India resists rail fare rise

India's railways carry millions every day

By Jyotsna Singh in Delhi

India's Railway Minister Mamata Banerjee has resisted pressure to increase passenger fares in the sector's annual budget.

I do not . . . propose to increase the passenger fare of any class or category of trains

Railways Minister Mamata Banerjee

Ms Banerjee announced an 11% increase in the budget, but left fares unaltered - despite an earlier warning by Prime Minister Atal Behari Vajpayee for people to be prepared for a costlier train service.

The fares for goods trains carrying essential food items including sugar, edible salt, kerosene and lentils will also remain the same.

Observers say the move is a disappointment for those who support efforts to rationalise tariffs to pull the sector out of a severe financial crisis .

Traffic growth

There has been a marginal increase in the cost of transporting non-essential items - including steel, iron and coal - by around 3%.

Mamata Banerjee: Faced criticism over budget

Ms Banerjee defended her decision to leave passenger fares unchanged.

She said passenger traffic grew by 10% last year and the rising number of new travellers would compensate for the move.

"I am hopeful that this buoyancy would continue in the coming years as well. I do not, therefore, propose to increase the passenger fare of any class or category of trains," she said.

Political critcism

Critics say that Ms Banerjee's budget seemed particularly aimed at benefiting her home state of West Bengal.

The state is due to get seven out of the 24 new trains announced on Monday.

Opposition politicians have described the budget as a damp squib which is unlikely to improve railway finances.

Ms Banerjee said her government planned to spend over $2bn on the railways, out of which the government would provide $76m.

She said the outstanding amount would be generated by borrowing on the market.

The overall state of the railways does not look financially sound.

It is reported to be in a debt trap, borrowing at a double digit interest rate from the markets.

Critics say these financial problems are due to the populist policies pursued by successive governments over the last 50 years - such as heavily-subsidised fares and the employment of more than one and a half million people.

The Indian railway network is one of the largest in the world, carrying 11 million people on its 12,500 trains every day.