Friday, July 11, 2025
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Surge pricing in railways

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The Indian railways have made a move to hike railway fare on premium services such as Rajdhani, Shatabdi and Duronto. It will go up by 10% for every 10% tickets sold. It is called surge pricing which will be fixed through every railway budget. As a result, railways will cease to be a departmental enterprise. It would become a more commercially-oriented organization. The objective is to face competition from airlines on premium routes and road transport. A dynamic fare system was introduced for railways in 2014. It generated higher revenues. But this was a flawed system and railways reverted to the simple and transparent fare system. Surge pricing will be dynamic even in lean periods. Refunds will be made on time and services will be improved. Passengers therefore will not be tempted to switch to road or air travel. Cross subsidization of railway fares or keeping rail fare low by hiking goods freight should not be an ideal measure. Railway finances need to be restructured. If government funding is reduced, railways cannot discharge social obligations estimated at about Rs 25,000 crore annually.

There is now a move to curtail the monopoly operation of the railways. Commercially run organizations are gradually coming up. Competition can only trigger change and tone up efficiency as a result of which consumers will be the beneficiaries. It is time railways dealt with competition from commercial road operators and private airlines.

 

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