Terming the steep hike by the Railways in passenger fares and freight as a “difficult but correct decision”, finance minister Arun Jaitley on Saturday came out in defence of the move and said it is the only way for it to survive.
“The passenger services have been subsidised by the freight traffic. In recent years even freight fares have come under pressure,” he said in a Facebook post, adding that the Indian Railways has been running at a loss for the past few years.
Implementing a decision of the previous government, railway minister DS Sadananda Gowda had on Friday increased passenger fare by 14.2 per cent and freight by 6.5 per cent.
Stating that the choice before the government was to allow the Railways to bleed and eventually walk into a debt trap or raise fares, Jaitley said, “India must decide whether it wants a world-class railway or a ramshackle one.”
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“The railway minister has taken a difficult but a correct decision…The Indian Railways for the last few years have been running at a loss. The only way that Railways can survive is when users pay for the facilities that they avail.”
The finance minister, who will present the Union Budget 2014-15 next month further pointed out that a loss making railway will provide below-par services. “It will eventually not even have the resources to pay its bill,” he said in the post titled ‘The Truth of Railway Fare Hike’.
Supporting his Cabinet colleague Gowda, whose decision has come in for a lot of flak from opposition parties, Jaitley said the decision to increase the rates was mooted by the Railway Board on February 5, when the UPA was in government. The board proposed a 5 per cent increase in freight rates and a 10 per cent increase in passenger fares.
“Even as the Interim Budget of the Railways was yet to come, the date May 1, 2014, was chosen hoping that the general elections would be over by that day. The railways had proposed that this increase would give the railways an additional revenue of Rs 7,900 crore,” Jaitley said.
“Armed with this decision, the then railway minister Shri Mallikarjuna Kharge met the then Prime Minister Shri Manmohan Singh on February 11, 2014. The then Prime Minister approved the hike and suggested that both freight and passenger fares should be implemented with effect from May 1, 2014, itself,” Jaitley added.
The proposal was to rationalise freight rates with effect from April 1 and passenger fares with effect from May 1, he said.
Applauding Gowda for taking a “challenging decision” and refusing to walk into a debt trap, the finance minister said that the former UPA government had developed cold feet and counter-manded the order of the Railway Board.