Currently the Railways of India recovers only 57 per cent of cost in passenger services and 37 per cent in suburban services. The only profitable revenue is from AC III tier which is the most expensive and targeted for the higher income groups.
The other expenses by the Railway include the social service obligation of the Railways, excluding staff welfare charges and law and order expenses, which comes to around Rs 24,000 crore.
Added to this, in late April a meeting started discussions on the increase of Railway prices by the Prime Minister Narendra Modi and the infrastructure department. This sanction for the increase in Railway fares has been approved and will be implemented soon.
The government has not discussed and analysed the loss in profits in the Railways of India. When analysing it, it is not rocket science that the price is still too high for the lower income groups hence only the AC tier III has been profitable.
The Railways in India is mainly targeted for the poor and middle class, but the government has thought of the railways as though it is the airline industry. There is a mandate that the Railways should work as “a commercial enterprise with focus on core operations to provide efficient and safe travel while enhancing customer experience”.
The way government is hiking the fare with any effective improvement in services can not be termed as an improvement. The main question is ‘How would the lower and middle class afford such high ticket prices?’
Looking at the current economic scenario the increase in cost should be on the AC tier III, with a reduction in prices in the Lower tiers. This will help offset the losses faced and will eventually lead to profits for the Railways to continue its efforts in improving the Railway services and infrastructure. The core reason is it’s better to make a small profit margin with a quantity and raise the quality and price for the people who can afford it.
The government could have revised and reduced rates for the new superfast trains, which include include Pune-Amravati AC Express, Pataliputra-Chandigarh Express, Visakhapatnam-Nanded Express, Delhi-Pathankot Express, Kanpur-Udhampur Express, Chhapra-Mathura Express, Rock Fort Chennai-Tiruchirapally Express, Bangalore-Shivmogga Express, Tata-Visakhapatnam Express, Darbhanga-Jalandhar Express, Mumbai-Mathura Express and Mumbai-Patna Express.
Passengers for these super fast trains will pay Rs. 30 more for Sleeper, Rs. 45 for Second and Third AC and Rs. 75 for First AC class.
The Railway Department, Infrastructure Department and the Government of India need to reconsider the prices in railways to make sure it is serving the Indian people in the right way!