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Railroads fare hike 14% and 6.5%

The Narendra Modi government on Friday administered the first bitter pill it prescribed with the railways announcing a sharp hike of 14.2% in passenger fares and 6.5% in freight tariffs — the steepest single-shot increases in recent memory and perhaps the highest ever. For commuters of suburban trains, the hike is still sharper — in certain cases the price of season tickets has been doubled.

The government justified the massive fare hike on two grounds. One, the hike was absolutely necessary in order to bring the cash-strapped national transporter back on track, and second, the decision was actually taken by the UPA government on February 10, and left for the new government to implement. The opposition predictably cried foul.

Apart from calling the increase “back-breaking” for the people, it questioned why the fare increase wasn’t announced in the railway budget that’s just a couple of weeks away.

The increased passenger fares and freight rates will come into effect from June 25. While passenger fares will go up by about one-seventh on average from their current levels, specific fares — such as season tickets on suburban networks — will increase significantly more.

Experts saw the move as a bold step towards uncoupling fare and freight revisions from the annual budget and towards implementation of dynamic pricing, a mechanism which gives railways the autonomy to raise or lower fares and freight tariffs depending on fluctuations in fuel costs.

As a matter of fact, the decision on these hikes was taken on February 10 by the UPA government with the caveat that it would come into effect after the polls, official sources said. Accordingly, the Railway Board notified the twin hikes on May 16 when the results of polls came in. However, just hours later, with his party suffering a rout, the former railway minister Mallikarjun Kharge leaned on the Railway Board to withhold the hike.

 

The railways is facing a severe cash crunch with the subsidy on passenger fares touching Rs 26,000 crore annually and the transporter losing Rs 30 crore every day after it chose to withhold the May 16 hike. Successive railway ministers in the last decade have shied away from raising passenger fares in their budgets, placing a huge strain on railways’ finances.

Speaking at a meeting of general managers and divisional managers, railways minister Sadananda Gowda on Thursday said the government is short of resources and some resource mobilisation should be a priority. The railways need significant investment to upgrade decaying tracks and signalling systems to prevent accidents. Modernisation and revamping of the railways is the top infrastructure priority of the government, which wants to build a Diamond Quadrilateral project of high-speed trains and a network of freight corridors over the next few years, all of which would require huge investments.

Defending the decision, railways said, “Passenger fare and freight rate revision was done as part of the interim budget presented by the previous government. But the implementation of revised rates was withdrawn by the previous regime because of the elections…Meeting the annual expenditure would not be possible unless the revised rates, as finalized by the previous government, are implemented,” it said.

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