Sunday, September 18, 2016

The Indian Railways has been losing money regularly on passenger traffic. According to a study on the impact of Social Service Obligations by the Indian Railways conducted by NITI Aayog member Bibek Debroy and OSD Kishore Desai, the railways incurred losses on all classes but AC3-tier fares
By: FE Bureau | New Delhi | Updated: September 17, 2016 

The Lower Fares Charged By The Railways Has Meant That People Prefer To Travel By Train Rather Than Buses To Many Close Locations.(Reuters)


The Indian Railways has been losing money regularly on passenger traffic. According to a study on the impact of Social Service Obligations by the Indian Railways conducted by NITI Aayog member Bibek Debroy and OSD Kishore Desai, the railways incurred losses on all classes but AC3-tier fares. In 2014-15 it was Rs 33,000 crore on earnings of Rs 49,000 crore (67%). The second and sleeper classes accounted for more than 75% of the entire passenger business losses on an average over the four-year period—2011-12 to 2014-15.




The lower fares charged by the railways has meant that people prefer to travel by train rather than buses to many close locations. It is only on AC trains that rates are higher than buses. The study has also concluded that the under-recovery in 2nd class and ordinary classes is almost 100% while in sleeper classes, it is 60%. Changing that is tough. So the Indian Railways has to find non-fare means also to raise revenues in the immediate future.



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