The Indian government said Wednesday that it would raise all railway passenger fares, which would be the first across-the-board increase in nine years, as it grapples with a growing fiscal deficit and weak finances.
Rail passengers will have to pay 10 to 25 percent more, depending on fare class, under the government’s plan, which is expected take effect Jan. 21. Pawan Kumar Bansal, the railways minister, said the higher fares will generate 66 billion rupees ($1.2 billion) in one year for the strained railway system. “Facilities and safety measures will improve with an increase in fares,” he told reporters.
The move comes as part of a series of fiscal changes initiated in September, including an increase in fuel prices and an opening of the retail sector to foreign investment. In October, Finance Minister P. Chidambaram announced a fiscal road map designed to cap the national deficit for this financial year at 5.3 percent of the gross domestic product.
The fare increase was welcomed by analysts. “This announcement signals the willingness of New Delhi to take politically unpopular decisions to put the economy in order,” said Sujan Hajra, chief economist at Anand Rathi Financial Services. “Even if these measures are not particularly populist, the government is now ready to bite the bullet for improving the fiscal situation.”
However, the government’s plan has already been greeted with some resistance from the opposition parties. “The near 20 percent hike in fares has dealt a big blow to the common man, who is already reeling under high inflation,” said the spokesman for the Bharatiya Janata Party, Ravi Shankar Prasad, according to the Press Trust of India.
Increasing the railway passenger fares has always been a politically sensitive issue, with critics saying that the move that will harm the poorest of the poor, who will not be able to afford higher prices.
Although fares for freight and higher-class travel have seen increases, a lack of political support has kept railways ministers from successfully pushing up passenger fares across the board since 2004. In fact, as Vikas Bajaj of The New York Times noted, adjusted for inflation, railway ticket prices have fallen about 48 percent in the past nine years.
In March 2012, the former railways minister Dinesh Trivedi proposed raising fares, citing a required improvement in safety and modernization of the railways. He was almost immediately dismissed from his position by the West Bengal chief minister and his boss, Mamata Banerjee, who said the fare increase was unacceptable.
Speaking with India Ink shortly after his dismissal, Mr. Trivedi said, “There is too much politics in rail and a trend to discourage any kind of modernization and it is a sad story. If the railway is not robust, the economy of India will not grow.”
India Ink: Railway Fare Hike Announced
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India Ink: Railway Fare Hike Announced
