New Delhi, Oct. 4: Long-distance train journeys will be costlier from Monday while a freight rate hike can make almost everything heavier on your pocket.
The railways today raised passenger fares by a flat two per cent for all classes but did not touch local trains or the Metro (suburban and non-suburban trains). The new charges kick in from October 7 and will apply also to tickets issued in advance.
Freight rates have been raised by 1.7 per cent on all commodities and are likely to have a cascading effect on inflation as the railways are the preferred mode of transport for bulk commodities.
The hikes have been made to offset the rise in fuel costs — a 7.3 per cent increase in the price of diesel and a 15.5 per cent hike in electricity charges.
The 2011-12 rail budget had announced a fuel adjustment component (FAC) in railway rates; today’s hikes were effected under that principle. The FAC is linked to fuel and energy prices.
Basic fares in AC first class have risen by around Rs 60 to Rs 85 per ticket, and by Rs 35 to Rs 45 in AC 2-tier.
Railway officials said all the other charges — such as reservation fees, superfast charges, catering charges and service tax — wherever applicable, would be levied additionally.
Train fares were last raised in January this year, by 10 to 20 per cent. It was the first passenger fare increase in a decade.
The latest hikes are expected to earn the railways an extra Rs 1,150 crore by March 31 next year. Of this, Rs 450 crore will come from the increased passenger fares and Rs 700 crore from the revised freight rates.
A senior official said the railways were “merely recovering” costs.
According to the railways’ calculations, the transporter will have to shell out an extra Rs 1,200 crore in the next six months because of increased energy and input costs. The cross-subsidy for passenger services is now Rs 26,000 crore a year.
The railways are expected to revise the passenger and freight tariffs every six months after taking into account the input costs and the prevailing market condition.
The hike in freight rates comes at a time the inflation rate has shown an upward trend, rising from 5.79 per cent in July to 6.1 per cent in August.
The railways use about 250 crore litres of diesel to operate trains on 70 per cent of their 65,000km network.
Since January, the transporter has had to buy diesel at market prices under a government decision to decontrol the fuel for bulk buyers.
Fuel costs make up 15-20 per cent of the railways’ total expenditure.