Govt rolls back first rail fare hike in eight years

Agencies/New Delhi

People are seen on a congested railway platform at a station in Kolkata. The Indian government yesterday rolled back a hike in rail fares, underscoring the Congress-led coalition’s difficulties in implementing tough policy decisions

The government yesterday scrapped plans to hike most rail fares, underscoring the Congress-led United Progressive Alliance’s growing difficulties in implementing tough policy decisions. “I intend to give relief to the already burdened common man,” new Railway Minister Mukul Roy told parliament after his predecessor Dinesh Trivedi resigned on Sunday over the controversial issue. Trivedi had announced the increases in rail fares, a touchstone issue among millions of Indians, only last week but the proposed rises triggered fury from his populist Trinamul Congress party, which is part of the ruling coalition. The dilapidated railways, still the main form of long-distance travel in India despite fierce competition from airlines, run thousands of passenger and freight trains and carry millions of people daily. G Raghuram, a transport expert and professor at the Indian Institute of Management in Ahmedabad, said the network - which is key to the nation’s future economic growth -would suffer after the rollback. “The hike was an important step because it broke the norm that fares cannot be touched because of political compulsions,” he said. “The rollback sets a wrong premise.” Prime Minister Manmohan Singh has suffered a series of embarrassing policy setbacks in recent months as his fractious coalition government struggles to push through its liberalisation agenda. The withdrawal of major reforms to the retail sector, slowing economic growth and a series of corruption scandals has beset Singh during his second term in office. The 79-year-old prime minister has been criticised as indecisive and the Congress Party fared poorly in recent state elections. Trinamul Congress chief and West Bengal Chief Minister Mamata Banerjee, led outrage against the rail price hikes - the first in eight years - saying that they were a deliberate “anti-poor” policy. Banerjee, a firebrand former railway minister, has become a thorn in the side of the government after she also forced the reversal of retail reforms in December. Roy said that fares for first and second class passengers in air-conditioned carriages would still go up, but there would be no increases for other classes of travel more commonly used by the poor on a network that carries 20mn people per day. “The proposal to increase will impact the common man,” Roy said. “I intend to give relief by not increasing fares in any of these classes.” The proposed modest nationwide hikes would have included the 1,400km Mumbai-Delhi fare rising by only Rs28 (55 cents) for bottom-rung second-class passengers. Trivedi had argued that the ticket price rises were necessary to improve safety standards on the crumbling British colonial-era trains. In his budget, he had pledged to spend a record Rs601bn ($12bn) in the financial year 2012-13 on improving safety and tracks, building new lines and introducing new trains. After the U-turn on the fares hike, it was uncertain whether the planned upgrade would still take place. A Railways Ministry official said the bulk of the proposed fare increases, which would have brought additional revenue of about Rs40bn ($8bn) a year, had been withdrawn. “We are now likely to get only around Rs2bn ($40mn) from the remaining hike in fares in upper categories,” said the official, who asked not to be identified because of the sensitivity of the issue. “This is yet another example of how a government ally had its way on a key government decision,” said D H Pai Panandiker, head of the RPG Foundation, a Delhi-based think tank. “This government will need to find new allies, else it can’t go on.” “This episode proves that anything that goes against the common man will be resisted. That means there will be no petrol price hike, no diesel price hike - meaning the budget will be in a complete mess.” Trade unions were split on the government’s latest move, with some backing increased fares as the only way to fund improvements. “This is a big blunder. The fare increase was needed,” said Shiva Gopal Mishra, of the All India Railwaymen’s Federation (AIRF), which has 1.26mn members. “The rise was a positive step as the Indian railway needs more money for its survival,” he said. India’s train system has a notoriously bad accident record, with a recent official report revealing almost 15,000 people are killed a year crossing rail tracks - a figure the government described as a “massacre.” Derailments, collisions and other accidents are also common.