Railway Stocks Surge: Fare Hike to Boost Efficiency

Railway stocks saw a significant surge in buying interest on Monday, December 22, with key players like RailTel Corporation of India, Rail Vikas Nigam, and Indian Railway Catering & Tourism Corporation witnessing gains between 1% and 5%.

Fare Rationalization

The rally follows the Indian Railways' announcement of a revised fare structure, set to take effect from December 26, aimed at balancing rising operational costs while minimizing the impact on passengers. The fare hike will see increases of one paise per kilometer for ordinary class, and two paise per kilometer for Mail and Express non-AC and AC classes.

Impact on Passengers

The ministry has clarified that the increase will have a limited financial impact on passengers. For instance, a 500-kilometer non-AC journey will cost only ₹10 extra under the revised structure. This fare rationalization is expected to generate an additional ₹600 crore in revenue during the remaining period of this fiscal year.

Background

Railways last raised fares on 1 July 2025, increasing fares for ordinary second, sleeper (non-AC), and first-class travel by half a paise per km. This was the first hike since the Covid pandemic, when in January 2020, the transporter raised fares by two paise per km for non-AC and four paise per km for AC chair car and AC-3 tier categories.

Operating Efficiency

The fare rationalization is expected to help the Railways improve its operating ratio, projected at 98.43% for the current fiscal year. The operating ratio represents the ratio of working expenses to traffic earnings and is used to measure the operational efficiency of the transport utility.

Remember, this is perspective, not prediction. Do your own research and consider consulting certified experts before making any investment decisions.