New Delhi: A decision on possible hike in passenger fares will be taken by the Railways in October when it will review the fuel adjustment component (FAC) in the wake of rising fuel and energy cost.
While the freight rate will go up by about 5.7 percent from April 1 due to the linking of FAC in the freight tariff, railways will examine its applicability in the passenger services in October this year.
"There is a policy now and the FAC is linked with energy and fuel prices and calculated accordingly," Railway Board Chairman Vinay Mittal said at a conference here.
According to calculation, the passenger fares could go up by 2 to 3 percent if FAC is linked to basic fare in passenger services in October.
"Fuel adjustment component will be reviewed after six months for both freight and passenger fares. Whether FAC will be reduced or increased, it will be examined in October and then only a decision will be taken," he said, adding, "by that time the Rail Tariff Authority is also expected to be constituted."
Rail Tariff Authority, the first of its kind for railways, will suggest the level of tariff for both the freight and passenger fares from time to time taking into account the input cost and volatile market conditions.
Mittal said currently the RTA is in the inter-ministerial consultation stage and a cabinet note will be prepared for it shortly.
"FAC for passenger and freight are calculated separately. While we decided to link FAC with freight tariff from April 1, we absorbed the increased fuel cost of Rs 800 crore and did not hike passenger fares," he said.
"Since we have raised the passenger fare in January so we did not consider it again and the FAC was implemented in freight rate only," he said.
Asked repeatedly whether FAC will be imposed in October, Mittal, however, said "I am not in a position to say that now because it will be reviewed and then a decision will be taken."
The FAC which takes into account both electricity and diesel cost is about 16 to 17 percent of the total expenditure. There is a 39 percent hike in fuel cost and 8 percent energy hike till January 2013 from April 2012.
He said earlier there was no FAC calculation "but now we have a mechanism".
Mittal said railways is focusing on fiscal discipline by curbing expenditure.
Referring to passenger amenities, he said measures are being taken to bring down accident rate and improving passenger amenities at rail premises.