Despite the increase in the number of passengers on various routes of the Indian railways, the service in the trains remain clogged. The maintenance at stations are poor, speeds remain slow, and the services too are far less than satisfactory.

As the number of trains increase on a route, the space for freight in the trains reduces. However, the freight trains are a critical support for the economic growth of the country and are also crucial for the financial health of Indian Railways (IR) itself. The IR is annually facing a loss of Rs. 20,000 crores as well as passenger business, according to reports.

The passenger fares are not inherently making a loss, but it is the ordinary class fare which is largely responsible for the system taking a hit. These fares have remained as low as 15.8 paise-per-passenger-km in 2010-11 and suburban travel is much lower at 12 paise-per-km. On the other hand, the bus fare on state road transport services across the country in 2010-11 averaged 56 paise-per-km.

Thus it is essential to increase the fares in order to bring the IR back on track in terms of finance. In terms of rail fares, countries like Japan, Russia and Germany charge 9.4, 6.7 and 6.2 times higher than India respectively.