After flexi fare success, rail tariff rejig on the anvil; fare hike likely

The Indian Railways is planning a new route-specific tariff model which is likely to increase fares on certain routes. This comes after the national carrier succeeded in increasing its revenue through the flexi fare system, launched in 2016 on premium trains. 

The new model could be applicable on all trains. “A new tariff model is in the initial stages of discussion. This will be vital for the railways as we are bearing huge losses on passenger side,” said a senior government official. Based on the idea floated, this may be a route-specific model as the railways is running on huge losses on some of them.

With elections round the corner, the plan is unlikely to see the light of day till the next government takes charge.

A Railway Board source indicated this was triggered by a recent study conducted by the National Institute of Public Finance and Policy (NIPFP) on the social sector subsidies borne by the national transporter. NIPFP had suggested the railways go for a passenger fare hike to tide over the financial constraints. The railways spends around Rs 35,000-40,000 crore annual in the form of social sector subsides. 

 

Other than the dynamic fare system, the last effort to hike the fares was taken by D V Sadananda Gowda as railways minister in 2014, when he opted for an across-the-board hike of 14.2 per cent in passenger fares in all classes and a 6.5 per cent increase in freight rates, which was later held back. In 2013, Congress minister Pawan Kumar Bansal raised fares between 2 paise and 10 paise across various classes. 

Union Railways Minister Piyush Goyal has estimated an 8 per cent increase in passenger revenue for the railways during 2019-20 to Rs 56,000 crore, against the revised estimate of Rs 52,000 crore for 2018-19.

“Over the last two decades, the railways has seen about three hikes and one rollback on the passenger side, apart from some minor rationalising of fares. Though we are suffering losses for some routes, the rates across the country for railways are the same,” the official added.

The NIPFP recommendations stated the losses on account of concession in passenger fare, uneconomic branch lines, strategic lines and EMU suburban services may also be considered as social services obligations.