The Indian Budget 1996-97 The Indian Economy Overview

Indian Railway Budget Goes Easy on the Poor

Rail Budget Augurs Well for Upcoming National Budget

India Railways Minister Ram Vilas Paswan presents a budget that goes easy on the common man while hiking luxury class fares in an effort to bridge a huge deficit.


Suburban train at Churchgate station, Bombay, at rush hour.
There were few surprises in the rail budget, presented by railways minister Ram Vilas Paswan on 16 July.

Living up to it's populist agenda, the United Front governmentannounced a freeze on second class fares, while hiking luxury class travel by 10%. Train trips over 200 kilometers long will cost 5% more.

Freight charges will also go up by 10% on all cargo, except on essential items like food, fertilizer, cattle feed and cooking fuel.

All price hikes are effective as of the 1 August 1996.

India's rail network, the largest in the world helped knit together the newly independent nation, nearly fifty years ago. But increased fuel costs, maintenance of the aging fleet of trains and demands for new rail lines into remote regions, has put enormous strain on the system.

Every year India's trains carry an estimated 4 billion passengers, 90% of whom travel second class. Fares are heavily subsidized, but no government interested in staying in power has been brave enough to hike the cost of travel.

The government is hoping that improved passenger services, like better catering, computerized rail reservations, on-board telephones, and weekend travel packages will lure the executive traveler and high-end tourists.

The fare and freight hikes are an attempt to bridge a massive deficit of 9.27 billion rupees (about 270 million US$). The government has also announced limited plans to privatize certain sectors of the rail network and an own- your-wagon scheme for high volume shippers. Now, it remains to be seen how generously the finance ministry will help out the beleaguered railways ministry in the upcoming National Budget.

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Jennifer Morrow is a Canadian radio journalist based in New Delhi. She edits a publication on social and current affairs in South Asia, and is a freelance correspondent for the Voice of America.
She is a member of the Indian Economy Overview editorial panel.

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