Indian Railways Projects 16% Increase in Passenger Revenue for FY26, Powered by Premium Train Demand
Indian Railways, the national transporter has projected a significant 16% rise in passenger revenue for the financial year 2025-2026. This boost, estimated to reach Rs 92,800 crore, is largely attributed to the increasing demand for premium services such as Vande Bharat trains and AC3 class services. This marks a clear shift in passenger travel trends, with more people opting for higher-class services, reflecting a growing appreciation for quality and comfort on long-distance journeys.
The increasing demand for premium trains has been a key driver behind the expected revenue jump. The Vande Bharat, which has garnered significant attention for its modern features and faster travel time, has been at the forefront of this shift. The rise in AC3 class bookings, which have seen a near 20% increase in earnings, also reflects this growing inclination towards more comfortable and faster train travel. Budget documents reveal that the share of passenger earnings in total revenue has increased steadily, from 26.4% in 2022-23 to 28.6% in the current financial year. This is expected to rise further to 30.6% in FY26. While freight remains the backbone of Indian Railways’ earnings, the growth in passenger services is helping to diversify and balance its revenue sources, providing much-needed flexibility for future policy decisions.
One of the most notable segments of growth has been in the AC3 category, which is expected to generate Rs 30,089 crore by the end of FY25, marking a nearly 20% increase from the previous year. Indian Railways anticipates even more impressive growth in FY26, with AC3 revenue projected to touch Rs 37,115 crore, a jump of 23%. Revenue from executive class services has also risen sharply. By March 2025, it is expected to touch Rs 698 crore, representing a 42% rise from the previous financial year. This growth is expected to continue in FY26, with projections indicating a further increase to Rs 987 crore. Similarly, earnings from AC Chair Car services are projected to rise by 31%, reaching Rs 5,626 crore in FY26.
Despite the growing focus on premium services, Indian Railways has also emphasised increasing accessibility for poorer and lower-middle-class passengers. The national transporter plans to run more trains with additional general coaches to accommodate the growing number of budget travellers. Revenue projections from second-class general coaches in inter-city trains for FY25 are expected to nearly double to Rs 1,517 crore. Railway Minister Ashwini Vaishnaw has assured that these improvements in services will not lead to fare hikes. “Passenger numbers have been increasing each year, and this year, total passengers are expected to rise to 7.5 billion. We expect this number to rise further to around 7.8-7.9 billion next year,” he remarked. This growth in passenger numbers underlines the rising demand for rail services across all income groups.
The projected revenue boost comes at a time when Indian Railways is increasingly looking at diversifying its income sources. While freight continues to be the largest revenue segment, the increase in passenger earnings, especially from premium trains, allows Indian Railways to strengthen its financial position. It also opens up space for policies aimed at attracting more cargo traffic, particularly from road transport, which has been a growing challenge for the railways. With the growing demand for both premium and general train services, Indian Railways is making substantial strides in expanding its offerings to cater to a wider range of passengers. As the infrastructure continues to evolve with an eye on both the high-end and budget-conscious traveller, this expansion sets the stage for a more inclusive and profitable future for the national transporter.