Modi led government’s “tough” decision has with the hike in passenger fares and a hike in freight rates from June 25.
Effective increase in passenger fare will work out to 14.62 per cent (10 per cent increase plus a 4.2 per cent fuel adjustment component). The effective freight hike will be a little over 6.5 per cent (5 per cent and the rest because of the fuel component).
Both fares and freight are re-adjusted twice a year, moving in either direction in pace with fuel prices. Amid customary calls for rollback by the Opposition, the railways tonight said “the additional burden due to oil prices fluctuation will get reviewed if the price of oil decreases”.
Revenue worth Rs 8,000 crore will get generated out of this hike for the cash-strapped Indian Railways.
The Modi government has, in effect, endorsed its approval on a plan that had been conceived by the earlier UPA government.
Fares were not raised for a decade between 2003 and January 2013, precipitating a financial mess in the railways where revenues have not kept pace with spending.
The fare hike comes about a fortnight before the Modi government presents its first railway budget and less than a month after it came to power.
