In less than 24 hours of mandating IRCTC to share half of its convenience fee, the Railway Ministry on Friday morning withdrew the controversial decision because its online ticketing arm made a desperate plea that its finances, already in doldrums due to Covid-19 disruptions, would take a massive hit.

Government sources said the negative impact of the decision on the market and the drop in prices of IRCTC’s shares also played a role in the roll-back.

“The IRCTC approached the Railway Board and requested that the decision to share the convenience fee with the Railways be withdrawn as it would create a financial mess for them, especially as Covid-19 had already affected them.

Moreover, the stock market, specifically the share price of IRCTC, fell further after the decision was announced. The Railway Ministry, therefore, thought it prudent to withdraw the decision,” the source said.

“Keeping in view the request of IRCTC, the matter has been reviewed and it has been decided to withdraw the instructions issued vide letter of number dated October 27, 2021 (received on October 28),” the Railway Board’s letter marked to IRCTC CMD, said.

Interestingly, soon after DIPAM Secretary tweeted the Railway Ministry’s decision to withdraw the convenience fee sharing order on Friday, the IRCTC stock, which had plunged to ₹639 earlier, rebounded to over ₹900.

However, it ended 7.74 per cent lower at the NSE at ₹842.8 compared to the previous day's ₹913.50.

Wrong signal

Capital market observers have blamed the Railways for the “terrible timing” as the move sends out a wrong signal at a time when several PSU divestments are in the offing, including LIC’s mega IPO.

Also read: Govt seeks 50% share of IRCTC convenience fee

 

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