Passengers travel on an overcrowded train at Loni town in the northern Indian state of Uttar Pradesh July 8, 2014. [Representational Image]Reuters

In order to boost its revenues, the Ministry of Railways may propose a hike of around 10 percent in passenger fare in the upcoming rail budget, scheduled to be announced on Feb. 25.

The railway ministry is mulling an increase because the Indian Railways have seen a decline in both passenger and freight earnings, PTI quoted railway ministry sources as saying.

Railways conducted a study by Axis Capital that recommended a 10 percent hike in passenger fares and a five percent hike in freight charges. The hike in passenger fares may be for selected routes.

The ministry is considering various other options as well to help boost the finances of the state-owned enterprise, which is facing a financial crunch. A hike is believed to benefit the railways during the peak season starting March.

Under the rule of BJP-led NDA government, the Railways increased the passenger fares by 14 percent in 2014 and by 10 percent in 2015.

It expected to earn  Rs 141,416.05 crore from both freight and passenger fares, but could collect around Rs 1,36,079.26 crore until January this year.