Indian Railways: The Class Gap And Cancellation Fees

Regina Posted on: 2020-03-14 09:41:56 Viewer: 122 Comments: 0 Country: India City: New Delhi

Indian Railways: The Class Gap And Cancellation Fees

Railways are a core aspect of India’s economy and workforce. The use and existence of the railways are an important factor in the nation’s growth and create a significant number of employment opportunities. Where employment generation is concerned, there is perhaps no other organization as important as Indian Railways. Yet, the rise in cancellation fees, whilst profitable for the railways, has hit the poorest passengers hardest.

Cancellation Fee Increase

One of the biggest challenges faced by railways is finding a suitable way to increase revenue, as well as offset its losses. On average, Indian Railways is only able to recover approximately 57% of the cost of travel. In an attempt to try to combat this loss and increase revenues, Indian Railways increased its cancellation of tickets fees by almost double since November 2015. “The cancellation fees have proven very successful in helping Indian Railways to increase its revenues,” states Philip Dunn, a writer at Writinity and Researchpapersuk.

“This is particularly important and crucial if Indian Railways is going to able to keep going. It also helps to increase the amenities for the public, as well as allowing for the rail infrastructure to be strengthened.” Indian Railways was able to earn Rs 1,852.50 crores in the period from 2018-19, compared to Rs 1,205.96 crores in the previous year (2017-18). The same success was also seen with Southern Railway and most impressively, with South Central Railway, who saw a 500% increase during the same period.

The Cost to Passengers

Yet whilst the railway companies certainly feel the benefit of their increased cancellation fees, the reality for passengers has been somewhat different. Particularly, the cancellation fee appears to fail to protect the poor, as they appear to be hit almost as much as richer passengers. Perhaps most striking of all is the difference between the cancellation fee for passengers in AC Classes (Rs 180) compared to passengers in Sleeper Class (Rs 120). It is well-known and accepted that passengers who travel in AC Class tend to be of a higher status and earn substantially more than passengers in Sleeper Class. Yet, the cancellation fees seem to entirely disregard this gap.

The assumption had been that the expensive cancellation fees would discourage touts. Instead, in combination with the increase in ARP (reservation period) to 120 days, knowledgeable touts are actually using the opportunity to book tickets under false names and then sell them to the poor at a much higher premium. Whilst passengers are finding themselves on waiting lists, especially during the peak season or rush periods, touts have already managed to get hold of the tickets. “Previously, passengers would have bought multiple tickets, especially if they were unsure of their exact travel dates.

They would then cancel any unused tickets and these would become available to other passengers on the waiting list,” explains Jason Floyd, a journalist at Draftbeyond and Lastminutewriting. “The higher cancellation fees mean that people are sometimes not bothering to cancel the ticket because the refund amount is too small. This results in greater numbers of ‘no-show’ passengers. It means that the available ticket isn’t given to someone on a waiting list. Instead, it’s often given to someone for a bribe, making it even more expensive for poorer passengers.”

How we can address the gap between the Rich and Poor

In order to address the gap between rich and poor, railways and the government should consider the following:

  • The cancellation fee should be significantly lower for passengers in Second and Sleeper Class. These could be calculated as a proportion or percentage of their ticket, rather than a simple flat rate.
  • Revenue generated from richer passengers could be utilized to help subsidize poorer passengers.
  • Policies and repercussions need to be put in place to ensure that touts are actively discouraged and to help reduce cases of bribery.

Although cancellation fees have proven successful to make Indian Railways more profitable, it is essential that steps are taken to ensure that the burden of this does not fall upon the poor. Revenue generation is necessary for railway development and growth, but addressing the gap between rich and poor (with regards to fees and charges) is equally crucial if the railways are to be truly accessible for all who need them.


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