The Indian Railways for the last few years have been running at a loss. The only way that the Railways can survive is when users pay for the facilities that they avail. The passenger services have been subsidised by the freight traffic. In recent years even freight fares have come under pressure.
On 5 February 2014 when the UPA was in power, it was the Railway Board which proposed a 5% increase in the freight rates and a 10% increase in the passenger fares. The proposal was to rationalise the freight rates with effect from 1 April 2014 and the passenger fares with effect from 1 May 2014. Even as the Interim Budget of the Railways was yet to come, the date 1 May 2014 was chosen hoping that the general elections would be over by that day. The Railways had proposed that this increase would give it an additional revenue of Rs 7,900 crores. Armed with this decision, then Railway Minister Mallikarjuna Kharge met then Prime Minister Manmohan Singh on 11 February 2014. The then Prime Minister approved the hike and suggested that both freight and passenger fare should be implemented with effect from 1 May 2014.
The Railway Board accordingly notified this increase on 16 May 2014 when the election results were being declared. This decision gave effect to what the Railway Board, the Minister for Railways and the then Prime Minister had concurred. The Railways Minister developed cold feet and, in the evening of 16 May 2014, even after the UPA had been defeated in the Elections, he countermanded the order of the Railway Board so that theoretically the decision taken by him and the then Prime Minister is implemented by the Railway Minister of the NDA Government.
By withdrawing the countermanding order, present Railway Minister DS Sadananda Gowda has taken a challenging decision. The choice before Gowda was whether to allow the Railways to bleed and eventually walk into a debt trap by following the policy of the UPA Government or implement the decision which the UPA Government had taken to increase the fares for both passenger and freight but did not have the courage to implement . A loss making Railways will provide below-par services. It will eventually not even have the resources to pay its bills. India must decide whether it wants world class railways or a ramshackled one. The Railways Minister has taken a difficult but a correct decision.
The writer is the Union Minister for Finance and Defence