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Railway fares might not witness any hike this year too
(Jan 28, 2008)
Speculations about the upcoming Rail budget 2008-09 indicates that the railway passenger fares might remain unaffected this year as well. In fact, according to the Government sources, there had been talks on an-across-the board reduction in fares which might not possibly happen because of the high fuel rates.

However sources say that railway ministry might opt for symbolic cuts in passenger fares like it happened in 2007-08. " We want to maintain a passenger-friendly image and a symbolic cut in railway fare would be a good option," said a railway ministry official.

The symbolic cut in railway fare this year would be similar to rail budget 2007-08, wherein Lalu Prasad, cut down on the fares of non-suburban ordinary passenger and non- super fast mail- express trains by a nominal price of Rs. 1 per ticket. There was also a reduction of 2% to 8% on sleeper and AC class rates.

As per the official figures, around 18% of the railways' operating cost is being spent on fuel since 2005-06. And it becomes quite difficult to reduce the railway fares with the rapidly increasing cost of the crude oil. However such a step to keep the rates same amidst such conditions could dim inflationary expectations.

More than13 million people travel through trains every day in India, which earned passenger revenue of Rs 17,400 crore in the year 2006-07. This comes to 27.6 % of the annual gross traffic revenue of the railways. The passenger earnings that year was raised by only14%. From this, it can be inferred that the rate of growth is barely lower than the nominal growth rate of the GDP for the year. The reason behind the lower rate of growth can be given to the fall in the bookings for upper class tickets in most of the trains, especially in the off-season. The railways have been continuously giving up its high-end passengers to the flourishing airline industry since the past three years.

Any kind of hike in the railway fares might add up in losing a surplus earning of around Rs. 20,000 crore (before dividend) that railways managed to attain in their budget for 2007-08. While preparing the upcoming budget, the Rail Bhawan officials are keeping in view this major point. However, the railway ministry is expecting to maintain a operating ratio at about 78.7% -which was no doubt a great enhancement in the finances of the railways.

This upcoming rail budget 2008-09 as the last budget that Lalu Prasad is about to put forward before the General Elections in 2009, the minister keeps the main objective of keeping the fares low and thus making passengers satisfied.