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How an e-ticket discount has become IRCTC's Achilles' heel
Aug 13, 2024
Nirmala Sitharaman, the Finance Minister of India, delves into the intricate financial struggles of IRCTC, the Indian Railway's ticketing arm. She discusses the controversial UPI discount that has cost the company a staggering Rs 40 crore in revenue. Amid rising UPI usage, officials express skepticism about the necessity of the discount. Sitharaman also highlights the government's unwavering stance on this mandate, despite IRCTC's push for financial relief through convenience fees. The dialogue reveals the complex balance between policy and operational viability.
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Quick takeaways
- The UPI discount initiated by the government has led to a significant Rs 40 crore revenue loss for IRCTC's e-ticketing segment.
- IRCTC struggles with declining margins, forcing a pivot to lower-margin sectors amid challenges in achieving Navratna status.
Deep dives
Impact of UPI Discounts on IRCTC Revenue
The government mandate to incentivize digital payments, specifically through a discount for UPI transactions, has significantly harmed the revenue of IRCTC. Since its introduction in 2019, the company has reportedly lost around Rs 40 crore due to this discount, which affects its second-highest revenue contributor, the e-ticketing segment. Many IRCTC officials believe that UPI does not require further incentive as a majority of users are already opting for it due to its convenience, making the discount unnecessary. Despite the push for revocation during the latest budget, the government's continued support for this mandate has left IRCTC’s leadership frustrated as they struggle with declining margins.
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