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Faced with mounting deficit of over Rs 20,000 crore in the passenger segment, Railways is keen on raising passenger fares between 5-10 paise per km in the coming months to generate about Rs 4,000 crore revenue.

The hike could come close on the heels of Railways finalising the broader contours of the proposed Rail Tariff Authority (RTA), which would be placed before Cabinet in January.

"The passenger fares should be hiked by 5 paise to 10 paise per km in the Rail Budget (2013-14). The financial condition of Railways is not good. We need funds, otherwise Railways will not survive," Minister of State for Railways KJ Surya Prakash Reddy told PTI. The other Minister of State Adhir Ranjan Chowdhury also advocated an urgent hike in fare.

"There is an urgent need for passenger hike as Railways’ financial condition is bad." Railways has incurred a loss of Rs 22,000 crore in the passenger segment this year, an increase of deficit of Rs 4000 crore from the last year.

However, a senior railway official said, "A decision is yet to be taken whether to increase the passenger fare before the Rail Budget or announce it in the budget." Asked about the quantum of possible hike, the official said, "It is likely to be between 10 per cent and 15 per cent," something which former Railway Minister Dinesh Trivedi had proposed in the last Rail Budget.

Reviewing the performance of Railways, the Prime Minister’s Office has asked the Chairman Railway Board to finalise and submit its recommendations on the constitution of proposed RTA by December 31.

RTA is expected to suggest the quantum of hike in passenger fare and freight tariff. "We are working on it (RTA)," said Railway Minister Pawan Kumar Bansal when asked about the progress on RTA.

Taking note of the financial condition of the national transporter, Bansal had also hinted for a possible fare hike in near future while taking over Railway Ministry two months back.

Railways has earned Rs 67,879.95 crore till end of October as against the target of Rs 70,147.74 crore, 3.23 per cent less than the budgeted provision. On passenger segment, Railways earned Rs 17,691.43 crore as against the target of Rs 18,196.46 crore, a decrease of 505.03 crore.

Earnings from goods have also witnessed a decline as the national transporter could earn Rs 46,805.48 crore as against the target of Rs 48,580.09 crore till October.
Keeping in view of the shortfall trend, the plan outlay for the current fiscal has been downgraded from Rs 60,100 crore to Rs 55,881 crore.

"There are so many pending projects which railways could not complete because of severe scarcity of funds. We also need funds for safety upgrading and improvement of passenger amenities," Reddy said.

Railways has 347 ongoing projects under new lines, gauge conversions and doubling having a throwforward of about Rs 1.47 lakh crore. "If you want projects to complete then you need funds. So from where will the funds come? Reddy asked, adding, "People have expectations from the Railways."

Expressing concern over the deteriorating financial health of Railways, All-India Railwaymen’s Federation General Secretary Shiv Gopal Mishra said, "Railways should not wait for the Rail Budget to announce fare hike. It should be announced without much delay as its financial condition is worsening."

The passenger fares in general, sleeper and AC III classes have not been hiked for the last nine years. Though Railways had proposed 15 per cent passenger fare hike in the 2012-13 Rail Budget, it was rolled back with the resignation of Trivedi.