There is good news for train passengers, unlike those who take the aeroplanes. Despite the unprecedented rise in the oil prices, the Indian Railways (IR) has decided it will not resort to increase in the passenger fares.

IR Member (Traffic) V N Mathur told Deccan Herald here on Saturday that the mega organisation has the capacity to absorb the oil price hike and would not affect the increase in the fares or freight rates. “It is true that 70 per cent of our locomotives are diesel-driven but we need not go for fare hike as our financial position is very healthy,” the senior official said. IR trains are powered by over 8000 locomotives.

The IR spends a huge amount on diesel — fuel expenses in 2006-07 was of the order of Rs 11,352.43 crore, which increased to around Rs 12250 crore in 2007-08. The railway budget for 2008-09 has made a provision of Rs 13,672.9 crore in this regard. IR sources said the railway ministry may have to spend more than this outlay as there is no respite from the spiraling oil prices which has hit $120 per barrel in the international market.

High revenue

One of the main reasons for the IR to absorb the hike has been its impressive financial performance over the last few years. The IR returned a net revenue of around Rs 18,500 crore in 2007-08. Thanks to this revenue, the ministry reduced the fares recently. To make higher classes competitive, the fares of AC-I and AC-II tiers were reduced by seven and four per cent respectively (this reduction will be only 50 per cent in popular trains during peak period).

As against the railways, the air fares have gone up by between Rs 150-Rs 350 as airlines raised the oil surcharges taking it to beyond Rs 2000. In addition, full-service carriers such as Jet Airways and Kingfisher Airlines increased the basic fares by 10 per cent, which will cost a passenger at least Rs 1000 more.