Narendra Modi govt orders rail fare hike, passenger rates soar 14.2%, freight 6.5%; Nitish, Lalu flay move

Jun 24 2014, 13:38 IST
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Railway minister Sadananda Gowda had said the decision on rail fare hike would come before the upcoming Budget session. Railway minister Sadananda Gowda had said the decision on rail fare hike would come before the upcoming Budget session.
SummaryNarendra Modi govt had prepared public for weeks about impending rail fare hike to reduce backlash.

pressures. The coal industry, the single biggest source (40%) of freight revenue for the railways, is relatively in a better position to pass on the extra cost to consumers due to the lack of competition in the sector, but the consuming industries like power and cement, already hit by the strained availability of the fuel, would doubtless resist it. As for the fertiliser industry, another key user of railways for transporting its products, the burden of fare hikes would partly come back to the government as the prices of these products are heavily subsidised by it.

The railways which had reported an operating ratio of 90.4% last year, is expecting the freight revenue to come to its rescue this year as passenger volumes have been keeping below projections over several months and has even shown a dip lately. Passenger fares is cross-subsidised by the freight segment (to the tune of Rs 26,000 crore) and needless to say that even with Friday's fare hike, that would hardly be corrected.

The railways' Gross Traffic Receipts for FY15 is projected at Rs 1,60,775 crore.

The national carrier expected its passenger bookings to be around 8,800 million in FY 15 as compared to 8,535 million in the last fiscal. However, it is already clear that the estimate is unachievable. In April-May 2014 (in any year, these months are normally the peak season for railways), passenger bookings stood at 1,377.82 million compared with 1396.03 million during the same period last year.

In the interim budget for FY15 presented by the UPA government, the passenger revenue was seen at Rs 45,255 crore, up Rs 7,500 crore over the revised estimate of FY14. It may be noted the revised estimate for last year was 11% lower than the initially budgeted Rs 42,210 crore.

Freight wise we are looking very comfortable as we carried 180.63 million tonne of revenue-earning freight during April-May 2014, an increase of 8.79 million tonne over the same in the corresponding period last fiscal. Going by the trend we are expecting that the freight revenue could be higher than the budget estimates, the railway official had told FE earlier.

It was the UPA government that began the practice of announcing passenger fare hike outside the railway budget when it announced the 20% hike in January 2013.

Nitish flays

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