Train fares are likely to be hiked. Giving broad hints about the proposed hike, railways minister Dinesh Trivedi said on Wednesday that one of the options being considered was "dynamic pricing", which is elastic and based on demand. Dynamic pricing means is prices of train tickets would go up when the demand increases. 

The fares in a particular sector might be different or higher as compared to other regions. "At the same time, we do not want to create imbalances within regions. The solutions are not all that simplistic," Trivedi told an Economic Editors' conference.

"The entire issue has to be dealt with intelligently and we are applying our minds," he said.

Hinting that an across-the-board hike was not being ruled out, he pointed out that 91% of revenues from passenger fares are accrued from the unreserved category of passengers.

"Poor are paying seven times more fare on road transport as compared to the railways. What this means is that they can afford to pay more," the railways minister said.

Bolstering his argument, he pointed out that that the chorus demanding a fare hike was coming from all sections: The parliamentary committees, railway federations and the media. "Even so, a decision to hike the fares must have a logic and a rationale," Trivedi said.

"The lowest train fare between two stations continues to be R1, while one platform ticket costs Rs 3," the minister pointed out.

Railways had increased freight charges by 6% on October 15 under dynamic freight policy. "We have done it in freight three days ago and it has not hurt anybody," Trivedi said.

The railways generated internal resources of Rs 18,928 crore in 2007-08; reduced to Rs 11,505 crore in 2008-09 and Rs 2,228 crore in 2009-10 - improving marginally to Rs 6,956 crore in 2010-11 and is estimated to increase to Rs 12,318 crore in 2011-12.