Railways should continue subsidies for non AC travel: Parliamentary panel

New Delhi: A Parliamentary Panel has suggested to the government that to balance social obligations, Indian Railways should continue targeted subsidies for suburban and non-AC travel.

The standing committee on railways in its action taken report on demands for grants of the Ministry of Railways said that, " A comprehensive fare review should be undertaken from time to time to align AC class fares with costs and ensure gradual, affordable adjustments for non-AC classes."

The panel headed by C M Ramesh, BJP Lok Sabha member from Anakapalle constituency said that "Despite fare rationalization efforts in 2020 and 2022, which included marginal increase in non-AC and AC class fares and significant reductions in AC EMU ( electric multiple unit) and First Class suburban fares, Indian Railways continues to heavily subsidize passenger services."

The panel pointed out that Suburban services recover only 30 per cent of costs, non-AC travel recovers 39 per cent, and AC travel generates only a marginal surplus by just 3.5 per cent.

The railways should adopt a comprehensive, multi-pronged strategy to enhance net revenue while ensuring affordability for low-income passengers. This includes implementing dynamic pricing models for AC classes and premium trains, regularly reviewing flexi-fare schemes based on demand, and expanding non-fare revenue through initiatives like e-Auction policies, advertising, and commercial utilization of railway assets, the panel said.

The railway also informed the panel that increasing the net revenue is always its priority by maximizing traffic receipts along with expenditure control measures.

"To enhance passenger revenue with a view to ensuring optimum utilisation of available accommodation various initiatives like running of special trains, introduction of Vande Bharat and Amrit Bharat trains, augmentation of on-board capacity, introduction and rationalisation of Flexi-fare scheme in premium trains, periodical review of reservation quota wherever required, extension of Alternate Train Accommodation Scheme known as VIKALP have also been undertaken, the railways informed the panel.

The panel in its report noted that the railways claimed that it has several measures to increase freight and non fare revenue such as introduction of Gati Shakti Cargo Terminal Policy featuring liberalized provisions, Wagon Investment Schemes, the launch of the Goods Shed Rating Dashboard, introduction of e-Auction Policy for Commercial Earning & Non Fare Revenue contracts, special focus on eCommerce and fast moving consumer goods.