The Narendra Modi governement implemented its first dose of bitter pill with the railways announcing a steep hike of 14.2% in passenger fares and 6.5% in freight tariffs. In the recent times, this is the most abrupt single-shot rise and the highe
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The Narendra Modi governement implemented its first dose of bitter pill with the railways announcing a steep hike of 14.2% in passenger fares and 6.5% in freight tariffs. In the recent times, this is the most abrupt single-shot rise and the highest too. The price of season tickets might be doubled for travellers of the suburban trains.
While the opposition thoroughly protested against this move, Modi government justified the massive fare hike stating the fact that Indian Railways revenues are not keeping up with the projections and the national transporter is facing a drop in passenger number.
Congress party attacked this decision and accused the governement of burdening the common man. Ajay Maken, party spokesperson told reporters, “This comes at a time the prices of onions and potatoes have skyrocketed. Also, there is concern about delay in the monsoon and the ongoing problem in Iraq is also having an effect on global crude prices.”
All the opposition parties have demanded a rollback of this rise. “This hike will affect prices of food items, coal, and hence we strongly condemn it.”
The hike will be effective from 25th June which will help Indian Railways raise an additional Rs. 8000 crore in the financial year. This will also apply to tickets purchased in advance for journeys commencing on or after 25 June.
In his earlier notice, Modi had already stated his governement's intent of taking tough decisions to recover the economy that has grown at less than 5% in the past 2 years. Last weekend, Modi said, "I am well aware that my steps may dent the immense love that the country has given me. But when my countrymen realise that these steps will result in getting the financial health back, then I will regain that love."
The decision on these hikes was taken on February 10 by the UPA governement but was put on hold because of elections.
Railway Minister Sadananda Gowda said, "I was forced to implement the order that was done by my predecessor. I am only withdrawing the withholding order. The interim budget presented by the previous government had assumed certain revenues on the basis of the proposed hike that was announced on May 16. That was the day the Lok Sabha election results were announced, giving the Modi-led BJP a clear majority and arming it with the numbers needed to take hard decisions. The hike was notified but put on hold immediately that day.”
A railway minitry statement said, “"Meeting the annual expenditure would not be possible unless the revised rates as finalised by previous government is implemented. Hence(the) order of withdrawing implementation of revised fare and freight has been withdrawn."
"The rail price hike is a very positive move. It clearly shows that the government is willing to bite the bullet on public finances. While it will help the financials of railways, the impact on inflation will only be mild,” said DK Joshi, chief economist, Crisil.
Chandrajit Banerjee, director-general, CII said,"Railway freight rates have been increased with a view to resource mobilisation, which is today the most critical requirement for Indian Railways. Without adequate resources, Indian Railways will not be able to afford its modernisation, capacity addition and safety plans."
Executive director and CIO at Centrum Wealth Management, Kunj Bansal said,"The railway freight hike would be negative for sectors such as cement, coal and steel, but markets may show some resilience as this shows the government's intent to go ahead with hard reforms.”
The Indian Railways transport an estimated 25 million people every day. The last fare hike was in October 2013.
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