Railway passenger and freight rates have not been revised through the budget since 2014. In December 2019, the Indian Railways raised passenger fares by as much as 4 paise per km after almost five years outside the budget. There have not been any regular fare changes since then.

Without an increase in fares, Indian Railways will have to rely heavily on government support and extra-budgetary resources to fund capital expenditure and use its increasing traffic earnings to improve operations, one of the two people cited above said, requesting anonymity.

Indian Railways’ total revenue from traffic in FY23 is on course to surpass the targeted 12% growth over the pre-pandemic year of FY20 and 20% more than the revised traffic earnings for FY22, the people said.

Passenger revenue has risen 76% from a year earlier to ₹43,324 crore in the eight months to 30 November, while freight earnings have grown 16% to ₹1.05 trillion, they added.

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“This will prevent any need for an upward revision of railways freight and passenger fares,” the first official said.

Emailed queries to spokespeople for the ministries of finance and railways remained unanswered till press time.

“There is no logic behind increasing rail fares in 2024 as people are already facing rising costs in various other sectors. Besides, higher central support to railways and grand recovery in its freight and passenger earnings should prevent the need for a fare hike. The railways’ operating ratio is still high, but rising traffic and earnings should help bring it down without changes in the fare structure,” a former railway board chairman said, declining to be identified.

In FY21, pandemic-related lockdowns significantly hit revenues of Indian Railways. Passenger revenues decreased by 75% to ₹15,000 crore on reduced train services, while freight revenues grew slightly by around 3% to ₹1.16 trillion. However, the lower passenger revenues allowed railways to pare subsidies on passenger fares.

On average, the subsidy on each passenger ticket amounts to more than 52%. The losses on passenger fares are compensated by freight earnings, but this makes Indian Railways’ freight charges among the most expensive. As a result, railways’ share of the country’s freight traffic has fallen from a high of 75% to just about 39% over the past 50 years.

“If railways can’t bring down freight rates, they should actually keep the rates unchanged. This is also required this year as the economy moved on the path of recovery after overcoming covid-related restrictions,” said another transportation expert asking not to be named.

Officials said while the base fare for both passenger and freight services may not change, there may be a rationalization of fare structures for certain commodity classes, which could affect charges for specific distances.

Fares on some mail and express trains have already fallen slightly after the railways removed the special tag from these trains last year following the lifting of lockdowns. These services, which were being run as special trains, had “slightly higher fares” to “discourage unnecessary travel”.

Railways generates revenue primarily from passenger and freight traffic. In FY20, freight and passenger traffic contributed approximately 65% and 29% of internal revenue, respectively. The remaining revenue comes from other sources such as parcel service, coaching receipts, and sale of platform tickets.

Railways is expected to see a return to a 65% share of freight in revenue for FY23 or higher by reducing reliance on passenger earnings and expanding the commodity basket offered through freight services. Additionally, marketing initiatives to capture more traffic and drive growth may be implemented.

Total revenue from traffic for FY23 is estimated to be ₹2.4 trillion, an annual increase of 19% over the revised estimates of the previous fiscal. In this fiscal, revenue from both freight and passenger traffic may grow 14% and 32%, respectively, over FY22’s revised estimates.