March 23, 2012

India's new railway minister rolls back fares increases

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INDIA's new railway minister, Mr Mukul Roy, wasted little time in rolling back many of the reforms proposed in his predecessor, Mr Dinesh Trivedi's, 2012-13 railway budget after he was appointed to the post on Wednesday.
Trivedi resigned on Sunday night after calls from within his own party, The Trinamool Congress, including party leader and former railway minister Mrs Mamata Banerjee, to stand down in reaction to the proposed fare increases included in last week's railway budget.
Roy rolled back all the fare changes excluding those in first and second class air-conditioned coaches in a 15-minute address to parliament on Thursday. He said the increases, which are the first in nine years, were a "burden on the common man already burdened" by the rising price of essential goods.
In addition to fare freezes, other changes proposed by Trivedi that have been dropped include the establishment of a new independent railway tariff regulator, expanding the railway board to include two new members, and to overhaul railway catering to allow foreign companies to enter the market. Roy does favour a catering overhaul, but only through an Indian contractor. Plans to round fares to the nearest five Indian Rupees have also been scrapped. This policy would, for instance, lower an Rs 12 ($US 0.25) fare to Rs 10, but increase an Rs 13 fare to Rs 15.
Indian Railways is set to lose between Rs 20bn and Rs 10bn in revenue as a result of budget changes, although Roy insisted it is the right thing to do. Roy has reportedly instructed the Railway Board to work out a revenue model that relies on commercial utilisation of railway properties and lucrative advertising opportunities.
"We will recover that amount through other, non-conventional means," Roy says. "A fare hike was just one of the possible ways of getting that money."
Trivedi's only remaining contributions are an increase in station platform tickets and an extension of Banerjee's subsidised travel scheme for poor urban commuters from 100km to 150km. He watched the parliamentary proceedings on television and described that the rollback as "unfortunate."
"If I get a chance, I would present the same railway budget again," he said. "Only time will tell who is right and who is wrong."

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