Even as important ministries including rural development, defence and roads and transport are facing a cut in allocations, the UPA government plans to extend the olive branch to the railways by increasing the Gross Budgetary Support (GBS) to the public transporter by approximately 40% in the upcoming Budget.

Sources hinted that the finance ministry was considering a GBS allocation of Rs. 34,000 crore, which is Rs. 10,000 crore more than last year's allocation.

The railways had put up a GBS demand for Rs. 38,000 crore.

With enhanced GBS, railways minister Pawan Kumar Bansal is looking to present the highest ever plan outlay of around Rs. 70,000 crore.

Besides the expanded GBS amount, the railways aim to raise the remaining amount through market borrowings, extra-budgetary support, internal resources and railway safety fund.

The railways are understood to have "entitled" itself to higher central assistance by taking measures to shore up its financial state — such as the recent decision to hike passenger fares.

As the benefits of the fare hike were largely offset by the subsequent government’s decision to hike diesel prices, sources indicated Bansal has agreed to bring about another marginal hike in fares in upcoming Budget.