Facing resource crunch, Railways is said to be mulling the possibility of effecting a 5 to 10 per cent increase in the passenger fares in the coming budget.
The proposal is being considered against the backdrop of a decline in both passenger and freight earnings and the additional burden of Rs 32,000 crore (Rs 320 billion) towards implementing the 7th pay commission recommendations, Railway Ministry sources said.
On top of this, the gross budgetary support for the 2015-16 has also been slashed by Rs 8,000 crore (Rs 80 billion) by the Finance Ministry due to low spending by the Railways.
The sources said while there are several possibilities including a fare hike are being looked into nothing has been finalised yet.
The sources said a decision has to be taken whether to hike the fares and, if so, when. But it is not necessary it has to be done only in the budget, they said.
There is a feeling in rail bhawan that a fare hike in the budget to be presented on Feb 25 can be more beneficial as the railways can utilise the peak season beginning March.
Currently, AC fares are already on higher side. If AC fares are raised, then they could even surpass the fares of low-cost air carriers in some sectors.
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