The Centre has decided to raise train passenger and freight charges to bail the Railways out of a crippling financial crisis but the timing of the announcement is yet to be finalised, sources have revealed.
Besides failing to meet its annual revenue targets, the Railways is also groaning under a burden of Rs 32,000 crore this year towards implementing the 7th pay commission recommendations.
“(The) rail coffers are virtually empty. A decision on hiking fares has been taken though railways minister Suresh Prabhu remains undecided on the timing and manner of the announcement,” sources dealing with the matter told HT.
They added that the fare increase can come by way of a direct increase or through an indirect route such as an increase in the cost of services provided by the public sector behemoth.
“The hike will be announced before or after the budget,” the sources said adding that a raise now will enable the Railways to take advantage of the peak travel season beginning March.
India’s largest’s transporter ferries around 23 million people daily, which is equivalent to the population of Australia and New Zealand put together, on its network of tracks running up to more than 64,000 km.
Immediately after assuming office in 2014, the NDA government had announced a 14% across-the-board hike in fares, following this up with incremental and indirect measures at raising travel costs by increasing the minimum chargeable fare for second class non-suburban trains or through changes in the refund rules and the imposition of the Swach Bharat cess.
In what can be seen as a hint of the ministry’s current thinking, the Railways portal have put up a study by a group named ‘Axis Capital’ which recommends a 10% hike in passenger fares and a 5% raise in freight rates to improve the state-run transporter’s finances.
Conceding to the shortfall in freight loading targets in items including coal, cement, steel and food items, the Railways minister recently told newsmen that the situation was result of an economic slowdown in these sectors.
Until last November, more than half of the 17 railway zones had reported an operating ratio (OR) -- which translates to each rupee spent against the rupee earned -- of more than 100%. What this means is that these zones were spending more than the revenue.
The best OR in the last decade was logged during UPA-I, when it was placed at 86%.
Overall performance during the current year has been worrying. Total freight earnings (Rs 71,217 crore) until November 15 was 8.42% lower than the budget target, while earnings from passenger services (Rs 27,991 crore) were 11.6% lower than the targets, official documents show.