NEW DELHI, January 9 (Agencies): In a rare decision just a month ahead of the Budget, railway minister Pawan Kumar Bansal on Wednesday effected an across-the-board hike in fares of all classes from midnight of January 21 ranging from 2 to 10 paise per kilometre 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. The minister said the fares, which he described as modest and reasonable, will not be increased when the Railways Budget is presented.
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, 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 Railway 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.
With the hike ,railways has finally bitten the bullet to come out of the fund crunch that has affected its operations and threatens to cripple its modernization and expansion plans.
Earlier, Pawan Kumar Bansal asserted that people are ready to pay more in exchange for better and modernized services.
“People are ready to pay. After all we have to modernize the railways,” Bansal told TOI, emphasizing that it was time the transporter got realistic about its expenditure. He said that the cross-subsidization – a scheme where railways charge higher freight rates in order to keep the passenger fares low – has become unviable and railways can persist with it only at the cost of pricing them out of the goods transportation business. The minister said that besides other things, 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.
“People also must understand this. We seek there cooperation since there is no increase in passenger fare for last 12 years. Though any increase in fare will pinch, it is obviously, but then we have to be realist in our approach. That is what I appeal to the people,” said Bansal in a significant policy pitch weeks before he presents the last full rail budget under UPA-II.
He said that he had sensed that people are now ready to pay more. “Where ever I have gone in these two months and what ever interactions I have with people with representatives of the people with the press everybody has supported an increase in the fare. Everybody say its time to increase. We have to improve services we have to provide better services than what we are giving presently, augment our capacity, and provide more services,” the minister told TOI.
In the last railway budget, government hike the fares only to roll them back, except for AC-1 and II passengers.
The last across-the-board hike had happened at the start of the millennium, when Nitish Kumar held the charge. His successors fought shy of taking the “politically incorrect” step. However, Bansal said that the railways may have run out of soft options now. He said that the implementation of the 6th Pay Commission staggered over five years left the department, government`s largest, with an additional wage bill of Rs 73,000 crore – almost three quarters of its gross traffic earnings for the last fiscal.
Stressing that railways cannot go on hiking freight rates, Bansal said that the pattern of goods transportation in India was heavily at odds with what is the case in China and the US, where trains continue to be the main beast of burden.
He also said that 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.
Bansal also indicated that the setting up of a fare regulator – a device to de-politicize the tariff fixation – was in its final stages, adding that the proposed rail tariff authority will have a substantial say in determining fares.