PM Narendra Modi's 'tough decision' No 1: 14% hike in Railway fares, 6.5% freight

Written by Avishek G Dastidar | New Delhi | Updated: Jun 21 2014, 21:50pm hrs
Rail fareRailways Minister Sadananda Gowda had sought the approval of PM Narendra Modi to roll out the 'unpopular move'.
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 possibly the biggest ever hike in railway fares. Effective from June 25, passenger fares across all classes are set to rise by 14.2 per cent, while freight rates will go up by 6.5 per cent.

Railways Minister Sadananda Gowda had sought the approval of Modi to roll out the unpopular move, barely a couple of weeks ahead of the new governments first rail budget.

While the opposition Congress criticised the move, citing a March 2012 tweet by Modi in which he had criticised the UPA governments decision to hike freight rates days before the rail budget, Gowda said the decision to hike fares had been taken by the previous regime as part of the interim rail budget, but its implementation was withheld on May 16 the day the election results were announced. He said that he was just withdrawing the order that had stalled the move then.

This is the first time that Railways officially admitted that the government had taken the decision to hike fares and freight as part of this years interim rail budget.

I have merely withdrawn the earlier governments order to withhold implementation of the fare revision on May 16, Gowda told The Indian Express. I am ready to face the brickbats.

As much as 4.2 per cent of the fare hike is on account of a variable Fuel Adjustment Component (FAC) approved in last years rail budget. The remaining 10 per cent is a flat hike across all classes. Similarly, freight rates will have a 5 per cent hike flat over and above a 1.4 per cent of the FAC.

Sources said railways had pressed Gowda to seek a subsidy from the government if it was politically inconvenient at present to approve 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. But the problem before the railways was that the expected mop-up due from the hike around Rs 9,000 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 the reason 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 Kharges objection.

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 slammed the hike decision, saying it bypasses Parliament as it was not brought in through the rail budget. The Congress tweeted a screenshot of a March 7, 2012 tweet by Modi, who as the Gujarat chief minister, had criticised the then Railway Minister Pawan Bansals decision to hike fares ahead of the rail budget. Just before rail budget UPA has suddenly increased railway freight rates bypassing Parliament. Wrote to PM against this, Modi had tweeted.

Congress leader Manish Tewari was quoted by PTI as saying, After coming into government, without taking Parliament into confidence and without bringing out a white paper... , they have gone ahead and increased rail tariffs by 14 per cent. Those who till yesterday were talking about aam aadmi and how his concerns should be addressed, have now started doing the opposite by imposing as much burden as they can on the so-called aam aadmi who voted them to power.

The Left parties slammed Prime Minister Modi for his reward to the people. We strongly condemn the unprecedented hike in railway fare. This is going to be a huge burden on the people at a time when they are already battling relentless price rise, CPM Politburo member Brinda Karat said. It is criminal. We demand its reversal.

Trinamool Congress spokesman Derek OBrien said: Is this a super rail budget before the rail budget The common man is already burdened, now he will be over-burdened.