AC, 1st class passengers are subsidised too

Our Bureau New Delhi | Updated on November 12, 2017

It is not only the poor who are subsidised by the freight earnings of the Railways.

Contrary to popular belief, even the high-end first and second air-conditioned (AC) passengers of the Indian Railways do not pay fully for the services.

In fact, only passengers availing the AC three-tier services and AC chair car services cover their operational costs, according to data for 2008-09.

The operational losses from various passenger service segments for 2008-09 are: Rs 59.37 crore (AC 1st class service), Rs 69.67 crore (first class), Rs 176.91 crore (AC sleeper or 2nd AC), Rs 3,175.24 crore (sleeper class), Rs 2,933.09 crore (second class), Rs 6,381.77 crore (ordinary-all class), Rs 1,651.19 crore (suburban services).

The earnings from AC three tier passenger segment exceeded the operational cost by Rs 540.57 crore; and that from AC chair car by Rs 5.45 crore.

However, this data is also a reflection of the high cost structure of the Railways. For instance, for four years up to 2007-08, earnings from AC sleeper services covered the operational cost.

But, with staff expenses galloping after sixth pay commission pay-out in 2008-09, this segment also turned loss making operationally.

CAG for higher passenger fare

No wonder, the pressure on Indian Railways to increase passenger fares is mounting. After the Planning Commission, the Comptroller and Auditor General of India (CAG) has now said the Railways should increase passenger fares.

“There is a need to review the passenger fare structure to ensure that the pricing does not result in a below the cost return. Inflation indexing may be factored in to make the cost realistic,” CAG has stated in its report on Railways Finances.

IR was unable to meet its operational cost of passenger services and other coaching services, CAG has stated. Revenue from passengers had increased by 60 per cent during five year period (2004-09), but expenditure on this head increased by 77 per cent during the same period.

A whopping 38 per cent of Rs 15,268 crore, which was the expenditure on providing passenger and other coaching services, was not covered by passenger and other coaching earnings in 2008-09.

Also, in 2008-09, 28 per cent of the Railways' freight earnings went towards covering passenger and other coaching services.


Published on August 05, 2011

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