Railways hikes fares marginally from Dec 26 to offset rising costs, target efficiency gains

The Indian Railway announced a new fare structure effective from December 26, 2025. 

For journeys beyond 215 km, there will be a fare hike of 1 paise per km in Ordinary Class, and 2 paise per km for Mail/Express Non-AC and AC classes. The expected revenue gain from this change is ₹600 crore, and passengers on a 500 km Non-AC journey will pay an additional ₹10. There is no fare increase for journeys under 215 km in Ordinary Class. 

There is no increase in fare in Suburban and Monthly season ticket

For a 500 km journey in non AC coaches, passengers will have to pay only 10 rupees extra.

Railways has expanded its network and operations significantly over the last decade. To cater to a higher level of operations and to improve safety, it is increasing its manpower.

Consequently, manpower cost has increased to ₹1,15,000 crore. Pension cost has increased to Rs 60,000 crore. Total cost of operations has increased to ₹2,63,000 crore in 2024-25.

To meet this higher cost of manpower, railways are focusing on higher cargo loading and a small amount of passenger fare rationalisation.

Due to these efforts on safety and improved operations, railways have been able to substantially improve safety. India has become the second largest cargo carrying railway in the world. The recent successful mobilisation of more than 12,000 trains during festival season is also an example of improved operational efficiency.

"Railways will continue to strive for more efficiency and containing cost to meet its social goals," the statement read. 

Revenue fillip for Railways

Indian Railways' freight performance cumulative loading this year crossing the 1-billion-tonne mark—reaching 1020 Million Tonnes (MT) as of 19 November.

This milestone reflects broad-based support from key sectors: coal remains the largest contributor at 505 MT, followed by iron ore (115 MT), cement (92 MT), container traffic (59 MT), pig iron & finished steel (47 MT), fertilisers (42 MT), mineral oil (32 MT), foodgrains (30 MT), raw materials for steel plants (approx. 20 MT), and balance-other-goods (74 MT). Daily loading continues to hold strong at around 4.4 MT, higher than 4.2 MT last year, demonstrating improved operational efficiency and sustained demand.

Freight loading between April to October further underscores this positive trajectory, touching 935.1 MT in 2025, compared to 906.9 MT during the same period last year. 

Railways also has taken significant steps to optimise this segment's logistics capabilities. The recent rollout of comprehensive reforms including the Policy for Bulk Cement Terminals and rationalized rates for bulk cement movement in containers, represents a strategic initiative to modernise cement transportation. "These measures aim to increase bulk handling capacity, reduce transit time, and lower logistics costs, directly benefiting both industry players and end consumers while driving greater efficiency across the supply chain. Such targeted interventions catalyze sectoral transformation."

Shifting bulk goods movement to rail yields multiple benefits that extend beyond mere commercial metrics. It reduces carbon footprints, decongest highways, and provides industries including MSMEs access to greener logistics solutions.