NEW DELHI: Ahead of the proposed railway budget for 2013-14, Railway Minister Pawan Kumar Bansal on Wednesday announced a fare hike that will take effect from January 21 midnight.

Addressing a press conference here, Bansal said that having hiked the railway fares now, the government will not increase the tariff in the budget.

"Train fares will be hiked from January 21 for all passengers, including the AC-1 and AC-2 tier passengers who were affected in early 2012. The hike will be two paise per km to 10 paise per km across classes. All fares will be rounded off to Rs 5, and there will be no fare hike in the Railway Budget," he said.

Justifying the hike, Bansal said passenger segment losses are likely to touch Rs 25,000 crore in the current fiscal.

"Input costs have increased immensely while rail fares have remained stagnant. In fact there was a decrease in lower class fares. Given economic slowdown, we have not been able to so far achieve this year's targets in either freight or fare side," he added.

He said that the slowdown has further impacted railways' earnings.

He further said that extra revenue earned through the fare hike will be used to maintain cleanliness and safety.

This is the first railway fare hike in ten years.