Title - Railway officials make a case for linking AC, Sleeper class fares to fuel price

New Delhi, Oct. 3:  Railway Ministry officials are building a strong case to implement the Fuel Adjustment Component in the passenger fares.

This, however, could be initially restricted to long-distance trains and to AC and Sleeper travellers.

Fuel Adjustment Component is the fuel-linked tariff component for train services, and has been implemented on freight services.

While a final decision is still awaited for fares, given the political sensitivity of the issue, many Railway Ministry officials told Business Line that the decision was “fluid, but under active consideration.”

Rs 1,200 Croe loss

Indian Railways has taken an extra hit of about Rs 1,200 crore on account of increase in fuel cost in the first six months of the current fiscal.

“Now is a small, but key time window for the FAC decision on passenger fares to be taken and get some financial benefits for the remaining part of the fiscal. The more we delay, the more difficult it will be for us to implement the decision with elections ahead. The key decision under consideration is to implement FAC on passenger services,” said a Ministry official, requesting anonymity.

This is a reformist proposal which has already been passed in Budget this year.

Delay explained

The delay in decision on FAC — beyond October 1 — happened primarily because there are political implications of this decision. However, the official stand of the Railways has been that the Budget did not specify a review in six months.

“If we had to implement FAC only on freight, that decision would have simply been taken from October 1,” explained the official.

Incidentally, Railways did increase the level of busy season surcharge on freight segment from October 1 to account for increase in various input costs, excluding the increase in fuel cost.

Meanwhile, the Ministry has taken two steps recently, which are expected to reduce losses in passenger services without any direct announcement of passenger fare hike.

They include adding extra income verification layer for Izzat scheme users from October 15.

Izzat is one of the most-subsidised passenger service scheme which allows workers from the unorganised sector with an income below Rs 1,500 a month to get a monthly season ticket for Rs 25 and travel up to 150 km distance in trains.

Tatkal services

Simultaneously, Railway Ministry has decided to introduce Tatkal services in passenger trains, while asking zonal Railways to decide the trains with over 60 per cent occupancy and time of implementation.

But before implementing Tatkal scheme, the issue will be discussed with the Ministry.

The new trains where Tatkal will be introduced will be notified about one-and-half-months before they begin.