India Finance News

Railways hikes passenger fares after five years, pass holders spared

After a span of five years, the Indian Railways have increased passenger fares by 1 to 4 paisa across various classes, excluding suburban and season tickets, with effect from January 1, 2020. The ‘marginal’ hike is expected to bring in another Rs 2,300 crore to the revenue of the cash-strapped national transporter.

For ordinary non-air conditioned (AC) classes, the fare increase will be 1 paisa per kilometre and in mail/express non-AC class, the hike will be 2 paisa per kilometre. On the other hand, for AC classes the fare hike will be 4 paisa per kilometre.

The hike will be applicable for only 34 per cent of the travelers on Indian tracks, while looking into the affordability concerns of daily commuters, the Railways restrained from hike for passengers over suburban sections and season ticket holders, which constitute 66 per cent of its total passengers.

This will be only a minor relief for the railways, that was staring at an operating ratio of 121 per cent for the first six months of the financial year, against 113 per cent during the same time in 2018-19. Operating ratio is the amount the Railways is spending to earn each rupee and hence lower the operating ratio, better the financial health of the national transporter is expected to be. For the current financial year, operating ratio was targeted at 95 per cent, as against 97.29 per cent achieved in 2018-19.

The last hike was in 2014, soon after the NDA government came to power, when the ministry was headed by Sadananda Gowda increased the passenger fares by 14.2 per cent in all classes. The current hike is coming at a time when the national transporter was bearing 73 paise in cost for every 10 kilo metre travel, while was charging only 36 paise to passengers.

“The additional revenue will be used to augment passenger experience through modernization of coaches and improved station infrastructure,” said a senior Railways official.

Investments to the tune of Rs 13.7 trillion is expected to improve the IR by FY 25, while a total of Rs 50 trillion may be infused to improve its infrastructure by 2030. In a notification, the Railways said the increase in fare will be on tickets bought on or after January 1, 2020 and no excess fare will be charged from passengers who have booked tickets before the date.

Even after the 2014 hikes, the Railways came with rationalization of rates across segments, that included schemes like flexi fare, similar to the aviation industry and cab-based applications. The flexi fare scheme, that is applicable in premium trains like Rajdhani, Shatabdi and Duronto Express trains was expected to add over Rs 500 crore to the revenue of the national transporter. Till April to December 2020, passenger earnings in reserved segment saw a rise of 6.21 per cent to Rs 27,469 crore compared to last year, while the number of passengers too saw a 5.07 per cent increase.

Tuesday’s notification added that a similar hike will be applicable in trains like Rajdhani, Shatabdi, Duronto, Vande Bharat, Tejas, Humsafar, Mahamana, Gatimaan and other special trains. Last week, the Railway Board chairman V K Yadav had said that rationalization of passenger fares is being planned by the railways.

Source: Business Standard

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