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IRCTC-Railways convenience fee kerfuffle: Why did the stock tank, who decides the charge and other questions answered

The decision to withdraw the revenue sharing announcement came on Twitter first, from the secretary of DIPAM, and seemed like a knee-jerk response to the stock hammering that IRCTC suffered. But it remains to be seen whether Indian Railways in its hunt for revenue streams spares the IRCTC and its investors.

October 30, 2021 / 11:40 AM IST
Representative image

Representative image

The voice of the investor became loud and clear – on October 29– with Railways having to roll back its decision to collect half of convenience fee collected by Indian Railway Catering and Tourism Corporation (IRCTC). As the IRCTC stock went on a downward spiral on Friday morning losing over 27 percent on the bourses, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kant Pandey quickly took to Twitter to announce that the Ministry of Railways has decided to withdraw the decision on IRCTC convenience fee.

On October 28 afternoon, IRCTC informed the stock exchanges about the Railway Ministry’s decision to restore revenue sharing of “convenience fee”. The decision brings forth the issue of autonomy of a public sector enterprise, pressure on an administrative ministry (Railways) to shore up revenues, and the need for the government (read DIPAM) to look at stock valuation at a time when it is looking to shore up revenues through disinvestment. In this context, we demystify the convenience fee saga of IRCTC.

What is a convenience fee or service charge levied by IRCTC?

It is the amount charged by IRCTC, the sole online train ticket booking platform authorised by Indian Railways, from passengers who book tickets digitally. It is similar to what passengers pay for booking airline tickets on online platforms, the only difference being that in the railways space, IRCTC is a monopoly and when opting for online booking consumers have no choice other than IRCTC or other online platforms that in turn have arrangements with IRCTC.