Passengers planning long-distance rail travel in the coming months may need to shell out more, as the Ministry of Railways is reportedly finalising a fare hike that will impact AC classes, Sleeper Class, and Second Class tickets from 1 July 2025. The move, aimed at bolstering passenger revenue and rationalising operational costs, is under active consideration and is expected to be notified shortly by the central government.
Sources indicate that the fare adjustment will be modest yet meaningful, with an increase of 2 paise per kilometre for AC coaches, 1 paise per kilometre for Sleeper Class, and 0.5 paise per kilometre for Second Class (General) passengers. The revision will apply only to journeys exceeding 500 kilometres. Suburban rail fares and Monthly Season Tickets (MSTs), which cater to a majority of daily urban commuters, will remain unchanged.
The decision, if implemented, could fetch the Indian Railways an estimated ₹700 crore in incremental earnings for the remainder of FY 2025–26. This comes at a time when the national transporter is targeting ₹92,800 crore in passenger revenue for FY26, a significant rise from ₹75,215 crore recorded in FY25.Detailed projections suggest that AC 3-tier will be the highest contributor to the expected surge in revenue, generating around ₹534 crore, followed by Sleeper Class with ₹292 crore and AC 2-tier with ₹93 crore. Cumulatively, the fare hike across all applicable categories is expected to bring in close to ₹990 crore.
While the AC segment comprises only about 4.8 per cent of total railway passengers, it accounts for a substantial 54 per cent of passenger earnings. This underscores the growing preference among travellers for comfort and convenience, especially over longer distances, and the Railways’ increasing emphasis on premium offerings like AC coaches and Vande Bharat Express trains to monetise this segment.In contrast, general and sleeper classes serve a combined 37 per cent of passengers, while the suburban network shoulders a massive 57 per cent of total daily footfall—primarily comprising daily wage earners, students, and city-based employees.
Notably, this would be the first fare revision since January 2020, when the Railways introduced nominal hikes across categories after a six-year gap. The latest move follows a parliamentary standing committee recommendation from December 2024, which suggested a rational review of AC fare structures. The committee cited the Railways’ low cost-recovery ratio and mounting losses in the passenger segment as reasons to realign fares with operating costs.As India continues to modernise its railway infrastructure and improve the quality of services, officials view this fare rationalisation not as a burden on passengers but as a necessary step to ensure financial sustainability, improved amenities, and timely expansions.
While public sentiment may be mixed, transport analysts suggest that such pricing strategies are essential in maintaining service quality without compromising the financial health of the largest rail network under single ownership globally.
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