Rail Budget 2015: No proposal to hike passenger fares

Railways loses Rs 29,000 cr a year on due to low passenger fares that are cross-subsidized by high freight rates

The rail ministry is not working on any proposal to hike passenger fares in the National Democratic Alliance government’s first full-fledged rail budget to be presented in Parliament on February 26.

Business Standard had reported on Tuesday no big announcements were likely in this year’s rail budget.

“There is no proposal to hike rail fares,” Minister of State for Railways Manoj Sinha said on the sidelines of a function in Lucknow.

He clarified it would not be appropriate to disclose the contents of the rail budget before it was presented.

A LIGHTER JOURNEY

• Minister of state says no passenger fare hike proposal in the works days before the rail budget
• This follows Union Rail Minister Suresh Prabhu recently hinting fares may not be hiked even as diesel prices have come down
• Railways loses Rs 29k cr annually on passenger operations from low fares that are cross-subsidised by high freight rates
• Passenger fares were hiked twice in 2013 – by 5% in Jun and 2% in Oct – and by 14.2% in Jun 2014
• Railways did not hike the fuel adjustment component of fares due in Oct 2014 when the ministry said fares would not be touched until Budget in Feb 2015

Rail Minister Suresh Prabhakar Prabhu recently said a reduction in passenger fares was unlikely although the price of diesel, used by the railways to run 36 per cent of freight and 49 per cent of passenger operations, had declined.

“The railways recover only 50 per cent of the passenger cost they bear. There is already a huge subsidy provided to passengers,” Prabhu said last week. “Railway services will have to be modernised to meet the people’s expectations. Finance is a major constraint, the point is how to raise resources,” he added.

The railways lose around Rs 29,000 crore a year on passenger operations as cargo haulage subsidises fares. Fares were last raised by 14.2 per cent in June 2014.

Prabhu, who took over as railway minister on November 10, 2014, will present his maiden rail budget at a time the transporter is facing cost overruns of Rs 1.11 lakh-crore across 288 projects, rising expenditure on fuel and pay for employees, dip in passenger volumes, slow progress of private-public partnership (PPP) projects and a lack of upgradation of infrastructure, leading to accidents.

The ministry is trying to meet the current fiscal year’s budgeted operating ratio – the amount spent to earn Rs 100 – of over 92 per cent.

The target involves increasing earning by 14 per cent to Rs 1,60,165 crore and maintaining expenditure at Rs 1,48,049 crore, 16.5 per cent higher than the last fiscal year.