Parl panel urges Rlys to review AC class fares to increase revenue

Noting that the net revenue of Indian Railways has been negligible for 2022-23 and 2023-24, the Parliamentary Standing Committee on Railways has recommended increase in the fare for AC classes by aligning the fares with costs incurred for the service.

In its first report on Demand for Grants (2024-25), tabled in Parliament on Friday, the Committee observed that low revenues from the passenger segment was the “main reason” crippling the growth of net revenue of the Railways.

“The budget estimates for passenger revenues for 2024-25 have been kept at Rs 80,000 crore against freight revenue estimate of Rs 1,80,000 crore. The committee feels that to increase net revenues of the Indian Railways, it is of prime importance to increase its earnings from the passenger segment,” the report stated.

The report said the committee was aware that the Indian Railways was the main means of transport for crores of poor people in the country and the Railways had to incur losses on pricing fares below cost to meet social service obligations.

However, the committee felt that the Railways would do well to make a comprehensive review of its passenger fares in different trains and classes. The report said while ‘General Class’ travel must remain affordable for the masses, the Railways must review its revenues with regard to the AC classes by aligning it with costs incurred to reduce losses in the passenger segment.

The report has also recommended supplying food to passengers at competitive prices and cutting down on subsidies on this account.

According to the report, net social service obligation for 2022-23 cost the Railways Rs 40,190 crore. Major components of social service obligations are pricing of fares below cost, losses on parcel, luggage, postal and catering services, losses on suburban services, etc.

The Railways must undertake comprehensive review of these losses, the report said, adding that further losses on categories like catering services must be eliminated on priority basis.

The committee urged the ministry to endeavour to provide quality food at competitive prices and simultaneously aim to reduce “social service obligations” on account of catering services.