Railway Budget 2016 – Plans to Increase Passenger Fares by 10%

Railway Budget 2016 – Plans to Increase Passenger Fares by 10% – Acknowledging the decline in earnings sources said various options were being explored to perk up revenue collections.

Facing resource crunch, Railways is said to be mulling the possibility of effecting a 10 per cent increase in the passenger fares in the coming budget.
The proposal is being considered against the backdrop of

 a decline in both passenger and freight earnings and 

the additional burden of Rs 32,000 cr towards 

 implementing the 7th pay commission recommendations, 

Railway Ministry sources said.
On top of this, the gross budgetary support for the 

2015-16 has also been slashed by Rs 8,000 cr by the 

Finance Ministry due to low spending by the Railways.
The sources said while there are several possibilities 

including a fare hike are being looked into nothing has

 been finalised yet.
The sources said a decision has to be taken whether to 

hike the fares and, if so, when. But it is not necessary it

 has to be done only in the budget, they said.
There is a feeling in rail bhawan that a fare hike in the

 budget to be presented on Feb 25 can be more beneficial 

as the railways can utilise the peak season beginning March.

Currently AC fares are already on higher side. If AC fares are raise,

 then they could even surpass the fares of low-cost air carriers in some 

sectors.
Similarly, freight rates are also at a high level and loading of steel, 

cement, coal, iron ore and fertiliser is on a down slide that rules 

out any further increase in this area.
Railways’ total earnings from freight and passenger fares were

 Rs 1,36,079.26 cr until January this year as against the target 

of Rs 141,416.05 cr, a shortfall of 3.77 per cent.
Acknowledging the decline in earnings sources said various 

options were being explored to perk up revenue collections.
While one option is to raise the fares in selected routes, the other is 

to go for increasing the cost of services provided.
Meanwhile railways have undertaken steps for cutting the costs and 

for commercial exploitation of surplus railway land besides 

looking at higher revenues from advertisement in a bid to tide

 over the crisis. The focus may be on improving 

non-tariff collection, the sources said.
Railways have conducted a study by Axis 

Capital which has recommended a 10 per cent

 hike in passenger fares and a 5 per cent

 raise in freight rates to improve the state-run

 transporter’s finances.
Under the rule of BJP-led NDA government, the

 Railways increased the passenger fares by 14 percent in 

2014 and by 10 percent in 2015.
Source: IB Times