Surge pricing for 131 premium trains to fetch additional Rs 500 crore

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New Delhi | Updated: September 9, 2016 7:19:42 AM

The surge pricing for 131 premium trains launched by Indian Railways will fetch it an additional Rs 500 crore from the passenger segment in FY17, though even this incremental revenue might not suffice for it to meet the annual target of over Rs 51,000 crore.

Rail fare hike,Train fare hike, Rajdhani fare hike, duronto fare hike, Shatabdi fare hikeSources said that the “flexi fare system” for the premium trains would herald further rationalisation of the fares, which will be undertaken at the behest of the proposed by the Railway Development Authority (RDA), which is likely to be set up by December via an executive order. (PTI)

The surge pricing for 131 premium trains launched by Indian Railways will fetch it an additional Rs 500 crore from the passenger segment in FY17, though even this incremental revenue might not suffice for it to meet the annual target of over Rs 51,000 crore. The segment is heavily cross-subsidised from the freight segment, which accounts for more than 65% of the railways’ gross traffic receipts.

Sources said that the “flexi fare system” for the premium trains would herald further rationalisation of the fares, which will be undertaken at the behest of the proposed by the Railway Development Authority (RDA), which is likely to be set up by December via an executive order.

According to the new “flexi fare system”, the base fare will rise 10% with every 10% of berths, sold subject to a ceiling. Since there is almost always excess demand for then births in the premium Rajdhani, Shatabdi and Duronto trains, the actual fare hike, sources said, could be up to 40%. Vacant berths left at the time of charting would be offered for current booking, while tickets under current booking shall be sold at the last price sold for that class, the sources explained.

With the transporter’s passenger revenue trailing the budgeted target (down 8% in April-August) and freight segment reporting negative growth (a slip of 13% in April-August) in a sluggish economy, it is making efforts to up revenue not just by boosting volumes but fare hikes as well. While the Budget target for passenger revenue in FY17 is 12%, in the first five months of the financial year, the growth was just 3.75%.

Passenger fare was last hiked in June, 2014 by the then UPA government; in a pre-Budget move, the fares were then increased up a steep 14.2% across-the-board. For more than a decade prior to that the fares were kept unchanged.

While the revenue is below the budget estimates, the railways, which witnessed constant decline in its ridership since FY14, has seen an upward trend in the number of passengers carried in recent months. It managed to exceed its budgeted target by a modest 0.06% (April-August), and according to sources, the festive season will further increase the passenger volume. The freight loading, on the other hand, continues to behind the targets.

The skewed nature of the railways’ revenue matrix is evident from the fact that it losses from passenger services due to subsidisation of fares, which was around Rs 34,000 crore in FY16 and the “national public service obligations” cost was close to Rs 25,000 crore (the railways’ gross traffic revenue stood at Rs 1.68 lakh crore in the year).

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