The Parliamentary Committee on Indian Railways has directed the national transporter to review the fares of AC coaches and align them with the costs incurred to improve revenue from the passenger segment.
Indian Railways aims to improve revenue and continue to be affordable for general coaches as it prepares to reduce losses in the passenger segment.
The Parliamentary Standing Committee on Railways has stated that there is a need to review the fares of air-conditioned (AC) coaches due to the loss of revenue from the passenger sector as compared to the freight sector. This has affected various aspects of Indian Railways.
Revenue loss of railways
Referring to its first report on subsidy demand (2024-25), the Standing Committee on Railways has estimated a revenue of Rs 80,000 crore for the passenger sector as against Rs 1.8 lakh crore from fares. “The total revenue of Indian Railways is negligible for 2022-23 and 2023-24. Further, the budget estimate of net revenue for 2024-25 has been pegged at Rs 2,800 crore,” the report observed.
The report emphasized the importance of increasing revenue from the passenger segment for railways for which it suggested a review of fares across classes. A standing committee headed by BJP MP CM Ramesh has also suggested that AC class fares should be commensurate with operating expenses to reduce losses.
However, Indian Railways is committed to maintaining affordability for general classes as it is the most useful mode of transport for millions of passengers across the country and simultaneously increases the cost by reviewing the operating costs of passenger trains.
Committee’s observations
The committee has made various suggestions to reduce the financial burden and improve revenue sources. It suggested eliminating catering services and instead bringing in high quality food at competitive prices as it showed inefficiencies in the catering segment.
On the other hand, the Ministry of Railways clarified that concessions of up to Rs 56,993 crore every year, even in the form of 46% discount on each ticket, would be difficult to give concessions to senior citizens.
“Furthermore, there should be continuous engagement with state governments at the highest level to address land-related issues and guarantee timely land acquisition. Indian Railways may also enlist the support of local parliamentarians to coordinate with state governments for efficient and timely land acquisition,” it also said.
The committee has emphasized on the need for major changes to modernize the Indian Railways. Taking the view that large capital investment is necessary for this, the Ministry of Railways has been instructed to find an option for more participation of the private sector to invest in railway infrastructure.