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Government likely to hike rail fares

The railways may boost rail travel fares by 2 to 10 per cent in its upcoming railway budget to help it through financial difficulties, a domestic daily said on Friday.

"Railway Minister Mamata Bannerjee has apparently agreed to consider a modest two per cent hike in second class fares on condition that a special safety cess (tax) of 50 paise per litre would be levied on diesel," the Business Standard said.

It said the highly-subsidised lower class fares were only likely to be increased by two per cent, while upper class fares would see a 10 per cent rise in the federal railway budget due to be presented in parliament later this month.

The railways follows a system of cross-subsidisation of railways with upper class fares kept high to subsidise cheaper lower class fares.

The newspaper said Prime Minister Atal Bihari Vajpayee had persuaded the minister of the need to raise fares during a meeting on the budget late on Thursday.

Earlier this month, Vajpayee had said a hike in railway fares was inevitable following pressures on government finances after last month's earthquake that devastated Gujarat.

Bannerjee, whose Trinamool Congress party is a key ally in the federal coalition government, has opposed a hike in rail fares for fear of upsetting voters ahead of provincial elections in her home state of West Bengal.

The newspaper said the railways could raise Rs 7 billion from an anticipated six to seven per cent growth in traffic while another Rs 3 billion would be generated by the fare hike.

The two per cent increase in lower class fares would help it realise Rs 1.6 billion while the rest would be made by the increase in the upper class rail fares, it added.

It said the diesel tax of 50 paise would generate Rs 15 billion and help the railways enhance its safety infrastructure.

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