Railway Ministry's Passenger Fare Adjustment Triggers Economic Shift

The Railway Ministry's adjustment of passenger fares over five years resulted in a decline in the share of freight earnings from 68% to 62%. An Economic Survey highlighted the impact on the railway's income, urging a reevaluation of freight rates to encourage a shift from road to rail transport.

The Railway Ministry has adjusted passenger fares thrice in the last five years, leading to a decline in the share of freight earnings from 68% to 65%, with a projected drop to 62% in the fiscal year 2025-26. This trend was reported in the recent Economic Survey presented to Parliament.

The Survey highlighted concerns about cross-subsidisation, wherein profits from freight services are used to offset losses in passenger operations, which resulted in an uncovered loss of Rs 5,257 crore for passenger services in the financial year 2022-23. Recommendations were made to critically examine passenger operation costs and diversify the freight basket to boost earnings.

Amidst rising freight loading, which grew by 3.3% to 1,215 million tonnes during April-December FY-26, infrastructural developments like new tracks and dedicated freight corridors have enhanced efficiency. Meanwhile, policy measures such as rationalised freight rates for containerised cement and digital platform adoption continue to bolster rail transport economics.

(With inputs from agencies.)