Congress leader Pawan Kumar Bansal, who replaced the Trinamool Congress' Mukul Roy as railway minister, has indicated a passenger fare rise sometime soon.
Expressing concern on the skewed rate structure, he said it needed to be rationalised.
The railways are in the process of forming a Rail Tariff Authority but Bansal said the fare rise would be independent of the formation.
"While taking care of the physical health of the railways, the financial health should also be taken care of.
"Though we are increasing revenue and our efficiency, finances are a matter of concern," he said.
The ratio of rates in India is 0.32, whereas in China it is around 1.32, the minister added.
This means the railways earn 32 paisa from a passenger vis-a-vis Rs 1 from freight.
Discussion is on within the Railway Board about RTA.
Only after the framework is ready and the Cabinet clears it will this be in place.
Vinay Mittal, chairman of the Railway Board, said the proposed authority was meant to depoliticise the fixation of fares.
As of now, the ministry has complete authority to change fares and freight rates.
The Cabinet is also likely to consider a policy on first- and last-mile rail connectivity projects, including those to ports, on Friday.
The railways expect to attract investments from stakeholders in rail infrastructure.
According to a senior railway official, "With stakeholders investing, we will work on a model to generate healthy returns for the private parties."
The ministry has identified projects for providing first and last mile connectivity to coal, power and steel plants.