Will the Railways review subsidy on passenger fares?

Indian Railways is offering a 47% subsidy per ticket of Rs 56,993 to keep train travel affordable. Now, the Parliamentary Standing Committee on Railways has recommended the government-run carrier to review losses due to social service obligation, including fares below cost.

Passenger fares remain a sensitive issue as railways remain an affordable mode of transport for the masses.

The Standing Committee, in its report submitted on December 13, said that Indian Railways should consider larger social and national interests while formulating its policies and undertakes certain non-economic activities in the passenger service sector to provide affordable transport facilities to various sections of the society.

“Indian Railways is also operating some non-economic lines. The losses incurred on this account are social service liabilities. The net social service liability for 2022-23 was Rs 40,190 crore,” the committee said.

The main components of social service liabilities are fares below cost, losses of parcels, baggage, postal and food services, and losses of peripheral services.

The committee said that to limit these losses, Indian Railways should undertake a comprehensive review of these losses.

“Further losses in categories such as food services should be eliminated on a priority basis. The committee has urged the ministry to make efforts to provide quality food at competitive prices and at the same time aim to reduce the social service liabilities of food services,” the statement said.

The committee has also called for increasing the fares of AC coaches to hide the losses.

Will the railways take a bold step? According to experts, fares and subsidies offered by the railways are a politically sensitive issue and all governments have been cautious on the issue.

During the Covid-19 lockdown, Indian Railways suspended passenger trains and raised the minimum ticket price from Rs 10 to Rs 30. This move was to discourage overcrowding of passenger trains during the pandemic, and the fare hike continued for three years. under increasing pressure and passenger complaints, public transport downgraded in February 2024 fare up to 10 rubles.

For AC services of trains like Shatabdi, Rajdani and Duronto, Indian Railways introduced dynamic pricing in 2016, under which the base fare will increase by 10% for every 10% of reserved seats on these trains, with a 50% increase in the original fare. The aim and objective of introducing dynamic fare trains is to enable rail users to travel in a shorter time by paying higher fares during certain periods when there is a big rush.