Akhil Vaani | The Cost Of Avoiding Costs: How India’s Fear Of Fare Hikes Broke The Railways |
Indian Railways transported nearly 90 per cent of passengers and over 86 per cent of goods back in 1949. IR was the lifeline of the country and a profitable venture. Still, the then railway minister Gopalaswami Ayyangar thought it necessary to say so in his budget speech of 1949–50: “There is still a considerable gap between the actual demand for transport and the capacity of railways to meet it in full in proper time. The problem of bridging the gap is one of adequacy of power, rolling stock and line capacity…. I will endeavour to bridge the gap sooner rather than later."
Unsurprisingly then, Gopalaswami Ayyangar decided to end his 1949–1950 budget speech with the following tribute: “Before I close, I should like to pay a tribute of appreciation to the Chief Commissioner of Railways and his colleagues on the Railway Board, to the officers and staff serving under it, to the Heads of the nine Railway Administrations and the officers and staff serving under them, and particularly to the large body numbering over 8 lakhs of Railwaymen for the hard work they have been and are doing, as well as for the service they have been rendering to the public under conditions of a certain amount of disorganisation and confusion, for which they certainly could not be saddled with responsibility. The House will, no doubt, agree with me in paying this tribute."
Where Have Those Days Gone?
Fast forward to 2025: Indian Railways today is a pale shadow of the golden era of the 1950s and 1960s, having lost its predominant position as the nation’s lifeline. Here is the story in brief:
One, Passenger Transport: These numbers have yet to recover to pre-Covid-19 levels. Suffice it to say that railways today carry around 10 per cent of total passenger throughput, while substantially expanded bus services (including long-distance routes), including the premier Volvo and Mercedes AC buses, carry 87 per cent, and air traffic accounts for 3 per cent.
With more airports being added under the Regional Connectivity Scheme (RCS) – UDAN (Ude Desh Ka Aam Nagrik), despite the Vande Bharat revolution, railways as a passenger carrier will sooner rather than later be relegated to third place, with air traffic overtaking it.
Two, Goods Services: There is no reliable data comparing total railway freight traffic with the total freight traffic available in the country. Nonetheless, I say with a reasonable degree of certainty that its share has come down to around 25 per cent, and is falling fast.
A bigger worry is that railways have been reduced to a carrier of a narrow set of commodities: coal, iron ore, foodgrain, fertilisers, cement, and a fast-eroding basket of POL. All other items are marginal.
The railways’ freight basket has not changed much in the last decade in terms of traffic volume or revenue share. In 2015–16, coal accounted for 45 per cent of total freight revenue. In 2024–25 and 2025–26, coal’s share is estimated to rise to 50 per cent.
Worse, with the Government of India committed to “Net Zero" by 2070, railway coal traffic will dwindle rapidly. If railways do not get their act together and become a logistics force to reckon with — an aggregator of high-value smalls — there is a high chance that they will be relegated to a footnote in India’s transportation business.
The Disruptive Dilemma — To Increase Or Not To Increase
Since Independence, Bharat has had more than fifty railway ministers — 43 Cabinet ministers and a few Ministers of State (Independent Charge). Traditionally, increases or decreases in passenger and freight fares were announced in the annual railway budget speech by the Railway Minister of the day. And the toughest dilemma most ministers faced was whether to increase passenger fares.
After scrutinising passenger-fare increases since Independence, I find the decision was so tough and disruptive that only a few ministers mustered the courage to raise fares. There was complete political unwillingness to “increase passenger fares" even when there was “willingness to pay". The railway ministers who dared to raise fares are few.
Worse, the political resistance to passenger-fare hikes has been so great that at least one erudite, well-meaning and capable Railway Minister — Prof Dinesh Trivedi — lost his job for attempting a modest fare increase in the form of a........