the target of Rs 141,416.05 crore, a shortfall of 3.77 per cent.