Indian Railways Introduce Major Fare Hike

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The government on Wednesday announced, in effect, a major fare hike of up to 50 percent in base fares for most passengers traveling in premium train services — Rajdhanis, Shatabdis, and Durontos. This brings the segment in direct competition with low-cost airlines in terms of pricing.

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The national carrier , Indian Railways, which cross-subsidises low-priced passenger tickets with revenue from premium services, has been too shy to raise fares, which has over the years affected its ability to make capital investments.

The passenger revenue target for the current fiscal is Rs 51,000 crore as against Rs 45,000 crore in the last fiscal, an increase of Rs 6000 Cr for 2016-17.

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Other supplementary charges like reservation charges, superfast charge, catering charges, service tax as applicable shall remain unchanged by Indian Railways.

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For example, the New Delhi-Mumbai 3AC fare in Mumbai Rajdhani, which is Rs 1,628 as base fare will be Rs 1,791 with 10 percent increase and it will go up to Rs 2,279 with maximum 50 percent increase.

Presented in the form of a dynamic pricing model — except that the new structure will not see any decrease in fares — the Indian Railways will offer only the first 10 percent of berths at current prices.

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The remaining 90 percent will be sold at prices starting at 10 percent higher than the base fare and ending at 50 per cent more for AC-II tier and 40 percent for AC-III tier.

There are total 42 Rajdhani trains, 46 Shatabdi and 54Duronto trains and railways expect to garner about Rs 500 crore from the new fare structure in these trains.

The changes in fares shall come into force on 9 September. Revised fares will not apply to tickets already issued in advance for journeys to commence on or after 9 September,” the Indian Railways said.

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