The new government defended its decision to increase railway passenger fares on Saturday after angry demonstrators blocked railway tracks and burned effigies of Prime Minister Narendra Modi to protest the move.
The steepest hike in 15 years is seen as the government's first tough step towards reforming a slow economy.
Defending steep hike as a ‘difficult but correct decision’, finance minister Arun Jaitley said the railways could survive only if users paid to avail of facilities.
“The passenger services have been subsidised by the freight traffic. In recent years, even freight fares have come under pressure,” he said in his first reaction to the 14.2% increase in passenger fares and 6.5% hike in freight rates.
Congress protests against rail fare hike in Delhi
Railway minister Sadananda Gowda said he was “forced” to take the step in order “to meet all the necessary expenditure”, hinting at the financial crunch the state-controlled network is facing. Years of financial neglect and populist policy of subsidising fares have hit the network.
Manoj Sinha, minister of state, railways, said the fares had not been hiked in the past 10 years due to political reasons. He justified his government’s move to charge more for tickets by saying that the railways is allowed to increase fares twice a year with a hike in diesel and petrol prices — an old tradition. “Railways is facing a Rs 900-crore loss every month,” he added.
Modi's government, which came to power a month ago after overthrowing the ruling Congress, has pledged to revive the economy after it grew at just 4.7% last year — the lowest in nearly a decade.
The hike is seen as the first dose of the “bitter medicine” that Modi recently warned was needed to revive the country’s economy.
Stating that the choice before the government was to allow the railways to bleed and eventually walk into a debt trap or raise fares, Jaitley said on Saturday: "India must decide whether it wants a world-class railway network or a rickety one.
Coming ahead of the full railway budget next month, the rail fares hike triggered loud protests on Saturday. In Uttar Pradesh on Saturday, scores of flag-waving protesters blocked railway tracks in Allahabad, forcing the Ganga-Gomti passenger train to halt.
In New Delhi, hundreds of supporters of the opposition Congress set fire to an effigy of Modi before police fired water cannon to disperse the crowd.
“It is a massive hike. If they continue to take steps like this, I am sure people of the country will punish the government,” Arvinder Singh Lovely, a Congress leader, said.
Modi's effigy was also burnt in Hyderabad by supporters of the Communist Party of India (Marxist), which is part of the opposition.
Congress spokesman Ajay Maken said the increased fares would put an “additional burden” on the middle-class and the poor, who are already facing the brunt of high inflation.
“This comes at a time when the prices of onions and potatoes have skyrocketed. As an opposition party, we demand an immediate rollback of this hike,” Maken said.