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Govt increases railway fares by up to 25%, after a decade

Effective from January 21, the hike is expected to add 20% to railways? fare revenue

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Barely a month-and-a-half before his Budget, Railway Minister today sprung a surprise by announcing an across-the-board fare rise– the first in 10 years.

The refusal by successive ministers to raise passenger rail fares has strained the railways’ finances, sapping its capacity to lay new track, modernise services and improve safety. But predictably, the Opposition, including the , which threw a spanner in the railway fare hike plans on many occasions, slammed the move.

The increase is the second one for the top-segment of railway commuters — those travelling in air-conditioned coaches, executive chair cars and first- and second-tier coaches. The passenger fare rise, effective from January 21 midnight, is expected to add around 20 per cent revenue to the railway kitty on an annualised basis and lead to Rs 1,200 crore more passenger earnings this financial year, over and above the budgeted Rs 32,000 crore. The Railways will mop up an additional Rs 6,600 crore in 2013-14.

IMPACT ASSESSMENT
With the railways going for passenger fare increase after 10 years, the second class ordinary segment has seen the highest proportion rise, of around 25%, on average distance travelled by a commuter. The railways expect to mop up an additional euro 6,600 cr in revenues in 2013-14 on account of fare hike and incremental traffic, while euro 1,200 cr would be added to the govt kitty this financial year
Segment
*Quantum of hike (%)
Class II ordinary (suburban) 25.0
Class II ordinary (non-suburban) 25.0
Sleeper 18.5
AC chair car 11.6
AC Tier-III 10.5
AC Tier-II 15.6
AC Tier-I 15.8
% rise for avg distance travelled               Source: Ministry of Railways

had been raised by up to 25 per cent before the Budget last year.

Though the AC segment accounts for 0.3 per cent of the passenger traffic, the 15 per cent rise in the segment’s fares would add Rs 1,000 crore in incremental revenues. The proposed increase is on the same lines as proposed by former Railway Minister, Trinamool’s , who drew the wrath of his party chief for his proposals in the and was ousted from the ministry.

Addressing a press conference, Bansal said the hike was inevitable as the “railways had to become a sustainable system in itself to ensure it did not come to a halt. We will ensure amenities and safety are improved proportionately”. The losses in the passenger segment, Rs 6,159 crore in 2004-05, rose to Rs 19,964 crore in 2010-11 and were expected to be Rs 25,000 crore this year, he added.

The railways have, however, not tinkered with the fares for the . According to the ministry’s statement, “the levying of development charge on passenger tickets will be done away with and fares will be charged in the multiples of Rs 5”. The fares with last digit as ‘one’ and ‘six’ will be rounded off backwards to ‘zero’ and ‘five’, respectively. All other digits will be rounded off ahead. The rounding off factor will fetch railways around Rs 400 crore and the remaining Rs 62,00 crore would come from the hike factor.

Despite this fare increase, the plan size of the railways for this financial year is expected to be scaled down to Rs 51,000 crore, down from Rs 60,000 crore budgeted for 2012-13. A senior railways official said: “This shortfall in plan size will be mainly because of a fall in budgeted internal resources of Rs 18,000 crore. Because of the rollback of the fare increase during Trivedi’s time, there was a straight fall of Rs 4,200 crore. We could mop up just Rs 300 crore from AC fare increase. We had to also absorb the Rs 1,000-crore impact on account of an increase in diesel price.”

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