Facing resource crunch, the Railways is said to be mulling the possibility of effecting a 5 to 10 per cent increase in the passenger fares in the coming Budget.
The proposal is being considered against the backdrop of a decline in both passenger and freight earnings and the additional burden of Rs 32,000 crore towards implementing the 7th Pay Commission’s recommendations, Railway Ministry sources said.
On top of this, the gross budgetary support for the 2015-16 has also been slashed by Rs 8,000 crore by the Finance Ministry due to low spending by the Railways.
Sources said while several possibilities, including a fare hike, are being looked into nothing has been finalised yet. The sources said a decision has to be taken whether to hike the fares, but it is not necessary it has to be done only in the Budget.
There is a feeling at the Rail Bhawan that a fare hike in the Budget to be presented on February 25 can be more beneficial as the Railways can utilise the peak season beginning March.
At present, AC fares are already on a higher side. If AC fares are increased, they could even surpass the fares of low-cost air carriers. Similarly, freight rates are also at a higher side and loading of steel, cement, coal, ore and fertiliser is on a down slide that rules out any further increase in this area.
Railways had effected a 14 per cent across-the-board hike in passenger fares in 2014 during the NDA regime and a 10 per cent increase last year. Railways' total earnings from freight and passenger fares 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.