New Delhi, June 17: Indian Railways is looking to hike passenger fares and freight rates to tide itself over a severe cash crunch.
However, the amount of hike will depend on the support that the railways will get from the finance ministry in the budget.
Railway minister D.V. Sadananda Gowda met finance minister Arun Jaitley to seek additional budgetary support for the national transporter to lessen the burden of passengers and reduce the cascading effect of a freight hike on inflation.
Gowda told reporters that he had discussed the fare hike with the finance minister and sought a higher budgetary support. He indicated that the railways were looking at different options to fund its requirements as several projects announced by previous government were pending.
The forthcoming railway budget, expected in the middle of next month, is likely to announce steps to boost public-private partnership and ways to attract foreign direct investment.
“Hike in passenger fare and freight rate was inevitable as the financial position of the railways is not so good. But, the quantum of hike is yet to be finalised. It could happen any time and not necessarily in the budget,” a Railway Board member said.
The railways had announced a hike on May 16 in both passenger fares and freight rates by 14.2 per cent and 6.5 per cent, respectively. effective from May 20. The hike was based on an automatic fuel adjustment policy.
Indian Railways, which is losing Rs 30 crore per day, was hoping to garner Rs 8.000 crore through the hike. The cross subsidy on passenger fares has touched Rs 26,000 crore.
However, the notification was put on hold, leaving the decision to the next railway minister.
Of the Rs 64,305-crore plan outlay for 2014-15 in the interim budget, the government support stood at Rs 30,223 crore, which is about 16 per cent more than the budget estimate for 2013-14.
However, despite the increased support, the railways will fall short of the 12th Five-Year Plan (2012-17) target of Rs 1,94,221 crore in budgetary support. The low allocation in the first three years of the plan means support in the last two years will have to be a staggering Rs 58,000 crore.
During the two months of this fiscal, earnings of the railways increased 8.14 per cent to Rs 24,272 crore.