PM Narendra Modi's 'tough decision' No 1: 14% hike in Railway fares, 6.5% freight

Jun 21 2014, 16:20 IST
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Railways Minister Sadananda Gowda had sought the approval of PM Narendra Modi to roll out the 'unpopular move'. Railways Minister Sadananda Gowda had sought the approval of PM Narendra Modi to roll out the 'unpopular move'.
SummaryUPA took decision on price hike as part of interim rail budget, says Rail minister Sadananda Gowda.

SIX days after Prime Minister Narendra Modi spoke in Goa on the need to take “tough decisions” to revive the economy, the government on Friday approved possibly the biggest ever hike in railway fares. Effective from June 25, passenger fares across all classes are set to rise by 14.2 per cent, while freight rates will go up by 6.5 per cent.

Railways Minister Sadananda Gowda had sought the approval of Modi to roll out the “unpopular move”, barely a couple of weeks ahead of the new government’s first rail budget.

While the opposition Congress criticised the move, citing a March 2012 tweet by Modi in which he had criticised the UPA government’s decision to hike freight rates days before the rail budget, Gowda said the decision to hike fares had been taken by the previous regime as part of the interim rail budget, but its “implementation” was withheld on May 16 — the day the election results were announced. He said that he was just withdrawing the order that had stalled the move then.

This is the first time that Railways officially admitted that the government had taken the decision to hike fares and freight as part of this year’s interim rail budget.

“I have merely withdrawn the earlier government’s order to withhold implementation of the fare revision on May 16,” Gowda told The Indian Express. “I am ready to face the brickbats.”

As much as 4.2 per cent of the fare hike is on account of a variable Fuel Adjustment Component (FAC) approved in last year’s rail budget. The remaining 10 per cent is a flat hike across all classes. Similarly, freight rates will have a 5 per cent hike flat over and above a 1.4 per cent of the FAC.

Sources said railways had pressed Gowda to seek a subsidy from the government if it was “politically inconvenient” at present to approve the hike. It had become a political decision since the last government had prevented the proposal of this very hike to be rolled out on May 16. But the problem before the railways was that the expected mop-up due from the hike — around Rs 9,000 crore — had already been factored into the interim rail budget passed in Parliament before elections.

It was understood within the railways that the hike would be automatic, and that was the reason why the decision to effect the hike was announced without

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