Being on the right track

Budget funding of Indian Railways infra has to be optimised; more profit centres need to emerge

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The Indian Railways is reportedly planning a modest hike in passenger fares, eyeing an additional annual revenue of around ₹1,500 crore. The first explicit fare increase since 2020 would still exclude ordinary second-class journeys up to 500 km, as well as suburban and season tickets. That is hardly a step one could object to, given that the railways has virtually run a revenue deficit for years on end.

Low-income travellers will be unaffected by the judicious tariff adjustment. Railway revenues have consistently lagged the growth rate of nominal gross domestic product (GDP) by a wide margin. To be sure, the revenue from the heavily subsidised passenger segment grew by a little over 100% between FY14 and FY25, and freight receipts, a trifle above 90%, although nominal GDP expanded by 194% during the period. Railway passenger volumes grew an abysmal 27% in the period, and freight loading an unimpressive 40%. This indicates loss of freight traffic volumes, including container cargo, to roads and ports.