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Indian Railways to Raise Fares 14% to Narrow $4.5 Billion Loss

May 16 (Bloomberg) -- Indian Railways said it will raise passenger fares by 14 percent, as the oldest network in Asia seeks to narrow a loss exceeding $4.5 billion that stems from below-cost prices.

Freight rates will rise by 6.5 percent, including a fuel price-related charge, the state-run rail company said today in an e-mailed statement. The new charges will take effect May 20. The company decided to link passenger and freight tariffs with fuel prices for the first time in February 2013.

Fare increases are a politically sensitive issue in Asia’s third-largest economy, where creaky infrastructure and lack of alternatives mean many poor people commute by train. About 13 million people ride Indian Railways each day. The company has a workforce of 1.54 million people, according to its website.

The passenger-fare increase is above the rate of inflation. India’s consumer-price index climbed 8.59 percent year-on-year in April.

The announcement of the higher fares came on the same day as the Narendra Modi-led Bharatiya Janata Party had the biggest victory in 30 years in an Indian national election.

The world’s third-largest rail network is working to curb losses as it seeks an investment of 14 trillion rupees ($238.2 billion) by 2020 to upgrade and expand facilities. The nation has a track network of about 65,000 kilometers (40,000 miles), while China plans to expand its network to 120,000 kilometers from 91,000 kilometers in the five years ending 2015.

Indian Railways, which plans to spend 452.6 billion rupees in the fiscal year ending in March, 2015, won’t change reservation fees, it said.

To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net Dick Schumacher

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