Railways may hike second, sleeper class fares in budget

The railways is mulling over increasing passenger fares of second and sleeper classes in this year’s budget.

There is a dominant view in the ministry that passenger fares of AC classes should not be touched as it is already high and an increase would make rail travel less competitive than the air travel.

“There is no scope of increase in AC fares. It is already high. There is certainly enough scope in passenger fares of second class and sleeper classes. However, the decision cannot be entirely commercial. This is a political decision and has to be taken by the political leadership,” said a top official in the Railways.

The current leadership in the Railway Ministry with Suresh Prabhu at the helm is said to be in favour of increasing fares. It is also against cross-subsidisation of passenger fares by freight earnings. Railways incurs an annual loss of Rs 30,000 core in passenger traffic.

In the recently released concept paper on Rail Development Authority, Prabhu has aggressively argued for cutting the losses.

The paper says that freight charges cannot be stretched. It says freight and passenger fare should be decided on the basis of the cost borne by the railways in passenger and goods traffic, respectively.

“Without increasing fare, we cannot think of giving quality services to passengers. We badly need that passengers be given better services in terms of hygiene, safety and catering,” said the official.

Though different concessions only play a minor part in losing revenue, the enthusiasts in the Railway Ministry are pleading for doing away with concessions. There are 53 types of concessions and the railways annually loses Rs 1,400 crore.

These concessions include subsidised travel for senior citizens, patients of cancer and other serious ailments and journalists. Concessions in AC-1 may be scrapped.

“Contrary to popular perception that MPs get concessions on their travel, their travels are fully paid. The railways is reimbursed for their travel by Parliament,” said a rail official. Burdened by the Seventh Pay Commission recommendations, the railways is looking for more revenue.

The Finance Ministry has also slashed the budgetary support to railways to Rs 32,000 crore from Rs 40,000 crore. The ministry is looking for increasing revenue both in passenger and freight segments.