DSIJ Mindshare

Prabhu's burden is Jaitley's this time: fare hike on the cards

After almost a century, this year, the Railway Budget is likely to be merged with Union Budget 2017. A combined Budget may also save the Indian Railways Rs 10,000 crore, with the ministry having sought an exemption from paying dividends to the Centre this year, prompted by a rise in additional salary and pension spending for its 1.3 million employees. 

Among other schemes, the ministry is expected to introduce a safety cess to fund its Rs 1.2 lakh crore safety corpus-the Rashtriya Rail Sanraksha Kosh, following a year of derailments that saw more than 150 people killed in a crash near Kanpur alone. This means railways tickets for second class and AC 3-tier journeys may turn expensive significantly owing to a lower fare base, while AC 1-tier and 2-tier ticket prices may increase marginally, sources close to the development said. 

The last full fare hike was in 2014, when there was a 14.2 percent hike in all classes of passenger fares and 6.5 percent increase in freight charges. A fare hike would boost the finances of the Railways, which expects Rs 1.84 lakh crore revenues in the currency financial year, but has already lowered its revenue expectations to Rs 1.7 lakh crore in the revised estimates. 

The ministry is also trying to reduce freight charges, which accounts for a larger portion of the Railways' revenue, to prevent cargo from moving to other transport modes and has reduced parcel sizes and average distances. 

Also on the anvil is the creation of a Rail Development Authority, an independent agency which can recommend tariff changes periodically by taking into account all direct and indirect costs such as pension, debts and market-driven forces. 

Besides, the government is contemplating to make Aadhaar or Unique Identification (UID) card mandatory to avail rail concession and an announcement is likely to be made by Union Finance Minister, Arun Jaitley while presenting the first combined general and railway Budget on February 1. According to certain media reports, the move will help the government in better targetting of benefits and check misuse of the facility.

There have been indications that the Indian Railways will also get Budget support to meet part of its capital expenditure and will be allowed to raise extra budgetary resources. Earlier this month, Railways Minister, Suresh Prabhu said the Indian Railways is expected to have an operating ratio of 94 per cent for the current financial year despite Rs 32,000 crore liability of 7th Pay Commission and negligible growth in the freight loading.

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