The one
that is creating ripples is the steep price hike in rail passenger and freight
fares - the first dose of the
"bitter medicine" Prime Minister Narendra Modi has warned to revive
the economy. India's railway network is one of the world's largest, but years
of low investment and populist policies to subsidise fares at affordable levels
have crimped growth in new lines and hindered private investment. From June 25,
rail passenger fares will increase by 14.2 percent and freight rates by 6.5
percent, the railways ministry said in a statement. The last fare hike was in
October 2013. It sure would impact many of us…. For my travel from Triplicane
to Kasturibai nagar (ticket valid from Chennai Beach to Velachery – the price
is Rs.5) and the monthly season costs Rs.105/- - that is set to go up by a huge
percentage. A newspaper report quoting
an official from the Mumbai Railway Vikas Corporation justified the hike on the
grounds that season ticket holders are paid conveyance amount by their
employers. He said, "Why should we subsidize a person by charging only for
15 journeys when he is undertaking more than thrice that number per
month?"
To the Q
why such steep hike now – Indian Express has the answer … it states that the answer to this is contained in the interim
rail budget presented this March by predecessor M Mallikarjun Kharge. Calculating
this fiscal's earnings targets for the public transporter, Kharge had factored
in a hike of 14.2 % in passenger fares and an increase of 6.5% in freight
charges in his interim budget this March. For political concerns of imposing
the tough decision in the run-up to the general elections, the United
Progressive Alliance (UPA) government had not implemented the decision. During
Pawan Kumar Bansal's stint in the ministry, the railways had taken a policy
decision to charge the Fuel Adjustment Component (FAC) twice a year. The hike
indicated by Kharge in his budget speech was due in April this year. Unable to
implement the decision because of the election code of conduct, the Railway
Board notified the decision on the day of the announcement of the election
results on May 16. The notification was promptly withdrawn the same day after a
few hours, reportedly because Kharge - who asserted that he continued to be the
railways minister on that date - put his foot down.
Now BJP
Govt has done what was thought to be undoable – a steep hike. Attacking the
previous government, Union Minister M Venkaiah Naidu today said the hike in
rail fares was “thrusted upon” by the UPA, but it was a “bitter medicine” that
had to be swallowed in the interest of sound health of the economy. Naidu
explained that only 4,000 out of 12,000 trains announced by successive railway
ministers during the last 10 years have been introduced, said the present
railway projects need Rs five lakh crores for implementation.
Firstpost
reports that in Feb 2014 when the UPA was in power, it was the Railway Board
which proposed a 5% increase in the freight rates and a 10% increase in the
passenger fares. The proposal was to rationalise the freight rates – the proposal
was to give the Railways an additional revenue of Rs 7900 crores. The then
Prime Minister approved the hike and suggested that both freight and passenger
fare should be implemented with effect from 1 May, 2014 itself. The Railway
Board accordingly notified this increase on 16 May, 2014 when the Election
results were being declared. This decision gave effect to what the Railway
Board, the Rail Minister and the then Prime Minister had concurred. The Railway
Minister developed cold feet and in the evening of 16 May, 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.
By withdrawing
the countermanding order, the present Railway Minister, DS 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. A loss making railway will provide below-par
services. It will eventually not even have the resources to pay its’ bill.
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
hike — 14.2% in all classes of passenger fares and 6.5% in freight charges — is
effective June 25 and will also apply to tickets purchased in advance for
journeys commencing on or after that date. The difference in fare for such
advance tickets will be collected by ticket examiners during the journey. It applies
for season tickets too … and how they would be collected remains to be seen –
as, today web searches threw no result on this.
With regards
– S. Sampathkumar
22nd June 2014.
