Rail fare hike difficult but correct decision, says FM Arun Jaitley

The decision to increase the rates was mooted by the Railway Board on February 5, when the UPA was in power, said Jaitley.

By: Press Trust of India | New Delhi | Updated: June 21, 2014 9:53 pm
arun The only way that Railways can survive is when users pay for the facilities that they avail, said Jaitley. (Source: PTI)

Defending the steep hike in rail fare and freight rates as a ‘difficult but correct decision‘, Finance Minister Arun Jaitley said the railways can survive only if users pay for availing of facilities.

“The passenger services have been subsidised by the freight traffic. In recent years, even freight fares have come under pressure,” he said in his first reaction to the 14.2 per cent increase in passenger fares and 6.5 per cent hike in freight rates.

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 ramshackled one.

“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.”

Jaitley, who will present the Union budget next month, said a loss-making railway would provide below-par services and would eventually not even have the resources to meet its expenditure.

In a Facebook posting titled ‘The Truth of Railway Fare Hike’, the minister said the decision to increase the rates was mooted by the Railway Board on February 5, when the United Progressive Alliance was in power. The board proposed a 5 per cent increase in freight rates and a 10 per cent increase in passenger fares.

The proposal was to rationalise freight rates with effect from April 1 and passenger fares with effect from May 1, he said.

“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.

“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 said.

The Railway Board, Jaitley said, accordingly notified this increase on May 16, when the election results were being
declared. The decision gave effect “to what the Railway Board, the Rail Minister and the then Prime Minister had concurred.”

However, Jaitley added, then Railway Minister Kharge “developed cold feet and in the evening of May 16, 2014, even after the UPA had been defeated in the elections, he countermanded the order of the Railway Board so that theoretically the decision taken by him and the then Prime Minister is implemented by the Railway Minister of the NDA government.”

Jaitley said that by withdrawing the countermanding order, current Railway Minister D V Sadananda Gowda has taken
a challenging decision.

“The choice before Shri Gowda was whether to allow the Railways to bleed and eventually walk into a debt trap by following the policy of the UPA government or implement the decision which the UPA government had taken to increase the fares for both passenger and freight but did not have the courage to implement.”

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  1. A
    Jun 21, 2014 at 11:51 am
    has finance minister seen the percentage hike done for suburban rail season tickets . new fares are 2 to 3 times . the hike is 100 to 200 % which neither rational not justified but criminal
    1. S
      Jun 21, 2014 at 5:46 pm
      This fare hike is not clear enough. If the government needed investementfor new material, it was better to charge about 25% on top of the stockmarket. Those investors if they make their money, they are using it as black-money or are investing it in foreign country as Tata, Suzlon and more have donein a debt loaded country as the Netherlands. The common Indians must payfor investments and the home companies are investing in foreign states.Put an end to this practices. India first must be the policy.
      1. J
        Jayanarayan Kongasseri
        Jun 22, 2014 at 4:22 am
        Any additional tax will not go well with us. But for developement sake, we have to accept reasonable additional burdens. The transportion cost of railways can be comaparable vis a vis the roadways. We have accepted the mive increase in transportation cost on roadways and then why not through railways.
        1. N
          Jun 22, 2014 at 12:22 pm
          Now we can only hope that for the 200-300 rupees hike, Modi Sarkar gives us at least some of these develipments - faster trains, more seat availability, safer tracks, increased connectivity, cleaner trains, cleaner stations, better services.
          1. N
            Jun 22, 2014 at 12:23 pm
            We should not have voted for UPA again and again.
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