Railway Budget 2012-2013: Fare hike expected

With the Budget date having been announced, the Rail Bhavan is abuzz with expectations of a "dynamic" fare hike.

According to top sources in the Railway Board, while the unreserved and janata categories could be spared, while high-end passengers, especially on busier routes, will have to pay extra.

Dynamic fare pricing, as in the aviation sector, means increasing fares in peak seasons in busy sectors and only beyond a certain distance.

DYNAMIC CHANGES Passengers travelling in unreserved category could be spared People travelling in AC and first class, especially on busier routes, will have to pay extra Aviation sector-like dynamic fare pricing is being mulled Would lead to increase fares in peak seasons in busy sectors beyond 400 km Additional levy of surcharge tax in the name of safety, modernisation and station redevelopment likely

This would mean that fares may go up in the busy Delhi-Howrah and Delhi-Mumbai sectors. But this would, according to a Board member, at least save Railways minister Dinesh Trivedi from criticism by his peers in the political class who have virtually stalled any move to hike passenger fares since 1999.

"The foundation for air sectorlike dynamic price hike in the Railways will be made in this Budget as the issue is close to the rail minister. He has been hinting to go the airlines way," said a senior Board member.

With Trivedi crying hoarse for "rationalisation of passenger tariff" to make ends meet in fundscrunched Railways, dynamic pricing policy looks a possible option, say senior Board members.

"At least, we would not be raising fare across the board, but in busy sectors and beyond 400 km. The raise would not affect passengers without reservation and those travelling in reserved second-class coaches would only get affected if they are travelling beyond 400 km. Passengers of AC and first class will have to pay higher fares in limited routes in specific periods. This would not be announced immediately but would be pitched for strongly in this Budget," the official said.

The Railways has already hinted that a service tax of 10.2 per cent may be levied on the tickets purchased for AC and first-class coach travel. Besides, there could be additional levy of surcharge tax in the name of safety, modernisation and station redevelopment.

The linking of service charge issue with the fares has been haunting the Railways for about three years now, but the ministry has been deliberately avoiding the discussion with the finance ministry.

Currently, only catering and commercial publicity of the Railways is covered under the service tax net.

"So far, the ministry has kept freight and ticketing outside the ambit. But the finance ministry has been pushing on the pretext that it is the only way the Railways can raise financial resources from outside the current revenue earnings. The rail ministry has argued that raising the service tax on freight would affect the earnings badly and passenger fare hike had been kept in cold You may have to pay more for rail fares freezer citing "social obligations".

In fact, the finance ministry had raised the fare hike issue earlier last August. Secretary, department of economic affairs, R Gopalan, had also written to Board chairman on August 12 to seriously consider raising the passenger fare, "particularly for the second class and sleeper passengers, who account for 90 per cent of the total passenger volume of Indian railways".

"To reduce the dependence on Union budget, the Railways must increase its capacity to generate resources on its own," Gopalan's letter noted.

Unfazed by the Railways' empty coffers, politicians' demands have started to pour in already. A close aide of Trivedi said, "We have already received about 4,000 IN TIGHT SPOT: Railway minister Dinesh Trivedi has been pitching for "rationalisation of passenger tariff" to make ends meet in funds-crunched Railways. requests from political leaders and parties, of which 125 letters have requested for new lines.

There are about 300 requests for new trains and for increasing frequency of the existing services. Besides, there are 12-15 proposals related to gauge conversion and station area improvement."

A lot of political leaders, including MPs, have stressed for "commercial exploitation of the Railway land and creation of multi-functional complexes in their areas". The minister too has been trying to "equate archaic railways with the modernisation boom in aviation sector" and considering a revenue model of using stations as a hub for commercial activity by constructing duty-free shops, multiplex, food plaza and library.

Courtesy: Mail Today