Indian Railways is offering a subsidy of 47% per ticket worth Rs 56,993 crore to keep train travel affordable. Now, the Parliamentary Standing Committee on Railways has recommended that the government-run transporter review losses due to social service obligations, including below-cost fare pricing.

Passenger fares remain a sensitive issue as the train remains an affordable mode of transport for people. The passenger fare is subsidized by the Railways through the freight segment.

The standing committee in its report submitted on December 13 stated that Indian Railways has to consider larger social and national interests in formulating its policies and is doing some uneconomical operations in passenger services to provide affordable transport facilities to various sections of the society.

"Indian Railways also operates some uneconomic lines for strategic reasons. The losses incurred on this account are included in the Social Service Liability. The net social service liability for the year 2022-23 was Rs. 40,190 crore," the commission said.

The main components of social service obligations are the pricing of fares below cost, losses on parcels, baggage, postal services and catering services, and losses on commuter services.

The commission said that to limit these losses Indian Railways needs to conduct a comprehensive review of these losses.

"More losses in categories such as hospitality services should be eliminated as a priority. The committee asked the Ministry to provide quality food at competitive prices and at the same time aim to reduce Social Service Obligations due to catering services," he added.

The committee also demanded hike in AC bus fares to cover the losses.

Will the railways take a bold step? According to experts, the passenger fares and subsidies offered by the railways are a politically sensitive issue and all governments have acted cautiously on the matter.

During the Covid-19 lockdown, Indian Railways suspended Passenger Trains and raised the minimum ticket price from Rs 10 to Rs 30, in line with Express Train fares. The move was to avoid overcrowding on passenger trains during the pandemic and the fare hike continued for three years. However, under increasing pressure and passenger complaints, the public transporter reduced the fare to Rs 10 in February 2024.

For AC services on trains like Shatabdi, Rajdhani and Duronto, Indian Railways introduced dynamic pricing in 2016, and the base fares will increase by 10% for every 10% of reserved seats in these trains, with a 50% hike in the original fare. . The aim and objective of introducing dynamic fare trains is to provide convenience to train users to travel in a short time by paying higher fares during specific peak periods.