The economic survey has suggested reduction in rail freight rates to shift the goods traffic from rail to roads, and reduce the overall logistics costs. The survey said that due to the cross-subsidisation of passenger services, railways has kept the freight rates high which has distorted the competition with roads segment, and rationalisation of rail freight rates will improve revenue buoyancy and incentivise a shift of goods transport from roads to rail.
“High freight rates, due to cross-subsidisation, distort competition with roads, inflating commodity and consumer prices, as well as logistics costs. Rationalising freight rates could improve revenue buoyancy, incentivise a modal shift of freight from roads to rail, and increase market share. This, in turn, would stimulate economic activity, green the transport sector, and decongest road space,” the survey said.
Fare hikes reduce freight share to 62% in FY26
As per the survey, the passenger fare has been rationalised on three occasions in the past five years – in January 2020, July 2025 and December 2025 – and consequently, the share of freight earnings in gross traffic receipts has declined gradually from 68% in FY23 to 65% in FY25 and is budgeted to be 62% in FY26.
In August 2025, CAG had recommended that the ministry of railways might critically analyse cost of passenger operations and take steps to reduce its losses in addition to diversifying the freight basket to enhance freight earnings.
Survey list Railways infra push
The survey pointed out to a bunch of initiatives taken by the railways to improve the infrastructure. This includes three corridor programmes for energy, mineral and cement, Mumbai-Ahmedabad High Speed Rail, dedicated freight corridors, and station redevelopment under Amrit Bharat scheme. For instance, 434 projects with an outlay of Rs 11.17 lakh crore have been identified under three corridors and mapped on the PM GatiShakti portal. Of these, 122 projects covering 12,150 km have been sanctioned, and 198 projects spanning 19,779 km are under different stages of appraisal.
“Continued focus on dedicated freight corridors, economic rail corridors under PM GatiShakti, and modern signalling and station infrastructure is improving throughput, reliability and multimodal integration. These infrastructure-led initiatives will be central for reducing logistics costs, and strengthening connectivity,” it said.