Train fares are set to become costlier. The Rail Tariff Authority (RTA) – which will regulate passenger and freight tariff based on fuel costs and volatile market conditions – will shortly be set up, Railways Minister Mallikarjun Kharge announced in the Lok Sabha.
The Railways have to cope with rising fuel costs. Prices of diesel have risen this fiscal by 9.6%, while electricity costs have risen by as much as 14.07%, officials informed.
Simultaneously, the Railways have decided to expand upon the plan to run premier trains – christened the Jai Hind Express – over 17 routes. The dynamic pricing model, on the patterns of the airlines industry, will be adhered to for these premier trains. Which means that prices of tickets will vary from season to season, depending on the demand.
“The decision to set up the RTA is a path breaking decision. The Authority will not only consider the requirements of the Railways, but also engage with all stake holders to usher in a new pricing regime through a transparent process. This would lead to an era of rationalization of fares and freight structures for improving the fare-freight ratio and gradually bring down cross subsidization between different segments”, the Railways Minister said.
Revenue earned from freight has so far been diverted to subsidize passenger fares. During the current foscal, for example, the Railways have earned Rs. 500 crores from freight traffic, while passenger earnings have declined- causing grave worries about the financial health of the public transporter. The Railways had targeted 32% growth in passenger traffic this fiscal, but just a growth of 18% has been registered.
Operating costs have also been rising because of a variety of reasons including increasing Dearness Allowences (DA), increments and retirement benefits for staff and pensioners.
The Railways Operating Costs (paisa spent against every rupee earned) has risen by almost three percentage points from 87.8% to 90.8%.