Facing a cash crunch, railways has decided to increase passenger fare by about 2 per cent for the second time this year to offset additional financial burden of more than Rs 1200 crore arising out of the increased fuel and power cost.

While the passenger fare hike would be effected from October 7, a parallel hike of about 2 per cent in freight would also be revised from October 10 under the fuel adjustment component. A passenger will have to shell out about Rs 20 more for a Rs 1000 ticket from Monday. The revised fares will also apply to tickets issued in advance for journey to commence on or after October 7.

The hike in passenger and freight tariff would help railways mop up about Rs 1,250 crore in the last six months of the current fiscal, sources in the ministry said.

The suburban and non-surban fares would, however, remain untouched and there will be no change in reservation and superfast surcharges. The decision on the fresh round of hike has been taken under the system of fuel adjustment component (FAC) about which an announcement was made in the 2011-12 rail budget.

Railways has taken into account the additional burden of 7.3 per cent increase in diesel price and about 15 per cent in electricity hike. While the fare of AC and sleeper class will be increased by about 2 per cent, the freight rate will go up by 1.7 per cent, as per the decision.

Railways has imposed 15 per cent levy as the busy season charge on all commodities from October 1 and the FAC-linked revision is likely to take effect from October 10.

According to the budget proposal, the fuel component is segregated from tariff as FAC and the railways is expected to revise the passenger and freight tariff after every six months taking into account the input cost and the prevailing market condition.