Calcutta: The Mamata Banerjee government on Wednesday apologetically released bus fares from a four-year political stranglehold, raising them by Re 1 for each tier and also proposing a system of dynamic pricing based on fluctuations in fuel prices.

The new fares will take effect once the notification is issued later this week. Dynamic pricing is still an idea that the chief minister has asked the transport department to work on and come out with a model within a month.

"The state government was forced to increase fares because of the Centre's failure to check rising oil prices across India," Suvendu Adhikari, the transport minister, said. "Our apologies to everyone who will feel the pinch of the hike."

Post-revision, the minimum bus fare for a trip up to 4km has increased to Rs 7. For every 4km tier thereafter, there is an increment of Re 1.

Private bus operators, who were straining at the leash and threatening to withdraw vehicles in phases from Thursday, said the fare hike had fallen short of their expectations. But they decided not to go on strike in response to an appeal from Mamata, who had met them before the hike was announced.

Meter-taxi operators are next in line. The official word is that the quantum of hike is still being worked out, although sources in the transport department said the government wasn't keen to cede anything beyond an increase in the base fare from Rs 25 to Rs 30 and proportionate increments after that.

A task force led by Alapan Bandyopadhyay, the additional chief secretary of the transport department, will be speaking to experts in transport economics and all stakeholders in the business to find a formula for dynamic pricing.

"The basic premise of dynamic pricing is that fuel prices will determine as and when fares need to rise to keep the business viable. If the price of diesel increases by a certain number over a period of time, it will be the cue for a Re 1 hike in fares for every tier. Fares will be pruned if fuel prices fall by the same amount. The trigger could be around Rs 9," a senior officer in the transport department said.

"It's early to think this will work, but the initiative reflects the government's eagerness to bring down fares when fuel prices fall."

This is not the first time that the Mamata government has proposed the concept of dynamic pricing. In 2014, when fares were last revised, the plan was to have a committee to monitor fuel-price fluctuations and decide on fare revision. The committee that was set up did not meet once.

The price of diesel has increased by up to Rs 12 since the state government last revised bus fares in 2014. Meter-taxi fares had been revised in November 2011.

"We had demanded that the 4km tier be reduced to three while raising the minimum fare to Rs 9. That has not happened," Tapan Bandyopadhyay of the Joint Council of Bus Syndicates said.

In 2014, the proposal was to revisit the fare structure every time the price of diesel increased or declined by Rs 2. Members of the committee were supposed to go into the "dynamics of transport economics" in a state where private operators control 72 per cent of the mass transportation business.

Fuel accounts for nearly 50 per cent of the total running cost of a commercial vehicle. The other overheads are loan EMIs, salaries, insurance and cost of spares and repairs. The viability of the bus routes in terms of competition from other modes of transportation is also a factor.

Sources said the task force assigned to come out with a dynamic pricing model would take all these factors into account.