What is Rail Subsidy or Train Ticket Subsidy

After LPG now it is time for Railways to earn some more with the forego subsidies given on the tickets. Last year the government has started to sell railways tickets where the subsidised amount was written. This year the authority has taken it to next level by making a formal announcement about forgoing the subsidy that the users get from railways.

How much is the Rail Subsidy?

Railways subsidy on tickets is given to the senior citizens, differently able people and sportsperson. The rate of subsidy under different category is:

Male citizens (above 60 years): 40% of total ticket price

Female citizens (above 58 years): 50% of total ticket price

For others: 43% of total ticket price

What is the problem faced by Railway?

As mentioned Railways pay out 43% subsidy to every eligible person who is travelling by train, the Railways authority has incurred Rs. 30, 000 Cr of loss in last few times. This drives them crazy as the amount is quite a huge one.
Back in 2015-16 total Railway revenue was 1.7 Lac Cr among which only Rs. 44, 000 Cr came from passengers’ segment. Nearly Rs. 22, 000 Cr came from AC-reservation and the rest amount came from non-AC reservation and non-reservation segments. Along with this, Rs. 30, 000 Cr has been added to the wages of the employees, after the 7^th pay commission revised salary.

How is the solution come?

It was last year (2016) when a couple travelling from New Delhi to Jammu sent a cheque of Rs. 950/- to the IRCTC along with a letter. He mentioned that he saw the message on the tickets where it was written about the 43% subsidy they are enjoying. He wants to return that subsidised money so he sent the cheque. He also said that he is not going to take such benefits again.

Unfortunately Indian Railways had to return the cheque to the owner as there were no such provisions to accept the payment at that time. Later on the Railway Ministry comes up with some ideas to start it officially like the LPG subsidy ones.

Implementation of the Idea

It has already mentioned that the plan started gearing up last year. In 2017 the statement got published officially regarding giving up the subsidy.
The main reason behind this plan is to recover the loss gradually. People who are well enough to pay the 100% ticket amount can buy tickets at original price and give up the subsidy. On the other, people who don’t have that position can enjoy the subsidy benefit.
In case of LPG it was much easier to implement the plan quickly. The reason was the linkage of bank accounts with LPG connections. However the process is complicated here in Railways. So as of now the authorities have decided to start up this plan in e-tickets only.
When the traveller will book their tickets, they will be asked whether 50% or 100% subsidy they are willing to forego. According to their choice, the amount will be charged. The authorities are working on more developed ideas and processes to make it possible.

What are the steps taken by government initially?

As per the Railway Ministry it is important for the general people to know more about the plan. Before they are being asked for foregoing their subsidy they must know how much subsidy they are paying. For this reason the railway ministry decided to print the subsidy amount on the ticket itself to let people know about the process.

How will it work?

Unlike LPG subsidy there is a bank account linkage with the LPG providers. However this will not work for the railways. So here the authority has worked out on some other ideas. To implement the idea they restrict themselves to e-tickets only as of now. Once the process gets less complicated they will proceed with the other modes of booking tickets.

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