After Stock Crash, Rail Ministry Withdraws Convenience Fee Decision On IRCTC

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What has happened?

The Ministry of Railways on Friday said that it has decided to withdraw the decision on Indian Railway Catering and Tourism Corporation (IRCTC) convenience fee.
This comes a day after IRCTC said that it has been asked to share 50% of its revenue earned as convenience fee from bookings on its website.

The online ticketing arm of Indian Railways on Thursday informed the exchanges that,
It was asked to share 50% of its revenue earned as convenience fee from bookings on its website with the national transporter,
An arrangement that had been discontinued since the pandemic.
It would be enforced from November 1.

Convenience fees charged from customers generated a sizable revenue for both IRCTC and the Railways.
The fee is not part of the rail fare.
It is for the service of online ticket booking offered by the IRCTC.

In 2014-15 when the revenue sharing ratio was 20-80, the Railway’s online ticketing and catering arm received a majority of the Rs 253 crore revenue.
The following year, the revenue generated from this was Rs 552 crore with a 50-50 share arrangement.
In 2016-17, with a similar revenue-sharing model, the fee generated Rs 362 crore as earning for the IRCTC-Railway combine.
The convenience fee was discontinued thereafter, and the duo did not earn any revenue from it till 2019.
The IRCTC began charging the fee again during the coronavirus crisis mainly to boost its revenues during the slowdown.
The Railways, however, gave up its share.
In 2019-20, IRCTC earned Rs 352 crore from convenience fees and in 2020-21, it earned Rs 299 crore.
Till August this year, the IRCTC had earned Rs 224 crore.

The Street expects about 433 million tickets to be sold via IRCTC in FY23 and
A 50 per cent convenience fee would have hit Ebit estimates by about 30 per cent for FY23 and FY24.

Q) Department of Investment and Public Asset Management or DIPAM comes under which ministry?