Railways may hike passenger fare, to earn Rs 700 cr more in FY26

Going by the Railways’ projection of passenger kilometres (PKM), the likely hike starting July would generate an additional revenue of around `700 crore for the remaining period of the current financial year 2025-26. For a complete FY26, the additional revenue generated would have been more than `920 crore.

According to the Railways, the total projected revenue from the passenger segment for FY26 is `92,800 crore, on the expectations of an increase in passenger numbers. In FY25, when over 736 crore travelled by trains, the total passenger revenue was `75,215 crore.

The Railways generates nearly 65% of its total revenue from transportation of freight. The passenger segment contributes almost 30%, and the rest is from sundry sources.

In the passenger segment, premium AC Classes — such as AC First Class, AC 2-tier, AC 3-tier, and AC Chair Car — contribute almost 54% of total passenger revenues. But in terms of number of passengers, AC Classes account for only 4.8% of the total, while Sleeper and General Classes together carry almost 37 per cent. Suburban trains account for a whopping 57% of passengers.

The last revision in passenger fares happened in January 2020, when the Ministry increased the fare of Non-AC class (Mail/ Express), also known as Sleeper Class, by two paisa per km and of AC Classes by four paisa per km. There was no increase in suburban fare up to 80 km, or season tickets.

The suburban section fare was further rationalised in May 2022, when the single journey basic fare of AC EMU (air conditioned electric multiple unit, a type of train used in suburban railway networks such as Mumbai) was reduced by 50%. The single journey basic fare of First Class was also cut by 41-49%.

In December 2024, the Standing Committee on Railways recommended the Indian Railways review the revenue from the AC Classes and align it with the cost incurred to reduce losses in the overall passenger segment.

The Railways has been heavily subsidising passenger services. According to a parliamentary committee report, the suburban services recover around 30% of costs and non-AC travel 39%, while AC travel generates only a marginal surplus of 3.5%.

“The Committee feel that to increase net revenues of Indian Railways, it is of prime importance to increase its earnings from passenger segment. The Committee are aware that Indian Railways are the main means of transport for crores of poor people and they have to incur losses on pricing fares below cost in wake of Social Service obligations. Committee feel that ‘General class’ travel must remain affordable for the masses but at the same time the Committee urge Indian Railways to review its revenues with regard to AC classes by aligning it with costs incurred to reduce losses in passenger segment,” said the committee.