The passenger services have been subsidised by the freight traffic. In recent years, even freight fares have come under pressure, he said, reacting to the 14.2% increase in passenger fares and 6.5% hike in freight rates.
Stating that the choice before the government was either 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 on a loss.
Jaitley 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 post 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 UPA was in power.
The board had proposed a 5% increase in freight rates with effect from April 1 and a 10% increase in passenger fares from May 1, he said.
The then railway minister Mallikarjuna Kharge had met then prime minister Manmohan Singh on February 11. Singh approved the hike and suggested that both freight and passenger fare hikes should be implemented with effect from May 1, Jaitley said. The Railway Board, Jaitley said, notified this increase on May 16, when the election results were being declared. However, Jaitley added, Kharge developed cold feet and in the evening of May 16, even after the UPA had been defeated, he countermanded the order.