India Keeps Railway Fare Hikes on Hold Ahead of State Elections

New Delhi: Indian Railway said on Thursday it would pump $17.6 billion into its decrepit, loss-making network in the coming year, a fifth more than this year, but the government shied away from raising fares as it eyes crucial state elections. The world's fourth-largest rail network, saturated and slow after years of underinvestment, is one year into a 5-year $137 investment plan that Prime Minister Narendra Modi is betting on to overhaul the network and boost economic growth. But it is facing a massive increase in labour costs and slowing growth in both passenger and freight revenue. Presenting the annual rail budget for 2016/17, Railway Minister Suresh Prabhu said the railways need more revenue to offset a $4.7 billion rise in its wage bill, and to fund the 21 per cent rise in the budget to Rs 1.21 lakh crore ($17.6 billion). "These are challenging times...We are faced with two headwinds, entirely beyond our control; tepid growth of our economy's core sectors due to an international slowdown and the looming impact of the 7th pay commission," Prabhu told parliament. Modi has prioritised overhauling India's dilapidated infrastructure in his first 20 months in power, but his government is expected to focus on more populist spending measures in Monday's union budget, making fare hikes tough to justify. Some 23 million, mostly poorer, people use the trains every day, but they generate little extra income to improve services because fares are heavily subsidised. A 3,150 km (1,960 mile) trip between New Delhi and Thiruvananthapuram can cost as little as 590 rupees, not much more than a trip on the underground in London. The government will hand the railways 450 billion rupees in funding for next year, up 12.5 percent on this year, but most of that will be sucked up by the wage bill rise. It is in rising revenues that Prabhu said he will find the cash to keep the modernisation plan on track. The railways is predicting a rise in revenue receipts to 1.85 trillion rupees next financial year, a 10.1 percent rise on this year. That compares with the 7 percent rise over last year as fewer-than-expected travellers caught the train. The railways will also seek to increase the share of non-tariff revenue, from areas like advertising and station redevelopment. Prabhu said the railways also would seek to revive its freight business, which provides two-thirds of the railways' revenue but is struggling as industrial production falls. "We need to look beyond the current approach to expand the basket (of freight commodities). We will make sure we recapture the traffic," he told India's parliament, announcing plans for three new dedicated freight corridors across the country. .© Thomson Reuters 2016.(This story has not been edited by NDTV staff and is auto-generated from a syndicated feed.)

India Keeps Railway Fare Hikes on Hold Ahead of State Elections

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