Indian Railways on Sunday announced hike in passenger fares for AC coaches and non-AC passengers on Mail and Express trains by 2 paise per kilometre. The price for train tickets for ordinary class travel has also been increased by 1 paisa for every kilometer of travel beyond 215 kms. Additionally, for a 500 km journey in non-AC coaches, passengers will have to pay only 10 rupees extra. These fare changes will be effective from December 26, and will help railways garner about Rs 600 crore of extra revenues in the current financial year, the rail ministry said.
Rationalising the Surge
In a statement, the ministry said that the fare hike is on account of higher manpower cost. “Railways has expanded its network and operations significantly over the last decade. To cater to a higher level of operations and to improve safety, it is increasing its manpower. Consequently, manpower cost has increased to Rs 1.15 lakh crore. To meet this higher cost of manpower, railways are focusing on higher cargo loading and a small amount of passenger fare rationalisation,” it said.
Categories like suburban and monthly season tickets have been spared from the latest fare hikes.
This is the second instance of passenger fare increase by railways this year. In July, fares were raised across ordinary non-AC, mail/express trains (AC and non-AC) and first class travel.
Efficiency Challenge
To be sure, a bulk of the railways’ revenues are derived from freight services which account for about 65% of its total earnings. The remaining 35% is derived from passengers/coaching, parcel services and non-fare revenue streams.
In a recent report by parliament panel, the ministry had informed that the last revision of freight rates was
undertaken in November 2018. Since then, there has been no increase in freight rates despite annual rise in operational costs have increased.
“The tariff policy of Indian Railways has traditionally been one of restraint with regard to increase in passenger fare. Indian Railways continues to incur losses every year by performing a variety of un-remunerative services, which imposes a heavy burden on railways’ finances,” the report noted.
Experts said that the fare rationalisation seems modest, targeted, and largely protects suburban commuters and short-distance ordinary class passengers. “An increase of Rs 10 over a 500 km non-AC journey is hardly burdensome, especially when seen against sharply rising manpower, pension, and operating costs,” said Lalit Chandra Trivedi, former general manager, East Central Railway.
In FY25, the railways’ operating ratio, which is a percentage of gross working expenses to gross earnings, stood at 98.9%, indicating poor efficiency and low surplus. The operating ratio for FY26 is projected to be 98.43%, which is marginally better than last year. The transporter is expecting passenger traffic of 7.6 billion in FY26, a slight jump from nearly 7.3 billion passengers carried in FY25.