IR- just unable to fulfill the demand even of lucrative ac class passengers!
That is why the passenger traffic share of Indian Railways at national level has fallen down from 74%(1950) to below 15% today!!
Some of the wait listed passengers go by bus/air/taxi, and other who could not just cancel/postpone their travel.
One more fact is a large number of passengers...
more...

do not book the tickets at all after waiting list starts building up. So the number of passengers who wish to go for Rly journey, but do not go due to inability of IR to offer confirmed reservation, is much higher.
Instead of increasing capacity and offer reservation on demand, carry more passengers and earn more, IR is increasing the number of ac coaches in trains, often by replacing second class coaches, and trying to extract maximum for ac class paxs thru flexifares.
No wonder, airline operators have earned annual revenues of Rs. 1.75 lac crores surpassing the IR annual revenue (Rs.1.67 crores)!!!
Instead of increasing capacity (volumes) and keeping a reasonable ac class fare, IR is increasing it thru Flexi/Suvidha/Tatkal ect. It is a historically proven fact that in marketing, the one operating on big volume with reasonable profit wins and the ones trying to profiteer are destined to doom in the long run. Today, airline operators who have lured these harassed passengers proved to be are better marketeers than IR. One thing IR does not realize is most of the passengers have not travelled/ not used to travel by air. Once they taste the blood of mall like airports & incomparably fast and high profile air travel, they may prefer to pay more than ac rail travel and new aviation policy has already made plans for their red carpet welcome.
It should be a very disturbing fact for IR. With flexi fares in offing on large scale the airlines are going to be much merrier.