Railways planning demand-based passenger fare structure

At present, train tickets are priced on the basis of distance, speed of a train, and categories (like air-conditioned, two-tier, three-tier; and non-AC (second class, sleeper). The Railways will now consider more variables, particularly ‘demand’, according to railway ministry officials.

According to railway ministry sources, some routes experience a crowding with demand outstripping supply. A hike in fares on these routes could fetch the Railways additional revenue from passenger movement .

NIPFP, a finance ministry think tank, is also reported to have suggested that the Railways could consider increasing tariffs after it was asked to calculate the social service obligation of the Railways, which could subsequently be compensated from the central exchequer.

It is not clear when and whether the Railways will decide on the fare hike proposal, which could be politically disastrous, especially in an election year. Railways is the national transporter, meeting the transportation needs of a large segment of population, including the economically-backward sections.

The Railways is looking at other measures as well to lower the impact of subsidy on revenues, including removal of several categories of concessional fares for newer, premium trains.

Railways is not providing these subsidies in new premium trains introduced on routes which already have alternatives like Durantos, Rajdhanis or other Mail and Express trains. Also, for the new Train 18, christened Vande Bharat Express, there was a discussion to provide booking choices to passengers, where they could book a window seat. 

For the next fiscal, the Railways hopes to earn Rs56,000 crore from passenger movement, with bulk of the revenue (Rs52,600 crore) accruing from the non-suburban segment. This reflects an incremental Rs4,000 crore, against the Rs52,000 crore.