AC Over Sleeper: Indian Railways’ Strategy for a New Age

Indian Railways, an iconic and vast network that has connected the diverse regions of India for decades, is undergoing a significant transformation. This article delves into the strategic shift from Sleeper and Second Class coaches to more Air-Conditioned (AC) coaches, exploring the reasons behind this move, its implications, and the future trajectory of Indian Railways.


For years, the Sleeper and Second Class coaches have been the backbone of Indian Railways, offering affordable travel to millions. However, recent trends show a pivot towards AC coaches. The Railway Ministry has begun replacing Sleeper or Second-Class coaches with AC 3-tier Economy Class coaches in several trains​​. This trend aligns with the Indian Railways’ goal of modernizing its fleet and services.

Financial Imperatives

The Indian Railways has faced financial challenges, exacerbated by the COVID-19 pandemic. The Operating Ratio (OR), a measure of financial health, has been concerning. In FY15 and FY16, the OR hovered around ₹90 but increased to ₹107 in FY22, indicating that the Railways spent ₹107 to earn ₹100​​​​​​. This financial strain is a primary driver for the shift to AC coaches, as AC 3-tier was the only class consistently making profits​​​​.

Production Plans

In response to these challenges, the Indian Railways has ramped up the production of AC three-tier economy coaches. For the fiscal year 2023-24, it plans to produce 2,765 AC three-tier economy coaches while planning only 138 sleeper coaches​​. The manufacturing units in Chennai, Kapurthala, and Raebareli are tasked with producing these coaches as part of a broader strategy to modernize the fleet​​.

Impact on Passengers

The introduction of more AC coaches has led to a significant shift in the passenger composition. In 2019-20, 7.8% of passengers traveled in AC coaches, up from 3.6% a decade earlier. Simultaneously, the share of Second-Class travelers decreased from 85.3% to 76.5%​​. This shift raises affordability concerns, as the fare for AC 3-tier has increased by 33 paise per passenger per kilometer in the past decade, compared to a 17.4 paise increase for Sleeper Class​​. Consequently, travelers who rely on more affordable travel options may find it challenging to secure Sleeper and Second-Class seats, potentially leading to overcrowding in non-AC coaches and forcing some to spend more on travel​​.

Regional Trends

A zone-wise analysis reveals a sharp increase in AC seats in the Central, Northern, and Western Railways, whereas the rise is less pronounced in the Southern and Eastern Railways. In the former zones, the share of AC seats increased by over 5% points, while the share of Second Class decreased by approximately 10% points or more​​.


The Indian Railways’ strategy to increase AC coaches while reducing Sleeper and Second Class accommodations is a balancing act between financial necessity and passenger affordability. While this move aims to modernize the railway system and improve revenue generation, it also raises concerns about accessibility and affordability for a large segment of the Indian populace. The future of Indian Railways will hinge on how well it can navigate these challenges, ensuring that modernization does not come at the cost of inclusivity and accessibility.



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