Railways: Fare Hikes & Freight Dependence - Economic Survey

New Delhi, Jan 29 (PTI) The Railway Ministry rationalised passenger fares on three occasions over the last five years, consequent to which the share of freight earnings in its total income declined gradually from 68 per cent to 65 per cent, and is further expected to fall to 62 per cent, according to the Economic Survey for the financial year 2025-26 tabled in Parliament on Thursday.

The Survey analysed the Railways' economic performance over the past financial year and presented an outlook for the upcoming fiscal.

It focused on cross-subsidisation in railway traffic, under which the Railways earns profits from freight services but uses them to offset losses from passenger and other services.

"During the last five years, passenger fare has been rationalised on three occasions, i.e., on January 1, 2020, July 1, 2025, and December 26, 2025, and consequently, the share of freight earnings in gross traffic receipts declined gradually from 68 per cent in FY-23 to 65 per cent in FY-25 and is budgeted to be 62 per cent in FY-26," the Survey said.

Citing the financial year 2022-23, it said that freight earnings accounted for about 68 per cent of the gross traffic receipts (total earnings) of Railways.

However, the profit from freight traffic was utilised to offset the loss on passenger and other services, leaving an uncovered loss of Rs 5,257 crore from passenger operations.

"The CAG has recommended critically analysing the cost of passenger operations, taking steps to reduce its losses, and diversifying its freight basket to enhance freight earnings," the Survey said.

It argued that high freight rates, due to cross-subsidisation, distort competition with roads, inflating commodity and consumer prices, as well as logistics costs.


"Rationalising freight rates could improve revenue buoyancy, incentivise a modal shift of freight from roads to rail, and increase market share. This, in turn, would stimulate economic activity, green the transport sector, and decongest road space," it added.

According to the Survey, rail freight services, a 50 per cent cost-effective cargo route compared to road transport, continue to play a critical role in supporting the bulk and long-distance movement of goods essential for core industrial activities.

"In FY-25, freight loading by Indian Railways exceeded 1.6 billion tonnes, witnessing a slight expansion over FY-24. However, it remains 12.5 per cent higher than the average of FY21-FY24, signalling a healthy underlying momentum," the Survey said.

"This momentum has been sustained into FY-26, with freight loading growing by 3.3 per cent and reaching about 1,215 million tonnes (MT) during April-December," it added.

The Survey noted that the growth was supported by strong demand from the core sectors, such as coal (601 MT), iron ore (138 MT), cement (109 MT), container traffic (71 MT), pig iron and finished steel (56 MT), fertilisers (52 MT), mineral oil (38 MT), foodgrains (36 MT), raw materials for steel plants (approximately 23 MT), and other goods (91 MT).

It observed that the Railways' operational efficiency has also improved, with average daily freight loading rising from 4.2 MT in 2024 to about 4.4 MT in 2025.

"This has been supported by capacity augmentation through the commissioning of new tracks and the expansion of dedicated freight corridors, which have eased congestion and increased movement speeds," the Survey said.

"Policy measures, including bulk cement terminals, rationalised freight rates for containerised cement movement, and wider adoption of digital platforms such as the Freight Operation Information System, have further strengthened bulk handling and operational efficiency," it added.