Fare hike imminent, but unlikely in Rail Budget

Mamuni Das Jayanta Mallick New Delhi/Kolkata | Updated on March 12, 2018 Published on January 27, 2012

Sensitive issue: In the past few years, the trend has been to rejig fares outside the Rail Budget for both the freight and passenger segments. — Satish.H.

Hike in passenger fares, though imminent, may not find place in this year's Railway Budget. At the most, there could be an announcement on a pricing model linking fares to input costs.

The fare hikes, in fact, could come after the Budget, or may be even before, in the small window of a few days after the State election results, depending on the political climate.


Passenger fares of the Indian Railways, which move about 800 crore people a year, have been always been a political hot potato. Since 2004, when the UPA-1 came to power, Railway Ministers such as Mr Lalu Prasad and Ms Mamata Banerjee have been unwilling to be branded as those who made rail travel costlier for the masses.


The Railway Minister, Mr Dinesh Trivedi, who took charge in July 2011, has publicly stated the need to increase fares in an intelligent manner, while not impacting the poor. He has also talked about the need to de-politicise the Railways. But, the exact timing of the increase has been pushed on account of various reasons that include State and local body elections.

On Friday, in Kolkata, Mr Trivedi ducked questions on fare hikes. The Railway Board Chairman, Mr Vinay Mittal, who was present in venue, said, “That is the challenge…we are looking at freight...and other peripheral earnings. As of now there is no talk of any hike.” Ministry sources said officials are unwilling to workout proposals on fare hike till they get signals from political leaders. “What if somebody seeks the document through RTI? The official who would have made the proposal will become the scapegoat,” said a source.

This has to be seen in the context of comments by Mr Mittal's predecessor, Mr Vivek Sahai, who had admitted to a Parliamentary Committee in June 2011 that the time had come to increase fares and the Railways “were working on it”. Mr Sahai had, in June 2011, stated that the fare increase “can be to the extent of 10-15 per cent.”


In the past few years, the trend has been to rejig fares outside the Rail Budget for both the freight and passenger segments. Mr Lalu Prasad resorted to out-of-budget tinkering to increase passenger fares. The steps that indirectly increased passenger fares during his tenure include increasing Tatkal charges, share of Tatkal seats in trains, reservation and cancellation charges, withdrawing telescoping benefits and subsuming special surcharge fund in fares instead of letting it lapse. Only through Tatkal charges, the Railways had raised about Rs 600-650 crore each in 2009-10 and 2010-11.

Mr Prasad's successor, Ms Mamata Banerjee, who had an eye on West Bengal elections last year, was no different.

Rail passenger fares are highly subsidised from freight earnings. In 2008-09, even the high-end first and second air-conditioned passengers did not pay fully for the services - only passengers availing the AC three-tier services and AC chair car services covered their operational costs.

All Government agencies, including the Prime Minister's Office, Planning Commission, Finance Ministry, Comptroller and Auditor General (CAG), Railways Employees Union, have sought increases in fares.

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Published on January 27, 2012
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