Mallikarjun Kharge in New Delhi on Thursday. (PTI)
New Delhi, Oct. 3: The railways may hike fares to pass on the burden of higher fuel costs to passengers.
“A fuel adjustment component (FAC) was announced in the budget and according to the budget proposal it should have been implemented from October 1. The FAC proposal has come to me and I am examining it and a decision will be taken shortly,” railway minister Mallikarjun Kharge said.
FAC is linked to fuel and energy prices and kept separate from base rates.
According to sources, the railways will have to bear a burden of Rs 1,200 crore because of increased energy and input costs in the next six months.
All this will add to the discomfort of travellers, who are trying to come to terms with higher air fares.
Last month, almost all major airlines jacked up fares by 22-25 per cent because of the rupee’s depreciation and the rise in prices of aviation turbine fuel.
The railways use coal, diesel and electricity to run its locomotives. Its fuel costs have increased because of the rise in the prices of crude oil and imported coal and the devaluation of the rupee.
Fuel costs have gone up for electric trains by 16 per cent and for diesel trains by 7 per cent since April 1, Arunendra Kumar, chairman of the Railway Board, said.
About 250 crore litre of diesel is used to operate 70 per cent of the railways’ 65,000km route. From January, the transporter is buying diesel at market prices following the government’s decision to decontrol the fuel for bulk buyers.
The earnings of the railways during April-August increased 10.29 per cent to Rs 54,462 crore compared with the corresponding period last fiscal. Freight revenue during the period increased 8.86 per cent to Rs 37,085 crore, while passenger revenue rose 13.48 per cent to Rs 14,758 crore.
At present, the cross-subsidy for passenger service by freight is Rs 26,000 crore a year.
According to an official, the railways plan to build 20 LNG locomotives, once the prototype is successfully tested. The use of LNG locomotives will reduce operating costs up to 50 per cent.
Train fares were increased 10 to 20 per cent in January, the first hike in a decade. The increase ranged from 2 paise per kilometre for second class ordinary (suburban) trains to 10 paise per km for AC 1st class trains.
The Union cabinet today cleared the proposal to give railway employees productivity-linked bonus equivalent to 78 day of their wages for financial year 2012-13.
Productivity-linked bonus is paid to railway employees each year before Dussehra.
Over 12.37 lakh non-gazetted railway employees will benefit from the decision.
The financial implication of the payment has been estimated at over Rs 1,043.43 crore. Kharge said the railways were seeking private investment, including FDI, in infrastructure projects such as elevated corridors and high speed trains.