Indian Railways has proposed a modest fare hike for passengers from July 1, from which suburban fares have been exempted to protect daily commuters. The railways contend that the hike is much less than those in 2020 and 2013, and is prompted by the Parliamentary Standing Committee on Railways’ recommendation to increase earnings from the passenger segment to boost revenues.
Three questions arise. First, how the railways can achieve social balance by applying the affordability principle, thereby sparing general-class travellers and limiting the increase to AC classes. Given the highly subsidised passenger services, the railways recover 39 percent of costs from non-AC travel, whereas the AC classes generate a surplus of a mere 3.5 percent. The viability of a steeper rise in AC fares must be examined, considering that the demand for AC first and second class berths has increased despite the prices nearly equalling airfares.
Secondly, how can the railways justify even a minimal fare hike for general class passengers without ensuring them basic amenities? In 2024-25, of the 715 crore train passengers, a whopping 634 crore travelled on unreserved compartments. Thousands of viral videos on social media attest to their pathetic conditions of travel—severely overcrowded carriages, unusable toilets and dry water taps. Nearly all these passengers come from the bottom of the economic pyramid. The government’s social service obligations should recommend holding the rate hike for this class till the conditions improve—such a hike risks marginalising crores of Indians who have no viable alternatives.
Thirdly, funding the railways’ need to maintain and modernise. For this, it should revisit non-fare revenue models and make freight operations more efficient before burdening poor travellers. The pricing model for top-end services can be revised while keeping basic travel affordable. Modernising stations under the Amrit Bharat Station Scheme should help convert them into revenue hubs through advertising and enhanced services, as well as increasing private partnerships. Curbing delays can cut costs, but track renewal in the world’s fourth largest network is woefully inadequate, resulting in superfast trains chugging well below their optimum speeds. Despite this, the railways’ estimated capital expenditure this fiscal remains unchanged from the last. A new-age rail system must also focus more on long-term, multilateral infrastructure financing. As for the fare policy, it must hinge on a single criterion—mass affordability.