IRCTC seeks partial lifting of service charge waiver

State-run Indian Railway Catering and Tourism Corporation (IRCTC) and the railways are pushing for a partial lifting of waiver on service charges to cut their losses. Railway officials have initiated talks with the finance ministry on this, sources said.

On November 23 last year, following the note ban announcement, the government had directed the IRCTC to waive service charges till March 31 on tickets booked online, to boost digital transactions. Days later, a free accidental insurance scheme was also announced for such passengers. On March 31, the Narendra Modi government extended these sops till June 30.

According to railway officials, the waiver of service charges for a year will lead to a loss of about ~500 crore in revenue to the IRCTC, while the agency is likely to suffer an additional outgo of ~36-40 crore if the free insurance scheme is extended.

The railway ministry, which gets a share of the IRCTC’s income, has written several letters to the finance ministry to compensate for these losses.

“We are now pushing even harder for compensation from the finance ministry. If the finance ministry wants to extend the scheme beyond June 30, we are saying that at least some part of IRCTC’s revenue should be restored —at least 70 per cent of the previous service charge,” said an official close to the development.

The IRCTC used to charge ~40 a ticket for bookings in air-conditioned classes and ~20 a ticket in the sleeper class. For the agency, this has been a major revenue source, as it posted ~551 crore income from ticketing in 2015-16, up from ~256 crore in 2014-15. Of its monthly income from service charges, 50 per cent used to go to the railways’ kitty. The IRCTC is one among the 11 state-run companies in which the government wants to sell its shares this financial year.

In order to minimise its losses, the agency has started seeking from banks a higher security deposit and also half of their transaction fees. Under the new policy, the banks which want to integrate with the IRCTC for payment gateways will have to pay ~20 lakh as security deposit, while the existing banks paid ~10 lakh. This has led to a tiff between the company and the banks. “We have asked the ministry to intervene in this matter or take it up with banks,” an IRCTC official said on condition of anonymity.