Reduction in diesel price unlikely to cut Rail fares

| December 22, 2014

NEW DELHI: Reduction in diesel price is unlikely to be passed on to rail passengers as the cross- subsidisation burden on passenger service is still hovering around Rs 26,000 crore.

“It is true that diesel prices have come down two/three times in the last few months but it has not happened beyond that in the entire year. Passengers are already getting benefits as passenger fare is subsidised,” Railway Minister Suresh Prabhu said today when asked whether reduction in fuel cost will reflect on the next fuel adjustment component (FAC)- linked fare revision.

“Freight earning is 2/3rd of total railways earning and 1/3rd is from passengers. Passenger service is cross- subsidised from freight earning,” Prabhu said during an informal interaction with reporters here.

FAC-linked fare revision, which was due in December, will now be effected in the upcoming Rail Budget in February.

However, though diesel cost has come down, the energy bill has gone up by more than four per cent due to the hike in power tariff by state electricity boards. The decision on FAC-linked fare revision is based on both diesel and power cost for that particular period.

According to the railways’ announced policy, fare and freight revision linked to fuel and energy cost are being done twice a year. The last revision was done in June wherein passenger fares were revised by 4.2 per cent and freight rates by 1.4 per cent.

Prabhu gave details of the challenges being faced by the railways, including its deteriorating financial situation and possible solutions to bring the ailing public transporter on the track.

He said efforts are on to reduce the power consumption in the railways by maximising the use of renewable energy.

“We are doing energy audit to know the details of energy consumption as well as ways to reduce energy cost also. We are trying to maximise use of renewable energy like solar power, wind power and other alternative source for supplementing the conventional energy sources,” he said.

Source: ET

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