Train fares to go up 14.2%, freight rate raised by 6.5%

The railway ministry has announced a 14.2-per cent across-the-board increase in passenger fares and a 6.5 per cent increase in freight rates, effective 25 June, to raise an estimated Rs8,000 crore in the current financial year.

The 14.2-per cent increase includes a flat 10-per cent increase in fares and a 4.2 per cent charge to neutralise the impact of fuel price rise on Indian Railways' operating costs. There will, however, be no increase in minimum fares, reservation charges etc.

''Meeting the annual expenditure (of the Railways) would not be possible unless the revised rates as finalised by previous government is implemented, hence order of withdrawing implementation of revised fare and freight has been withdrawn,'' a railway ministry stated, adding that the revised passenger fares and freight rates and freight structure rationalisation will come into effect from 25 June 2014,'' the railway ministry stated.

With the passenger subsidy touching Rs26,000 crore amidst a severe financial crunch faced by the railways, the ministry decided to implement the hike in passenger fares and freight rates proposed in the Rail Budget 2014-15, the ministry stated.

It added that the UPA government had left passenger fares unchanged in the interim railway budget in February ahead of the general elections. Instead, it presented a vote-on-account, leaving the difficult job of managing the Railways' weak finances to the next government.

Railway minister Sadananda Gowda is slated to present the Rail Budget 2014-15 in the second week of next month.

Suburban fares
The biggest shocker, however, is for the suburban train user who will now pay double the fares, compared to the cheaper monthly tickets offered by the suburban rail systems at present.

Beginning 25 June 2014, second class monthly season ticket (MST) fares of suburban and non-suburban trains will be charged on the basis of 30 single journeys instead of approximately 15 single journeys at present.

Fares of first class monthly season tickets will be charged at four times the second class monthly season tickets (MST) fares as is done at present. 

A statement issued by the railway ministry said the revision was part of the interim budget exercise by the previous government, which, however, deferred implementation of the rate revision because of the elections.

The revised fare will also be applicable as per the existing method of computation on quarterly season tickets (QST), half yearly season tickets (HST) and yearly season tickets (YST), etc. These revisions have been shown in the season ticket fare tables.

Long-distance passenger fares

• A flat 10 per cent increase in all classes. There will be no increase up to minimum distance for charge. In addition there will be an increase of 4.2 per cent in fares on account of fuel adjustment charges (FAC), which is due from April 2014.
• There will be no change in charges for reservation fee, superfast surcharge etc. Such charges, wherever applicable, will continue to be levied additionally as per existing instructions.
• Service tax will continue to be levied as applicable as per instructions issued in this regard.
• The revised fares will also apply to tickets issued in advance for journeys to commence on or after 25 June 2014.
• In the case of tickets already issued at pre-revised rates, the difference in fares and other charges on or after 25 June 2014 will be recovered either by TTEs on the trains or by the booking/reservation offices before the commencement of journey by passengers.

Freight rates

• A flat 5 per cent increase in freight rates and an additional increase of 1.4 per cent on account of FAC (fuel adjustment component), which was due since April 2014. The overall increase in freight rates will be 6.5 per cent approx .for major commodities.
• Short lead concession in charging of freight for all traffic booked up to 100 km withdrawn. Minimum distance for charge has been increased from existing 100 km to 125 km.
• The number of low rated classes have been reduced from 4 to 3. Certain concessions in case of some of these commodities have also been withdrawn.

The railways had, last month, announced both passenger fares and freight rates by 14.2 per cent and 6.5 per cent, respectively, from 20 May. However, the hike notification was put on hold later in the day leaving the decision to the next railway minister.

Since the rate hike has already been affected, the railway budget is expected to focus on issues like safety, security and service.

The railways may also seek private capital for the huge investment needed to upgrade its signaling system and strengthening the track to prevent accidents (See: Govt moves to allow 100% FDI in railways).

The operating ratio of the railways, a measure of expenses as a percentage of revenue, is seen deteriorating to 90.8 per cent in 2013-14 compared with a budgeted 87.8 per cent and 90.2 per cent in 2012-13. Railways have targeted to improve this to 89.8 per cent in 2014-15.

Indian Railways could benefit from FDI in high-speed trains, station development and last-mile connectivity.

Gowda had said that all railwaymen need to be innovative and find solutions for all major issue like efficiency, punctuality, cleanliness and services on the Indian Railways.

Addressing a conference of general managers of all zonal railways, divisional railway managers, chiefs of railway production units and railway PSUs and  senior railway officials, in the national capital, Gowda said that conventional thinking and the present style of functioning will not help achieve anything. ''Normal tendency is to come out with replies and excuses for nonperformance, which will not be tolerated by the government,' Gowda said.

He expressed concern over the lack of safety and security for women and elderly passengers as well as the poor passenger amenities like drinking water, waiting areas and rest rooms and said, ''We all have to make efforts to make Railways efficient and passenger oriented.''