Railways Spent ₹ 62,000 Crore In Subsidy To Passengers Last Year

By: Yash Gupte

Railway Minister Ashwini Vaishnaw stated that the railways provide a discount of 55% to its customers and has spent a total of Rs 62,000 crore on subsidies last year.

Indian Railways is known as the largest public employer organization in India. It provides last-mile connectivity to lakhs of passengers across the length and breadth of the country. As a public transporter, railways has traditionally kept its fare low thus helping the poor and marginalized. Railway Minister Ashwini Vaishnaw stated that the railways provide a discount of 55% to its customers and has spent a total of Rs 62,000 crore on subsidies last year. Ashwini Vaishnaw stated: "If the expense of the Railways is Rs. 100, then just Rs. 45 is taken from the passengers”. According to him, the Railways provided various passenger categories with subsidies totaling Rs 62,000 crore in the previous year.

In a bid to reduce the burden of subsidies, it had launched a campaign some time back for generating awareness among the people for giving up the subsidies if they wish to not opt for it. The aim was to use the money thus generated for the betterment of rail services. In July 2017, Indian Railways established the "give it up" scheme, which allowed senior citizen passengers to forsake their concession in whole or in part. Since then, 48 lakh passengers have taken advantage of the option, earning the railways an additional Rs 78 crore.

The Indian Railways has been giving heavy subsidies to its passengers over the years but it has also subtracted the senior citizen’s concession. The reason behind this can be the increasing burden of subsidies on the Indian railways. The railways witnessed a decline in its revenue from Rs. 1,90,507 crore in 2018-19 to Rs. 1,74,694 crore in 2019-20 and Rs. 1,38,236 crore in 2020-21. The decrease in revenue was a result of the nationwide lockdowns imposed due to the covid-19 pandemic in 2020 and 2021.The chart below shows the total revenue of Indian Railways from 2015-2021.

Source: Ministry of Railways

The movement of trains was largely restricted and this brought a decrease in passenger footfall and movement of goods ultimately resulting into decreased revenue for the Indian railways. But the railways again witnessed an increase in its revenue in the financial year 2021-22 as its revenue went up to Rs. 2,17,460 crore. Most of the revenue is generated from the freight traffic and passenger traffic. Railways generate most of its freight revenue from the transportation of coal (43%) followed by cement (8%) and food grains (7%). Passenger revenue is broadly divided into two categories: suburban and non-suburban traffic. Majority of the passenger revenue (94% in 2017-18) is generated from the non-suburban traffic/ long distance trains.

Though, the Indian railways remains one of the largest service provider and employer in the world, it must work upon the heavy subsidies in order to focus on better services and infrastructural development.