Tough journey ahead

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14.2% hike in passenger fares and 6.5% in freight rate will mop up `8,000 crore in FY14

Ahead of the rail budget, the Narendra Modi government on Friday took a tough decision to raise long overdue railway passenger fares by a whopping 14.2 per cent in all classes and hiked freight by a modest 6.5 per cent with immediate effect to mop up an additional Rs 8,000 crore in the remaining part of this financial year.

The previous UPA government on the day of election results on May 16, had already hiked fare prices, later only to put it on hold fearing charges of impropriety and left the decision to the new NDA government that was sworn-in on May 26.

Railway minister Sadanand Gowda, who had a pre-budget meeting with finance minister Arun Jaitley on Tuesday, said a decision on rail fare and freight hike would be taken this week after consulting prime minister Modi.

The meeting with Jaitley was to seek enhancement in gross budgetary support for rail projects in the union budget to be presented in the second week of July.

Innovative methods to raise additional funds by permitting foreign direct investment (FDI) or by taking the public private partnership (PPP) route and through the floating of bonds, are being considered. After the drift of the past several years, the railways need to be infused with a new dynamism now, Gowda had said.

Gowda’s predecessor M Mallikarjun Kharge had factored in an across-the- board 10 per cent hike in passenger fares besides an additional 4.2 per cent raise as fuel adjustment component and an increase of freight charges of 6.5 per cent. At a recent meeting with railway board officials, Gowda is understood to have agreed to the proposals.

Figuring high on Gowda’s agenda are plans to build high-speed corridors and to accord greater priority and funding to central rail projects in Jammu and Kashmir and the North Eastern states.

Gowda had told Jaitley that railways needed the hike as the interim rail budget’s calculations were all based on the assumption that a hike would be effected.

It had been communicated to the government that if a hike was not allowed then the government should cover the losses through a subsidy to the tune of Rs 10,000 crore. The hike is inevitable as the financial position of railways is not too sound, a senior railway ministry official had said a couple of days ago. Currently, railways are facing a severe financial crunch with passenger subsidy touching the Rs 26,000-crore-mark.

Bihar’s RJD leader Lalu Yadav, who left train fares untouched during his tenure as railway minister in 2004-2009, was among the first criticise the fare hike and demanded a rollback.

“The BJP has fired its first salvo at the poor people of this country. This has never happened in the history of the country. Whenever the BJP comes to power, they try and get a few people all the advantages,” Prasad claimed.

Samajwadi Party’s Naresh Agarwal said, “This is the start of acchhe din. People should be prepared to bear the burden.” According to Congress leader Manish Tiwari, it was “ironic that the same people opposed the previous government for any important economic decision on grounds of burdening common people.”

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