Fare hike in Rail Budget looks remote

The Rail Budget to be presented tomorrow may continue with the practice of not raising the fares and freight rates but the possibility of imposition of a safety cess may not be ruled out, at least on the higher class fares.

As Trinamool Congress leader and Railway Minister Dinesh Trivedi rises to present his maiden budget he is expected to carry on with the practice of not tinkering with the second class fares like his predecessors, including Mamata Banerjee, over most part of the last decade.

There is speculation that the budget could bring in a safety cess following a recommendation by the Kakodkar Committee report which went into issues relating to safety over the huge railway network.

Union Budget 2012-13: Complete coverage

...

The Committee had suggested a cess to realise money to the tune of Rs. 5,000 crore (Rs 50 billion), to fund projects especially for safety upgradation of signalling and telecommunication systems.

As he does the tight ropewalk, Trivedi may also introduce a mechanism to provide cushion for meeting costs on account of any spike in fuel prices.

There is a suggestion for introducing a fuel adjustment component (FAC) in the basic fare to insulate railways from fuel price hike.

...

Railways shell out Rs 19,000 crore (Rs 190 billion) as part of its fuel expenditure to run its huge fleet of diesel locomotives adding to the total expenditure placed at Rs 70,000 crore (Rs 700 billion) in the current financial year.

Indications are that the Railways have got only Rs 25,000 crore (Rs 250 billion) as gross budgetary support from government despite its demand of Rs 50,000 crore (Rs 500 billion) to tide over its financial crisis.

Railways had got Rs 20,000 crore (Rs 200 billion) as GBS in the current fiscal.      Trivedi could also spell out plans for internal generation of fund from additional resources like commercialisation of stations.

...

Since railways have already increased the freight rate on March 6 for all commodities ahead of budget, there may be no further hike in any freight on goods, say highly-placed sources in the Ministry.

The budget would strive to allocate a substantial amount of fund for the depreciation reserve fund and safety fund which have suffered in recent years in the wake of railways focus on other priority areas.

The Rail Budget could announce two new coach factories in Kolar in Karnataka and Kutch in Gujarat. Incidentally, both the Ministers of States for Railways K H Muniyappa and Bharatsinh Solank come from these two states.