Rail Budget 2014: No hike in fares; periodic fuel price-linked passenger fare hike to continue

The budget did not raise fares as the government had already effected a steep hike in the run-up to the budget last month. However, periodic revision will be made to pass on higher fuel costs.

The June revision of fares is expected to net the Railways Rs 8,000 crore. Railway minister DV Sadananda Gowda said there will be periodic revision in fares that “will be linked to revisions in fuel prices in order to insulate the Railway revenues from fuel cost escalation.”

This fuel adjustment had been proposed by the UPA government in the last Railway budget. The Fuel Adjustment Component (FAC)-linked tariff revision is to be done bi-annually in sync with movement in fuel costs.

In the June revision in freight rates, the FAC was 1.4% in a total increase of 6.5%. In the case of passenger fares, FAC component was 4.2% over and above the 10% increase in fares.