Fare increasing

Rail fares may rise substantially to finance mega projects

Chetan Chauhan, Hindustan Times
New Delhi, January 08, 2013

Rail fares may rise substantially with the Planning Commission raising a red flag over need to generate revenue to fund railways' two ambitious projects - high speed bullet trains and dedicated freight corridor.

Planning Commission deputy chairperson Montek Singh Ahluwalia is said 

to have told railway minister Pawan Kumar Bansal on Monday that the money required to build the freight corridor would be around Rs. 1 lakh crore - almost four-time higher than the ministry initial estimate of Rs. 27,000 crore.

Railways do not have internal resources to fund a project of such a magnitude. The government is not in a financial position to provide so much of money as finance minister P Chidambaram has already announced that allocations for different ministries would not be jacked substantially.

So, the plan panel, which allocated money to different ministries based on finance ministry's consent, wants railways to raise its own resources to fund the mega-project now delayed for years. And, the panel wants ministry to start preparations for increasing its financial kitty.

The way-out, according to the panel, is hike in rail fares across categories keeping in view the rising energy costs and ground realities. The panel officials say top officials of the railway ministry agree with their view and upward revision of rail fare can be expected soon.

The panel believes that the fare increase would also help to fund the high cost bullet trains, which the ministry wants to introduce in public private partnership mode by 2015. Seven corridors have been selected for conducting feasibility studies including Delhi-Mumbai rail-link.