The government on Friday pushed through a steep hike in railway passenger and freight fares in possibly the first instalment of the “tough measures” Prime Minister Narendra Modi had hinted at as necessary to revive the Indian economy.
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.
Coming ahead of the full railway budget next month, the announcement was greeted with loud protests by leaders across the political spectrum, with some warning it would fuel inflation.
“The government has imposed burdens on the ‘aam aadmi’ who voted them to power,” Congress leader Manish Tewari said. Tamil Nadu and Odisha chief ministers J Jayalalithaa and Naveen Patnaik strongly opposed the ‘anti-poor, anti-people’ hike and demanded a roll-back.
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Railways minister DV Sadananda Gowda defended the decision, saying he was simply “implementing an order of the previous UPA government.”
This was a reference to the interim budget presented by the UPA that had assumed certain revenues on the basis of a proposed fare hike announced on May 16 but withheld soon after.
“Meeting the annual expenditure would not be possible unless the revised rates as finalised by previous government is implemented. Hence the order withdrawing implementation of revised fare and freight has been withdrawn,” said a statement issued by the Ministry of Railways.
The hikes will help the Railways mop up an additional `8,000 crore this fiscal.
Industry sources said the transportation cost of a 50 kg cement bag was likely to increase by Rs 8 to Rs 10. “The freight hike will increase the cost of cement production and affect margins”, said HM Bangur, MD of Shree Cements.
The Confederation of Indian Industry (CII) wasn’t happy either. “While inevitable, the industry, currently reeling under a low growth scenario, can ill-afford the freight increase especially on bulk heavy industries like Steel, which contributes about 20% of the freight revenue of Indian Railways and are already under stress,” it said in a statement.
The Indian Railways transport an estimated 25 million people every day. The last fare hike was in October 2013.
Read: The real story behind railway passenger fare hike
(With agency inputs)
Interim Railway Budget coverage