The Railways appears to have firmed up plans to raise passenger fares in AC classes in face of depleting financial resources and little options available to generate funds.
As pressure is mounting on it from various quarters including the finance ministry and the Planning Commission to raise fares untouched for last eight years, the Railway Board is understood to be preparing a blue print for a possible fare hike.
The hike could be anywhere between 10 and 12% or Rs 35 for every 500 km, highly placed Railway sources said.
With little assistance coming from the finance ministry and the overall failures on its part to generate internal revenue, Railways have no options but to rationalise fares, they said.
Railway minister Dinesh Trivedi had earlier this month hinted about a possible hike in fares as "there was a case to do so as input cost had risen over the years".
The fare hike could also be linked to fuel prices to offset that additional pressure, sources revealed.
The passenger fare segment is subsidised to the tune of Rs 16,000 crore.
While a fare hike may not be adequate to cover its rising expenses, the national transporter could also explore other avenues which could be in the form of levying surcharges or cess for infrastructure creation in the Rail Budget proposal, they said.