Railways to hike fares from January 21

January 12, 2013

The Railway Ministry has decided hike in fares of all classes from midnight of January 21 ranging from 2 to 10 paise per km to generate an additional Rs 6,600 crore a year.

Railways declared the scheme of cross-subsidization impracticable as the department fears that cross-subsidization, which has seen the railways steadily losing market share to road transporters, will result in clogged roads, higher transport cost for goods and higher pollution.

What is Cross-subsidization scheme?

It is a scheme by railways which envisages charging higher freight rates in order to keep the passenger fares low.

Why Railway needs this hike in fairs?

Railway needs this hike to meet the fund crunch that has affected its operations and threatens to cripple its modernization and expansion plans. As per current Railway Minister Praveen Kumar Bansal, railways needed funds to do even the elementary things – from upgrading signaling system to facilitate running of trains through fog, installation of anti-collision devices to bio toilets in coaches and at stations as part of ensuring better hygiene. The implementation of the 6^th Pay Commission staggered over five years left the department with an additional wage bill of Rs 73,000 crore – almost three quarters of its gross traffic earnings for the last fiscal.

The Ministry also indicated that the setting up of a fare regulator – a device to de-politicize the tariff fixation – was in its final stages and the proposed rail tariff authority will have a significant role in determining fares.