IRCTC train ticket prices to go up soon! How Indian Railways plans to make passengers give up their subsidy

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Published: July 10, 2019 1:27:00 PM

The idea is to urge passengers to voluntarily forego the subsidy component of their train ticket fare for a better, modern rail system.

Indian RailwaysIndian Railways, on an average, collects only 57% of the cost of passenger transport operations from tickets.

IRCTC train ticket prices to go up soon! Piyush Goyal-led Indian Railways is currently finalising an option that will allow passengers to voluntarily give up, either a part or the full subsidy component on their train tickets. Financial Express Online had exclusively reported about the initiative being part of Railway Board’s 100-day roadmap for the national transporter. The national transporter, on an average, collects only 57% of the cost of passenger transport operations from tickets. Thus, if a passenger gives up the subsidy, the proposed class-wise calculations, applicable on the base fare, will make train journeys in popular classes like AC-2 tier slightly more expensive, states an IE report.

The idea is to urge passengers to voluntarily forego the subsidy component of their train ticket fare for a better, modern rail system. The sources quoted in the report said Indian Railways’ option is different from the one for LPG cylinders, which powered Modi government’s Pradhan Mantri Ujjwala Yojana. While the scheme promised to provide one cylinder to a home in a village for every subsidy foregone, the same will not be applicable in Indian Railways. They also said the subsidy that is provided by Indian Railways is not from the general exchequer but a cross-subsidy from railways’ own freight business.

The incentive involved in giving up the subsidy has been discussed by the policymakers in Indian Railways. Sources are of the view that giving up the subsidy on a ticket cannot guarantee a confirmed ticket and if it does, it would be same as Tatkaal scheme with a new name. One of the options suggested by them is reservation forms at station counters to have the option for people to opt for the “give it up” choice. The system will be easier if applied online on IRCTC, as is prevalent now in concessions for senior citizens. Since July 2017, when Indian Railways introduced the “give it up” scheme for senior citizen passengers to forego their concession either in part or full, the option was availed by 48 lakh passengers, earning the railways an extra sum of Rs 78 crore.

The national transporter recovers only around 38 paise per rupee spent on a km of passenger travel. After being computed class-wise, the effect is distributed and a per-seat subsidy worked out. As per the calculations so far, the most popular classes of travel – AC Chair Car and AC-III tier – see a modest profit after recovering their traction cost. However, policy makers are of the view that ticket prices without subsidy in the upper AC class, might make them closer to the cost of air travel, especially in case of long distances. In case of short distances, the competition may be from bus fares. But, after giving up the subsidy, the cost of the ticket will not double, an official said.

According to sources quoted in the report, for the suburban network, the option will be to give up subsidy on the monthly season ticket that is highly under-priced. This recovers cost of only 15 trips in a typical origin-destination sector. In cities like Mumbai, where monthly season ticket is popular, the target for ‘give it up’ option would be those passengers who can afford to buy tickets at full cost.

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