Indian Railways is projecting a near 30–60 per cent rise in revenues from its premium push – Vande Bharat trains that include chair cars & sleepers; and other offerings like Rajdhani, Shatabadi and Gatiman. The AC 1st class fares are seen flattening. This apart, volume push is expected in the sub-premium AC–three tier segment across trains that account for nearly half of its rolling stock.
AC-three tier fare growth is pegged higher than the sleeper and second class categories, the previous volume driver for Railway earnings.
As per revenue projections, Executive Class arrangements in trains like Vande Bharats (a 2 x 2 seating format) is seen to lead to a 56 per cent rise in earnings – to ₹987 crore for FY26, as against ₹698 crore in the year-ago-period (BE FY26 vs RE FY25). This is a substantial rise – and one of the highest since the introduction of this service. A 30 per cent rise in earnings for the national transporter was projected last year, that is ₹644 crore over ₹490 crore., in the said category.
Officials said Vande Bharat train services are being increased with new frequencies being introduced or plans are underway, which the national transporter is hopeful would lead to rise in earnings.
Similarly, the AC chair car arrangements – a 3×2 set up in trains like Vande Bharats, Shatabdis, Rajdhani and Gatiman Express (all semi-high speed offerings), is projected to have a 33 per cent revenue jump for FY26, up to ₹5626 crore; as against the expected ₹4281 crore. Railways were expecting a 16 per cent y-o-y growth in the category to around ₹4000 crore, as against the ₹3327 crore earned in F24.
Vande Bharat sleeper trains are expected to be introduced soon, which will “further push the premiumisation drive of the Railways”, an official said.
This comes in the back-drop of earnings from the premium AC – 1st class flattening to ₹1200-1300 crore levels.
For instance, BE FY25 earnings from AC 1st class was projected at ₹1357 crore; but has been revised downwards to ₹1295 crore. Earnings from the segment last year was ₹1138 crore.
“There is a significant upward revision in FY26 projections, to ₹1,526 crore – as there will be introduction of Vande Bharat sleeper trains, and increase in general passenger traffic. No significant change in rolling stock numbers are expected to drive earnings in the category,” an official told businessline.
Overall revenue for Railways are pegged at ₹302,000 crore in FY26, the highest in recent times and ₹188,000 crore is from passenger (overall 16 per cent up y-o-y).
Earnings Volume
However, as per Budget documents, AC – 3 tier to be the key revenue driver for Railways – in terms of volumes. Nearly, 20 per cent of the projected earnings, or ₹37116 crore of the ₹188,000 crore of revenue receipts is expected from the segment. The segment is projected to see a 23 per cent y-o-y increase in bookings, almost 4 times the previous year’s projections.
In FY24, actual earnings were around ₹25015 crore, and in FY25, the Railways expected to earn ₹26584 crore- up 6 per cent. However, numbers were revised upwards to ₹30,090 crore as passenger traffic improved.
“In terms of revenue share, earnings from AC-3 tier increased from 14 per cent-off in FY24 to 16 – 17 per cent in FY25 and will move up to 20 per cent. It will overtake the two other major revenue segments put together – sleeper class and second class,” another official said.
The two other general class fares – sleeper and second class – are projected to have revenues in the ₹34,000 crore range (put together). For FY25, earnings estimates have been revised downwards to ₹31638 crore, down 14 per cent over budget estimates of the fiscal at ₹36711 crore. Earnings revision is almost at par with FY24’s ₹30,326 crore-levels.