Railways hikes fares across the board from midnight January 21

PK bansal
In a rare decision just a month ahead of the Budget, Railway Minister Pawan Kumar Bansal today effected an across-the-board fares hike of all classes from midnight of January 21 to net an additional Rs 6,600 crore a year, the first such increase in a decade.

The proposals will rake in an additional Rs 1200 crore between January 21 and March 31 this year, the minister said announcing the decision and did not rule out a hike in the freight tariff.

Fares of Ordinary Second Class (suburban) trains will go up by 2 paise per km while for non-suburban travel it will be 3 paise.

Travel by Second Class Mail and Express trains will be costlier by 4 paise per km, while it will be 6 paise in Sleeper Class.

Travellers by AC Chair Car and AC Three Tier will have to shell out 10 paise more per km, First Class by 3 paise, AC Two Tier by 6 paise and AC First Class by 10 paise.

The fares for First Class, AC Two Tier and AC First/Executive Class were already raised by 10 paise per km, 15 and 30 paise respectively in the current year's budget.

Breaking away from the populism of his predecessors, including Lalu Prasad and Mamata Banerjee, Bansal, who was made the Railway Minister in October last, told a press conference that the decision to hike the fares was "imperative" as lack of revision in the last 10 years has had a "telling effect" on the railway finances.

Dinesh Trivedi, who succeeded his party chief Banerjee, made a bold decision to hike fares in the Budget in February, 2012 to mop up an additional Rs 4000 crore but paid the price when he was made to resign by his party Trinamool Congress which was opposed to it.

Today's decision also covered services like Rajdhani, Shatabdi and Duronto type trains. However, it exempted platform tickets from any hike.

Bansal also proposed to do away with the practice of levying development charge on passenger tickets and all the chargeable fares will in future be in multiples of five.

As a result of the proposed hike, ordinary Second Class suburban fares for a distance of 35 km will go up by Rs 2 from Rs 8 to Rs 10, while in the non-suburban trains it will go up by Rs 5 for an average distance of 135 km.

In Sleeper Class, the increase would mean a hike of Rs 50 for a distance of 770 km from Rs 270 to Rs 320. In the case of AC Chair Car, for a distance of 387 km, the increase would be Rs 40 from Rs 345 to Rs 385.

In the case of AC Three Tier, for a distance of 717 km, the fare will go up from Rs 724 to Rs 800, an increase of Rs 76.

Similarly, in the case of AC Two Tier, the increase would mean a hike of Rs 48 for a distance of 721 km, while for AC First Class it will be Rs 56 for a distance of 547 km.

Replying to questions, Bansal said the Railway Budget next month will not propose any fresh hike in passenger fares.

But when asked whether there would be hike in the freight tariff, he was non committal. "I am not saying anything either way. We are not saying anything now."

Giving reasons for the decision which he described as reasonable, the minister said the losses in passenger segment, which was Rs 1,059 crore in 2004-05, rose to Rs 19,964 crore in 2010-11, an increase of 18 per cent a year. This is likely to go up to Rs 25,000 crore in the current fiscal.

Bansal said input costs have increased immensely over the years and the fares had remained stagnant or there was a little decrease in the lower class fares.

He said Railways was making efforts to raise revenues to meet urgent safety and user amenities requirements.

In addition, the Sixth Pay Commission meant an additional outgo of Rs 73,000 crore in the five year period and about one lakh crore till this time.

Bansal also said the freight traffic target could also not be met with the load showing a shortfall of 13 million tonne till December end.

He cross subsidy through freight business was no more viable in view of the fast evolving competition from other modes.

The across-the-board fare hike proposal of Dwivedi in the current year's budget was finally approved only for First Class, Second AC and First AC/ Executive Classes, which together constitute only about 0.3 per cent of total passengers and about 10 per cent of total earnings from passenger segment.

He said internal resource generation has been seriously impacted resulting in scaling down of Annual Plan size. Fund balances turned negative in 2011-12, adversely affecting essential replacement and renewal of assets, operation and maintenance activities and critical safety and passenger amenity works.

India moves to mend public finances, revive growth

(Reuters) The Indian government moved on Wednesday to mend its strained finances, which have hit capital investment and put its sovereign credit ratings in peril.

Prime Minister Manmohan Singh's government hiked railway passenger fares after a gap of nine years and later in the day sources in his government said it had proposed an increase in heavily subsidised fuel prices to rein in a swollen fiscal deficit.

The move signals Singh's intent to push ahead with politically unpalatable but vital reforms to revive an economy that is on track to post its worst growth rate in a decade.

The economic slump is also making it tougher for Prime Minister Singh to fund flagship welfare programmes ahead of a national election due by mid-2014.

Railways Minister Pawan Kumar Bansal said the passenger fare increase will help generate 66 billion rupees ($1.2 billion) for the cash-strapped rail system, whose creaky service has become a drag on the economy.

The government tried to raise the fares, unchanged since2004, in March 2011 but protests from a key ally forced Singh to abandon the plan and drop his railways minister.

The refusal by successive ministers to raise passenger rail fares has strained the finances of the railways, sapping its capacity to lay new track, modernise services and improve safety.

A sleeper ticket from New Delhi to Mumbai, about 1,390 km(864 miles) away, can cost as little as about 400 rupees($7.27).

Bansal said the fare hike, which will be effective from Jan.21, was necessary. "Facilities and safety measures will improve with an increase in fares."

DIESEL PRICE HIKE

India's economic growth that once promised to hit double-digits is languishing below 6 percent for the past three quarters. One of Prime Minister Singh's key policy advisers, Montek Singh Ahluwalia last month said economic growth could get stuck at 5.0-5.5 percent if a policy logjam continues.

Singh has been pitching for a phased adjustment in domestic energy prices since last month to align them with global markets, warning that business-as-usual policies won't deliver higher growth.

India's policy to subsidise retail prices of fuels such as diesel, which account for about 40 percent of refined fuel consumption, to benefit the poor is a major drain on the exchequer.

These populist policies have swollen India's fiscal deficit,which funding through a heavy market borrowing has driven up borrowing costs for private investors and dimmed economic growth prospects.

Officials at the oil ministry said in Wednesday that the ministry has moved a proposal to the federal cabinet to increase diesel prices a rupee a litre every month. It has also suggested increasing the cap on subsidised cooking gas cylinders to nine from six and hiking prices by 100-110 rupees a cylinder. The fuel prices were last raised in September when a beleaguered government, under pressure from the credit rating agencies, launch some of its most daring initiatives that also included opening the retail and other sectors to foreign players.

"There is also a possibility that the government may decide to raise diesel prices by 4-5 rupees a litre instead of going in for a phased increase," one of the oil ministry officials said.

"With general elections due in 2014, raising prices will be difficult in the second half of this year."

Ratings agencies Standard & Poor's and Fitch have warned that a widening fiscal deficit has put India on the brink of losing the investment grade status enjoyed by fellow "BRICS"Brazil, Russia, China and South Africa.

"It's positive news, as rise in fuel prices will help curtail subsidy bill, and hence the fiscal deficit," said Vivek Rajpal, fixed income strategist at Nomura in Mumbai.

New Delhi aims to trim the fiscal deficit to 5.3 percent of gross domestic product in the fiscal year that ends in March after overshooting the official target of 4.6 percent last year by 1.2 percentage points. But given the revenue and expenditure mismatch, many economists dub the target as optimistic.

($1 = 55 rupees)

PIL forces Railway Board to roll back circular on 'Tatkal' ticket holders

Jabalpur: The Railway Board has rolled back a circular under which 'Tatkal' ticket holders were given priority while clearing waiting lists over normal reservation ticket holders.

The circular was taken back by the Railway Board after a public interest litigation (PIL) was filed at the Madhya Pradesh High Court's principal bench at Jabalpur on the issue, after which the court directed the railways on December 12, 2012, to appoint a competent official where the petitioner could file his complaint in this regard.

However, the railways moved a review petition yesterday to inform the high court that it has withdrawn the circular under which 'Tatkal' ticket holders were given priority in clearing waiting lists, over those with normal reservation.

The PIL was filed by a journalist Sanjeev Pandey, who termed the circular as against the interest of large numbers of normal reservation ticket holders who book their tickets three to four months in advance to get confirmed tickets.

The Railway Board's decision is expected to benefit a large number of railway passengers, especially those who cannot spend enough money to book a 'Tatkal' ticket.

The journalist alleged that the circular clearly indicated that the railway had deviated from its role of a public welfare institution to a purely commercial one catering to the needs of only the rich.

If such practices are allowed to continue, common people would be deprived of their chance to get tickets on the waiting list confirmed, he said.

The Railway Board, in its circular issued on May 15, 2012, said that clearance of waiting list tickets of a general passenger would be done only after clearing the 'Tatkal' waiting list, as part of its efforts to earn more.

Highlights

* Railway Minister P K Bansal announces hike in fares of Second class and AC class travel. He says it has become imperative.

* There will be no fresh hike in the Rail Budget: P K Bansal

* P K Bansal non committal on freight tariff hike.

* Incremental earning of Rs 6,600 crore including Rs 1,000 crore on AC class hike alone.

* Second class ordinary suburban fares to go up by 2 paise per km and non suburban 3 paise per km.

* Second class mail express train fares to go up by 4 paise per km and Sleeper class 6 paise per km.

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