Rail fares to increase on fuel charge

Indian Railways on Friday announced the introduction of a fuel charge on passenger fares. This would see fares rising by up to two per cent under the Fuel Adjustment Component (FAC) in the higher classes and around 3.5 per cent in lower classes.

Simultaneously, freight rates would see a rise of 1.7 per cent in the FAC. The rise would be effective from Monday for the passenger segment and Thursday for freight. The increase in the FAC for freight is additional to the busy season surcharge of 15 per cent announced last week. Fares for second class non-suburban travel will see a maximum rise of Rs 5 in select distance slabs. Air-conditioned (AC) travel would see a rise of two per cent. Suburban fares have been exempted from FAC.

The FAC rise is expected to help the railways earn Rs 1,150 crore more in revenue in the remaining six months of this financial year. Of this, Rs 450 crore will come from passengers and Rs 700 crore from freight.

The FAC was introduced when Pawan Kumar Bansal was minister; he had to resign earlier this year, in a graft scandal. In his Budget, Bansal had imposed a 5.7 per cent FAC on freight rates; he refrained from imposing it on passenger fares since these had been earlier increased by around 25 per cent. Bansal had managed to increase passenger fares for the first time outside the Rail Budget in January.

Rajdhani/Shatabdi fares would see a rise of up to Rs 95 for first class AC travel. Second class travel for select long distance trains, such as New Delhi-Chennai, will see a rise up to Rs 15.

In the present exercise, only the escalation recorded in fuel cost during the February-July 2013 period has been factored in. This works out to a 7.3 per cent increase in diesel cost and 15.5 per cent in power rates, explained an official statement.

The Railway Board chairman had earlier mentioned that fuel costs for electric trains had risen by 16 per cent and by seven per cent for diesel trains.

The railways spend about 25 per cent of the yearly budget on energy cost. The FAC is to be revised twice each year.

Adhir Ranjan Chowdhury, minister of state for railways, recently said passenger losses were expected to be around Rs 26,000 crore this year. The second class sleeper fare is one of the highly subsidised segments of passenger traffic. The move to shift the burden to the luxury AC travel is seen as a way of balancing the political compulsions associated with passenger rates.

FUEL ADJUSTMENT COMPONENT

Railway fare hike

* AC fares in Rajdhani and Shatabdi see a rise of up to two per cent

* Second-class sleeper fares see an increase of Rs 5

Quantum of rise in first-class AC travel

Rs 65 Mumbai-Delhi Rajdhani
Rs 95 Delhi-Bangalore Rajdhani
Rs 35 Shatabdi from Bhopal to New Delhi
Rs 75 Punjab Mail from Ferozepur to Mumbai