According to railway sources, this round of fare rationalisation is expected to earn about Rs 600 crore in additional revenue by the end of the current financial year on March 31, 2026.

Earlier, from the rationalisation of train fares announced on June 30 and implemented from July 1, 2025, the railways claimed to have generated Rs 700 crore so far.

The second round is therefore expected to generate Rs 100 crore less than the revenue earned from the first round.

Explaining the rationale behind the fare rationalisation, the Ministry said the railways have significantly expanded their network and operations over the past decade.

“To cater to a higher level of operations and to improve safety, it is increasing its manpower. Consequently, manpower cost has increased to Rs 1,15,000 crore. The pension cost has also increased to Rs 60,000 crore and total cost of operations has increased to Rs 2,63,000 crore rupees in 2024-25. Thus, a slight rationalisation in fare is warranted," a railway official said.

The railways added that to meet rising manpower costs, they are focusing on higher cargo loading, along with a small amount of passenger fare rationalisation.

It noted that India has become the second largest cargo-carrying railway in the world and that the successful mobilisation of more than 12,000 trains during the festival season demonstrated improved operational efficiency.

Following the decision to implement the second round of fare rationalisation from December 26, the Ministry also said the railways would continue to strive for greater efficiency and cost containment while meeting their social objectives.