Marginal rail fare hike not enough to cover rise in input costs: Experts

The likely increase in the passenger fares will have a marginal or no effect on the financial health of the Indian Railways, according to experts.

- MANU KAUSHIK

The below 1% increase in fares after a gap of five years will not be sufficient to compensate for around 2-3% annual increase in the input costs on the passenger side, they pointed out.

"Indian Railways has long operated with a significant gap between cost and recovery in the passenger services. Though the likely increase in passenger fares will correct distortions and marginally reduce cross-subsidization from freight earnings, it will not be sufficient to fill the gap between the costs and revenues on the passenger side," a former railways official said.

Historically, the railways has used operational surplus on the freight side to cross-subsidize losses in the passenger segment.