Is it necessary to go for railway fare hike?

Railway Fare Hike
Railway Fare Hike

Fare Hike in Indian Railways

Congress-led UPA government has given us so many price hikes in the last ten years. Continuing the same tradition Modi government has taken the decision of hike in railway fare and freight charges by 14.2% in all the classes and 6.5% respectively including the Fuel Adjustment Component (FAC). The FAC for passenger fare is 4.2% whereas for freight charges it is 1.5%. The FAC changes with the fluctuations in oil prices and revised once in every six months. Previous government has revised the rates as per the FAC in October 2013.

The increase was finalized by the UPA government in February and left the implementation decision on the next government. It even promised to revise it in case oil prices falls. BJP has taken the decision and rail fare hike will come into effect from June 25. Though the announcement was made on May 16 the day when election results were declared but the decision of hike was immediately put on hold that day.

Increasing freight charges will lead to increase in the price of all the essential commodities. As per analysts consumer price inflation will increase with the increase in passenger fare whereas wholesale price inflation will go up with freight hike. Railway Minister Sadananda Gowda announced the increase and added that he was forced to implement the orders. Finance Minister Arun Jaitley defended the government’s decision and said that it is a ‘difficult but correct decision’.

BJP called the decision necessary for the survival of railway and inevitable as the passenger segment railway has been bearing the loss of Rs 900 crore per month. With this increase railway will earn Rs 8,000 crore a year.

Few days back Prime Minister Narendra Modi had said that India should be ready for ‘tough decisions’ which are required to improve the financial condition of the country. He was actually preparing the ground for this and many more such decisions in future.

All political parties are opposing the decision of hiking railway fares. The Aam Aadmi Party (AAP) is saying that countrymen are feeling cheated as this decision is jut opposite to what BJP had promised during its election campaign. BJP vowed to bring down the prices. The AAP is also expecting increase in electricity tariff in Delhi from the month of August. It stated that an average electricity consumer in the capital is overcharged by the discoms.

Left parties have also condemned the price hike as said that the BJP is doing the same by pursuing the policies of the previous UPA government. Just like Congress Modi’s government has announced the hike before actual budget which is to be announced in the next month.

Former railway minister and RJD Chief Lalu Prasad also criticized Narendra Modi’s government for making this announcement. He was the railway minister for five years in UPA I. During his tenure fare was not hiked even once and railway generated surplus.

Instead of increasing the fare in one go, the government should have increased it at a regular intervals of time. Railway can be said a lifeline of the country. Any such decision to fill the gap of the fiscal deficit would surely produce a crushing effect. Burden on poor and middle-class person would increase to manifold. On the other hand it might be right from the government point of view. If we want modern and world class services we have to pay more for the same.

Related Information:

Railway Budget 2015-16 Highlights

100 Days of Modi Government