FAC set to spike passenger, freight tariffs

Hike would be over busy season surcharge of 15% announced last week in freight

Indian Railways will hike passenger fares up to 2% under the fuel adjustment component from October 7. The freight rates may witness a hike of about 2%.

This hike would be over the busy season surcharge of 15% announced last week in freight. The last FAC hike was seen in April during the tenure of Pawan Kumar Bansal by 5.7% and it did not touch the passenger fares which were last revised in January.

The hike in passenger fares is most likely to affect the air-conditioned travelling and the second class-sleeper coach fares would see a marginal increase. Senior officials said that the tariffs for travel less than 200 kilometer might not see any hike in passenger segment.

This is the second time passenger fares would be increased outside the budget.

“The hike in energy prices since January has not been included in the passenger fares since it was untouched, we are not charging more merely recovering”, said a senior Railway official.

The combined hike in freight and passenger tariffs is expected to help Railways gain about Rs 1,500 crore. Recently Railway Minister Mallikarjun Kharge speaking on the sidelines of a conference had said that he is examining the hike under the FAC.

The second class sleeper tariffs are the one of the highly subsidized segments of passenger traffic. The move to shift the burden to the luxury air-conditioned travelling is seen as a way of balancing the political compulsions associated with passenger tariffs.

Railway Board Chairman earlier mentioned that the fuel costs for electric trains have gone up by 16% for electric trains and 7% for diesel trains. Railway spends about 25% of its budget on energy costs. The Fuel Adjustment Component is revised twice each year.

The passenger losses are expected to hover around Rs 26,000 crore this year.