Indian Railways increased passenger train fares by up to 4 paise per km from January 1. The fare hike—the first in the last five years—is applicable on all non-suburban trains.

The fare hike will be applicable to all tickets bought on or after January 1.

How much difference will the fare hike make? Remember, the government-run enterprise has been reeling under mounting losses and poor operating ratio.

“Indian Railways continues to incur losses in passenger segment under social service obligations, like- on account of concessions in passenger fares, on EMU suburban services, on uneconomic branch lines, on strategic lines, due to pricing of fares below cost etc,” Railways Minister Piyush Goyal had informed Lok Sabha in a written reply in December 2019.

Railways incurred a loss of Rs 31,128 crore in 2017-18 on account of pricing of passenger fares below the cost of operations, according to government data. These losses stood at Rs 25,561 crore in 2016-17 and Rs 22,262 crore in 2015-16. During 2017-18, Indian Railways recorded its worst operating ratio in 10 years at 98.44 percent, as per the latest report by the Comptroller and Auditor General.

Stacked against these unflattering numbers, the latest increase in fares is expected to translate into an additional annual revenue of around Rs 2,300 crore for Indian Railways. That does provide some relief, but will not significantly help. The fare revision applies to trains that carry just 34 percent of the total passenger traffic.

In other words, the fares for suburban passengers and season ticket holders, which constitute the lion's share of total passenger segment, have not been raised. The last revision for passenger trains was done in June 2014 when fares were raised by 14.2 percent across all classes.

“In order to expand passenger amenities and facilities at railway stations and trains, it has become imperative to increase the fare marginally without overburdening any class of passengers. Further, the burden of the seventh Pay Commission on Indian Railway has necessitated rationalization of fares. Fare revision will help in channelising the fast modernization of Indian Railway,” Railways said in a statement.

In 2018-19, passenger traffic on Indian Railways has grown 1.8 percent from the previous year. Passenger earnings grew 5 percent at Rs 51,066.65 crore.

Conventionally, Railways has tried to compensate the losses incurred in passenger and other coaching services through a process of ‘cross-subsidization’ from revenues generated in the freight segment. However, it has also implemented steps like Premium Tatkal Quota, flexi fare scheme, among others to boost its earnings.

In the non-AC segment, ticket prices for ordinary trains have become expensive by 1 paise per km and the fares for mail or express trains have been hiked by 2 paise per km. All AC train fares are now costlier by 4 paise per km.

First Published:Jan 2, 2020 6:19 AM IST