In a little-noticed circular in February 2013, just a few weeks before the railways budget was presented, Indian Railways silently announced that they would start rounding up ticket fares to the nearest multiple of five. For example, if a ticket cost ₹122, it would be rounded up to ₹125. It would never be rounded down. In the railways budget that followed, no fare hikes were announced. The fare tables are not in multiples of five, so the rounding-up policy was essentially an across-the-board fare hike implemented silently.
Now, the Railway Ministry has told MediaNama in response to an RTI application that it doesn’t know how much revenue was earned by rounding up fares.
Rounding up policy
This is how the rounding-up policy works if you’re booking your ticket online. When you book your ticket online, this is what the fare breakdown looks like:
That’s an interesting breakdown because while the base fare is not a multiple of five, the other taxes and online booking charges are. Then how do they add up to a multiple of five? Simple: the base fare was rounded up, from ₹2206 to ₹2210. The round-up isn’t disclosed in the breakdown but is mentioned at the end of the legend explaining the breakdown. So the numbers literally don’t add up. This happens millions of times each day.
Estimating the extra revenue
While base fares are rounded up to the nearest multiple of five, they don’t start out that way — fares are an arithmetic function of price for the first couple hundred kilometres and increment steadily from there. Here‘s an excerpt from 2018’s railway fare sheet:
Right around 300 kilometres, the fares start incrementing by ₹28–35 per additional 10km travelled. But those fares are not correct. Since these are the base fares, they’re rounded up to the next multiple of five before taxes and other charges are calculated. So that means that ₹1486 is actually ₹1490, ₹1519 is actually ₹1520, and so on.
In 2016–17, Indian Railways had 8.1 billion passengers, which comes out to as many tickets sold. A third of that is suburban traffic, whose fare isn’t rounded up. So the number of effective tickets sold where fares are rounded up is 5 billion (shaving away around 340 million for suburban travel outside Mumbai). Base fare round-ups range from zero (when the base is already a multiple of five) to four. So that makes the median round-up 2.5.
By that estimate, Indian Railways made over ₹1250 crore from rounding up ticket fares. But it’s impossible to know for sure since the Railways itself doesn’t maintain that number.