Indian Railways
Indian RailwaysReuters

The decision to raise the railway fare by 14.5 per cent and freight rates by 6.5 per cent will be finalised only after Railway Ministers consult Narendra Modi, who is against hiking charges.

On Tuesday, during a pre-budgetary meeting with the Finance Minister Arun Jaitley, a proposal was made to consider the hike in passenger fares and freight charges in the upcoming budget railways budget session in July.

The decision was taken after considering the pending proposal made by former railways minister Mallikarjun Kharge to increase the passenger fares by 10 per cent, which according to him would help the railways to cover at least one-month's loss.

A rise in the fare was considered at the backdrop of loss suffered by railways at ₹900 crore per month. The passenger ticket revenue for the 2013-14 fiscal year was targeted to ₹42,210 crore but the railways managed to collect only ₹37,500 crore, according to The New Indian Express.

Railway Ministry in the budgetary meeting to be held somewhere in the mid of July would address the need to raise passenger fares by 14.5 per cent and freight charges by 6.5 per cent. It will also discuss among other measures, including safety issues, Foreign Direct Investment in Railways, pending projects and public-private partnership, to cope with the losses the railways has been facing.

A raise of 2-3.5 per cent in the passenger fare and 1.7 per cent in the freight charges were already imposed in October 2013 under the Fuel Adjustment Component (FAC).

Apart from raising ticket fares and freight charges, railway ministry has also considered ways to boost finance in the department.

"Innovative methods to raise additional funds by permitting foreign direct investment (FDI) or by taking the public private partnership (PPP) route and through the floating of bonds are being considered," Hindustan Times quoted Railway Minister Sadanand Gowda.

He said that the decision on whether or not to hike passenger fares would only be finalised by Modi, who is said to against the hike, as he wants the new government to run on its agenda of not hiking rail fare. Modi does not want to burden people, already facing the wrath of inflation, with high fares in the first budget of his government, according to reports.

Financial support

In the meeting with Jaitley, Gowda has sought financial support from the Finance Ministry through allocations of more funds than usually granted. Along with it, he has suggested that a safety fund be created, which will run on the safety cess, added to the rail fare.

According to the Business Line, the safety fund was once brought into practice during the reign of Atal Bihari Vajpayee government.

Considering the financial pressure, Gowda also sought an increase in the Gross budgetary Support for the coming fiscal year. As in the last fiscal year, the railway ministry was allocated a little more than the sought amount which was ₹45, 000 crore, and instead got ₹25, 000 crore.