Biting the bullet podcast full#
Biting the bullet podcast series#

Given this round of fund-raising, the Railway Minister should make his first budget passenger, customer and investor friendly. It is hoped that the Railways will now start investing in projects under implementation and in a major programme to shore up safety and security on the wheels. Now that the new government wants to attract private and even foreign investment in infrastructure, including in the Railways, the financial viability of the system assumes importance. Excessive market borrowing was creating another burden. It is a known fact that the Railways was finding it difficult to fund major infrastructure, safety, and other ongoing projects, given the financial constraints. The only concern is that the freight increase could contribute to inflationary pressures. Gowda, and more so Prime Minister Narendra Modi, have decided to bite the bullet and mark up the fares substantially. Pawan Kumar Bansal of the Congress took charge in 2013 and effected the first increase, followed by a minor revision by Mallikarjun Kharge. For nearly a decade, successive Railway Ministers from alliance partners in the Congress-led UPA, found it convenient to deny the Railways any fare revision. With the Indian Railways moving 20 million passengers a day, the subsidy burden was clearly hurting the system. The increase was considered inevitable, but it can still be asked whether it should have come as a pre-budget announcement or could have waited for the Railway budget that will be presented to Parliament next month.

As a result, the freight rates were subsidising or diverting profits to the passenger segment, and this was not sustainable. It is estimated that the monthly loss to the Railways on account of passenger fares is about Rs.900 crore.

Biting the bullet podcast full#

The two hikes together are expected to fetch the Railways between Rs.7,000 crore and Rs.8,000 crore in a full year. However savage this pre-budget increase may be, it was expected, sooner than later. Gowda had clearly indicated that a hefty increase was coming, and had sought to explain it away on the ground that he was only implementing a decision taken by the previous government on May 16 that had been put on hold. These include a flat rate increase and a fuel adjustment component. >14.2 per cent increase in passenger fares and 6.5 per cent rise in freight rates. However, after crude oil prices starting soaring since mid-August ahead of the festive season, in October the Centre decided to cut the excise duty on petrol and diesel by Rs 2.50 per litre.Ĭentre bore the burden of Rs 1.50 per litre while oil marketing companies (OMCs) absorbed another Re 1 in cost, bringing the total benefit to consumers to Rs 2.50.Simultaneously, many state governments reduced their state VAT on petrol and diesel by Rs 2.50 a litre, bringing a relief by as much as Rs 5 per litre to consumers.In an indication of tougher decisions to come, the BJP-led NDA government has acted to raise resources for the Indian Railways.

The central government had raised excise duty on petrol by Rs 11.77 a litre and that on diesel by Rs 13.47 a litre in nine instalments between November 2014 and January 2016 to shore up finances as global oil prices fell. This is particularly true for the richer or the so-called industrialised states such as Karnataka and Maharashtra.

Likewise, states earn significant revenues from taxing petroleum products. Of course, a part of this was shared with states as part of an agreed devolution formula. In 2017-18, the Centre earned Rs 2.29 lakh crore from central excise duty on petroleum products, which is about 11 percent of the Centre's total gross tax revenues of Rs 19.46 lakh crore earned during the year. Successive governments, both at the Centre and states, have used petroleum products as milch cows. PhonePe Beat of Progress Powered by Moneycontrol.Pharma Industry Conclave Unlocking opportunities in Metal and Mining.The Challengers Life Insurance Made Simple.

Biting the bullet podcast series#

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