The Government is thinking of doing what its erstwhile ally, Trinamool Congress, had steadfastly prevented it from doing — raise railway fares.
This will be in addition to the service tax on air-conditioned or first class travel that is scheduled to be imposed from October 1. Fares in general have not been revised for almost eight years.
A senior Government official told
There is also thinking about setting up a Tariff Regulatory Authority. The Rakesh Mohan Committee had talked about an Indian Rail Regulatory Authority to regulate the Railways as a monopoly supplier of rail services, particularly related to tariff setting. With the increase in the wage bill due to the Sixth Pay Commission, soaring input costs and requirements for massive modernisation, the Railways needs additional funds.
“However, a call has to be taken whether to increase the fare across-the-board or levy surcharges,” the official added. Sources in the Railway Ministry are hoping for some tariff revision. Although passenger fares for First Class, AC 2-Tier and First AC/Executive Class were raised from April 1, the proposal to increase fare in other classes was dropped after a huge protest from then ally Trinamool Congress. However, with the return of a Congressman in the Railway Ministry, expectations of a fare hike have gone up.
This was also evident from the fact that the Finance Ministry and the Railway Ministry have agreed not to extend service tax exemption on fares of AC First Class, Executive Class, AC-2 tier, AC-3 tier, AC Chair Car and First Class beyond September 30. Fares in these classes will attract a service tax at the rate of 3.7 per cent (after abatement at the rate of 70 per cent) from October 1. Service tax at the rate of 3.7 per cent will also be levied on freight.