Six days after Prime Minister Narendra Modi spoke in Goa on the need to take “tough decisions” to revive the economy, the government on Friday approved a steep hike in the train fares and freight rates. Effective from June 25, fares of all classes are set to rise by 14.2 per cent, while the freight rates will go up by 6.5 per cent.
Railway Minister Sadananda Gowda had sought the approval of Modi to roll out the “unpopular move” barely a couple of weeks before the government’s first rail budget. Gowda had also made a case for the hike to Finance Minister Arun Jaitley earlier this week.
As much as 4.2 per cent of the fare hike is on account of a variable Fuel Adjustment Component (FAC) approved in last year’s rail budget. The remaining 10 per cent is a flat hike across all classes. Similarly, freight rates will have a five per cent hike flat over and above a 1.4 per cent of the FAC.
Railways had pressed Gowda to seek a subsidy from the government if it was “politically inconvenient” at present to give a green signal to the hike.
It had become a political decision since the last government had prevented the proposal of this very hike to be rolled out on May 16, the day of the election results that brought in the regime change. But the problem before the railways was that the expected mop-up due from the hike — around Rs 10,000 crore — had already been factored into the interim rail budget passed in Parliament before elections.
It was understood within the railways that the hike would be automatic, and that was why the decision to effect the hike was announced without asking Railway Minister Mallikarjun Kharge on May 16 and then quickly withdrawn hours later following Kharge’s objection.
“I have merely withdrawn the earlier government’s decision to withhold the fare revision on May 16,” Gowda told The Indian Express when contacted. “I am ready to face the brickbats.”
Railways’ subsidy to passenger operations has touched Rs 26,000 crore and its ordinary working expenses have been mounting on account of fuel bill and salary. The two take away almost Rs 70 of every Rs 100 earned by the national transporter.
The opposition parties have slammed the move, saying it bypasses Parliament by not introducing the fare hike in the rail budget. The Congress tweeted a screenshot of a tweet by Modi, who as the Gujarat chief minister a year ago, had criticised the then Railway Minister Pawan Bansal’s decision to hike fares after 16 years before the rail budget. “Just before rail budget UPA has suddenly increased railway freight rates bypassing Parliament. Wrote to PM against this,” …continued »