Indian Railways may hike passengers fare from February 1, 2020

Indian Railways passengers will have to pay more for their travel as the government is likely to increase train fares in the coming months. According to sources in the Ministry of Railways, the fare hike can be announced after the end of the current Winter Session of Parliament.

If sources are to be believed, the ministry has received the PMO's green signal to increase rail fares. The biggest reason behind the fare hike is being attributed to deteriorating economic condition of the railways. The government is also in favour of implementing the increased fares from February 1, 2020, sources added.

According to sources, the Railways has proposed to increase the passenger fare by 8-10 percent, but the department is not in favour of any increase in the freight rates because of stiff competition from the road sector.

As per the proposal, the government wants to reduce the cross-subsidy by increasing passenger rail fares. Cross-subsidy is to compensate the freight earnings by incurring losses in passenger fares. The government may adopt a new formula to increase passenger fares. Under this new formula, the routes which are witnessing great demands may see a hike in the fares, while the routes with less in demand may see partial increase or the fares can be kept constant, sources added.

Accordingly, the high demand routes like Delhi-Mumbai, Delhi-Chennai, Mumbai-Goa, Mumbai-Ahmedabad may witness 8-10% fare hike, while the low demand routes including Ajmer-Jaipur, Kanpur-Lucknow, and Chandigarh-Ludhiana may see partial increase in fares.

The routes witnessing stiff competition from the road sector may go for partial fare hike or the same could remain the same.

Notably, an attempt has already been made to increase rail fares. Former Railway Board Chairman Board Ashwini Lohani had thrice sent proposals for flat fare hike of all trains to Railway Minister Piyush Goyal by removing the Flexi Fair fare system from all premium trains. But, the railway minister had then hung up the proposal due to political reasons, especially due to assembly elections in several states. Since then, the financial condition of the railways has failed to improve rather it has witnessed a declining trend.

Earlier in June 2014, the Modi government had increased the rail fare. Then, passenger fares were increased by 14.5 per cent, while the freight rate was hiked by 6.5 percent.

Reasons why Indian Railways fare in being increased

1. India Railways' operating ratio is constantly deteriorating.
2. In the last 7 months i.e. from April-October, the operating ratio of Indian Railways has been 108%.
3. Operating ratio means how much money Railway spends to earn one rupee. If this figure is beyond 100, it means that the expenditure of railway is more than its total income. This is not a good sign for Railways.

4. According to sources, the railways missed the target of its earnings in the last 7 months. There is shortfall of Rs 19,000 crore in passenger and freight earnings. While in the expenditure side, Rs 5000 crore more has been spent more than the fixed target.

In the First quarter (April-June) of 2019-20 financial year, the railways earned a revenue of Rs 13,398.92 crore from passenger fare, but this dipped to Rs 13,243.81 crore in the July-September quarter.

Similarly, in the first quarter, the railways had earned Rs 29,066.92 crore from freight loading, while in the second quarter, the freight earnings came down to Rs 25,165.13 crore.