Bansal signals reform, raises railway fares
Fares had remained unchanged since 2001-02 under populist ministers Lalu Prasad and Mamata Banerjee until Dinesh Trivedi proposed increases in 2012 — a decision that cost him his job, followed by a rollback in all classes except the most expensive AC First Class, Executive Class and 2 Tier, and First Class.
Bansal's unusual move, made less than two months before he is scheduled to present his first budget, indicated the gravity of the crisis, which the minister said was having a "telling effect" on the Railways' finances.
The new fares will be applicable from the midnight of January 21-22. Passengers who have already bought tickets will have to pay the balance on the train.
General and Sleeper class fares will go up by 2-4 paise and 6 paise respectively per kilometre of travel. An AC 3 Tier ticket, popular among the middle class, will cost 10 paise more per kilometre.
First Class, AC First Class and AC 2 Tier fares will go up by 3 paise, 10 paise and 6 paise respectively for every kilometre of travel. Last year's railway budget had raised fares in these classes by 10 paise, 15 paise and 30 paise respectively per kilometre; fares have now been raised a second time in nine months.
The lowest suburban fare will now be Rs 5 instead of Rs 3. All fares across the board will be rounded off to the next multiple of five. For example, a fare of Rs 198 will be deemed to be Rs 200. A development charge of up to Rs 60 applied to all fares has been done away with.
The higher fares will bring the Railways an extra Rs 6,600 crore per year, and Rs 1,200 crore in this financial year during the period January 22 to March 31, 2013. More importantly, the decision signals long overdue reform in the Railways, which is in desperate need of modernisation and a safety upgrade, but which is nearly impossible without generating funds internally.
Passenger trains, which carry an estimated 2.3 crore people every day, have been causing the Railways a loss of 18 per cent annually. Accumulated losses by the end of this financial year are likely to be around Rs 25,000 crore. Non-AC fares are more unviable than AC fares.
"This (fare increase) was needed because the people of this country wanted better service in Railways. People are willing to pay for it. That would not have happened without revising fares immediately," Bansal said. "Cross subsidisation from freight business is no more viable because of fast-evolving competition from other modes."
Fares of the Kolkata Metro have not been affected by Wednesday's increases, but a revision is indicated shortly. The Metro in Mamata Banerjee's base has been causing an annual loss of around Rs 300 crore to the Railways.
Wednesday's announcement comes two days after Bansal met Planning Commission Deputy Chairman Montek Singh Ahluwalia to discuss Railway finances. The plan panel has been asking for higher fares for several years.
With the fare hikes out of the way, the railway budget would concentrate on announcing a handful of new projects and trains, sources said.
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