Railway passenger fares to be revised in October

Budget 2013 had provided for revision of freight rates from April 1

The railways would revise passenger fares in October, as part of an exercise to introduce a fuel adjustment component (FAC) in the passenger segment. According to the FAC policy, the freight and passenger rates would be revised twice a year, keeping in mind the proportionate movement in diesel and electricity prices.

Budget 2013-14 had provided for FAC-linked revision of freight rates from April 1.

At the National Editors’ Conference on Saturday, Railway Board Chairman Vinay Mittal said, “We insulated the passenger segment from FAC in April, as we didn’t feel it was appropriate, considering there was a fare hike in January. The railways had to absorb Rs 800 crore on account of this.”

In the passenger segment, losses rose from Rs 6,159 crore in 2004-05 to Rs 19,964 crore in 2010-11. It was expected this year, these would stand at Rs 25,000 crore.

Earlier, the railways had announced an across-the-board passenger fare rise, with effect from January 22. In the quarter ending March, the railways recorded additional revenue of only Rs 1,200 crore. This was primarily used to offset passenger losses due to low traffic over long distances.

The railways had also expected to garner an additional Rs 6,600 crore in 2013-14. However, a price rise of Rs 10.8 a litre for HSD oil in January added Rs 3,300 crore to its fuel bill, taking away a substantial portion of the additional targeted revenue. It is estimated in 2013-14, the increase in the railways’ fuel bill on account of fuel revisions (electricity and diesel) in 2012-13 would be Rs 5,100 crore.

In his Railway Budget 2013-14 speech, Railway Minister Pawan Kumar Bansal had said, “In light of deregulation of HSD oil, railways’ finances need to be rationally insulated. To this end, a mechanism is required to neutralise the impact of fuel prices on operating expenses. I propose fuel adjustment component be dynamic in nature and change in either direction with a change in fuel cost, say twice a year.”

The railways’ plan size for this financial year was scaled down to Rs 51,000 crore, against Rs 60,000 crore budgeted for 2012-13. A senior railways official said,

“This shortfall in plan size would 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 (former railway minister)’s term, there was a fall of Rs 4,200 crore. We could mop up just Rs 300 crore from the AC fare increase. Also, we had to absorb the Rs 1,000-crore impact on account of an increase in diesel prices.”