New Delhi, 14 December 2025 :
Indian Railways incurred a provisional passenger subsidy of ₹60,466 crore during the financial year 2023–24, covering nearly 45 percent of the total cost of providing passenger transport, the government informed Parliament. The disclosure highlights the scale of financial support that keeps train fares in India among the lowest in the world.
Railway Minister Ashwini Vaishnaw, responding to questions in the Lok Sabha, said the subsidy enables affordable rail travel for more than 720 crore passengers annually. The announcement came amid debate over a minor fare rationalization introduced on July 1, 2025, marking the first increase in passenger fares in over five years.
According to official data, the average cost of passenger travel is around ₹1.38 per kilometer, while travelers pay only ₹0.71 to ₹0.75 per kilometer. This results in fare recovery of just 45–47 percent, with the remaining cost borne by the Railways through subsidies. Passenger operations are largely supported by surpluses from freight services, a long-standing policy aimed at fulfilling social obligations and ensuring accessibility for low-income groups.
The Minister emphasized that Indian rail fares remain significantly cheaper than those in Pakistan, Bangladesh, and Sri Lanka, and are 10 to 20 times lower than rail travel costs in many Western countries.
The July 2025 fare adjustment was described as modest. It included a half-paisa per kilometer increase for sleeper, ordinary, and first-class ordinary travel; one paisa per kilometer for non-AC Mail and Express trains; and two paisa per kilometer for reserved AC classes. Notably, no fare hike was applied to second-class ordinary travel up to 500 kilometers, Monthly Season Tickets, or suburban services, shielding daily commuters and economically weaker sections.
Vaishnaw noted that less than half of all passenger journeys were affected by the revision, which was aimed at balancing affordability with rising operational costs and long-term infrastructure investment.
The FY24 subsidy marks an increase from previous years, when passenger subsidies ranged between ₹56,993 crore and ₹59,837 crore, reflecting higher input costs and the post-pandemic recovery in passenger volumes. Despite rising revenues, passenger services continue to operate at a loss, with freight earnings offsetting the deficit.
In the Union Budget 2025–26, Indian Railways received a capital allocation of over ₹2.5 lakh crore, focusing on safety upgrades, electrification, and network modernization. However, provisional passenger subsidy figures for subsequent fiscal years are yet to be released.
While critics argue that heavy subsidization strains railway finances and contributes to a high operating ratio nearing 98 percent, supporters maintain that it plays a crucial role in social equity, economic mobility, and promoting rail travel over costlier road and air transport.
