Topic Introduction Topic of the week for discussion : 19 to ... - Bulls Eye

Topic of the week for discussion : 19 th to 25 th March
Topic : Railway Budget and its aftermath
India will raise railway passenger fares for the first time in eight years, snapping
a populist trend to help mend the finances of a creaking network that is a
bottleneck for growth in Asia's third-largest economy.
The railway budget, released on Wednesday, precedes the union budget, to be
presented in parliament by Finance Minister Pranab Mukherjee on Friday, which
is expected to push fiscal deficit reduction amid slowing economic growth and
high inflation.
Passenger fares were last raised before the Congress party won its first term in
office in 2004. The refusal by successive ministers to raise fares has strained the
ministry's finances, which in turn has sapped the amount of money available to
lay new track and modernise services.
Clogged freight lines, slow delivery times and overcrowded ports have dented
Indian companies' competitiveness and slowed the pace at which crucial
commodities such as coal are transported -- aggravating India's power shortages.
Topic
Introduction
"Indian railways are passing through a difficult phase," Railway Minister Dinesh
Trivedi told parliament.
"If we do not strengthen Indian railways, I'm afraid we weaken our country," he
added, in a speech that was littered with poetry and occasionally interrupted by
jeers and laughter.
SUBSIDIES VS INVESTMENT
Successive railway ministers have belonged to powerful regional allies of the
ruling party in New Delhi, who have tended to subsidise passenger fares at the
expense of freight traffic, making goods transport expensive and slow.
Many Indians still see the railways as a service for the "aam aadmi", or "common
man", ferrying often-poor migrants left largely outside of two decades of surging
growth that have seen millions of Indian buy cars or travel by air for the first
time.
Trivedi is a senior politician in the Trinamool Congress Party, which governs
West Bengal under chief minister Mamata Banerjee. The party last year blocked
one of Prime Minister Manmohan Singh's biggest reforms: to open the Indian
supermarket sector to foreign retailers such as Wal-Mart Stores Inc.
"The price hike is a big concession to the market forces and it goes against
Mamata Banerjee's strident refusal to hike fares," said political analyst Amulya
Ganguli.
Earlier this month, the government raised rail freight rates by nearly 20 percent.
The railway ministry plans to borrow 500 billion rupees from the market through
the Indian Railway Finance Corporation (IRFC) in the 2012/13 fiscal year,
Trivedi said.
Read further :
http://articles.economictimes.indiatimes.com/2012-03-16/news/31201227_1_tmc-boss-dinesh-trivedi-rail-budget
http://economictimes.indiatimes.com/news/politics/nation/railway-budget-2012-government-in-new-crisis-overrail-fare-hike/articleshow/12273816.cms
http://articles.timesofindia.indiatimes.com/2012-03-14/rail-budget/31164811_1_independent-railway-safetyauthority-dinesh-trivedi-railway-minister

India plans to add 700 kilometres of new rail lines to its network in the fiscal
year starting in April, Trivedi said.
Trivedi also said India planned to invest $147 billion in the railways during the
next five-year plan period that runs from 2012 to 2017.
India's railway network is one of the world's largest, but years of low investment
and populist policies have crimped growth and hindered private investment in a
sector seen as crucial to the country's economic expansion. "We need to have a
system that delivers," Trivedi said.
Ahead of the budget, business leaders were crying out for the government to
improve the railway network, more than 80 percent of which was built before
India's independence from Britain in 1947, and is plagued by delays and
overcrowding.
Mamata Bannerjee’s Reaction and Coalition Compuslions
Railway minister, Dinesh Trivedi looked set to quit on Thursday after a storm
broke out over his move to raise passenger fares, underscoring the government's
inability to take unpopular policy steps amid growing speculation the ruling
coalition could break up.
The move cheered investors but prompted a furious response from Trivedi's own
party, a powerful regional ally of the ruling Congress party that has stood in the
way of economic reform in the past.
Trivedi's Trinamool Congress Party governs the eastern state of West Bengal
under firebrand Chief Minister Mamata Banerjee. Shortly after the railway
budget speech ended, the party attacked its own minister, demanding he resign
and that the fare increase be rolled back.
Should the Government buckle
If the government gives in to this demand, Roy will promptly scrap the passenger
fare hikes that were proposed by Trivedi in the budget, rolling back 10 years
worth of reform. Trivedi should not resign under pressure from his party - his job
as a Union minister is to pilot his budget through Parliament.
If the TMC chooses to sack him from party membership, it is welcome to do so:
Trivedi can continue as an unattached member of Parliament. The government
should not buckle under any more pressure from the TMC. Earlier, it has
grovelled before Mamata, rolling back fuel price hikes and stopping overseas
investment in multi-brand retail.
Many in government fear this will provoke Mamata to pull out support for the
government, which could then fall. Such fears are baseless. Mayawati's Bahujan
Samaj Party (BSP), still reeling from a shock defeat in the UP assembly
elections, will be keen to support the government in New Delhi. The BSP has 21
MPs, two more than the TMC, and will be as keen as the Congress to avoid early
elections.
So, there are enough people who can step up to substitute Mamata's TMC at the
Centre. It is time for the government to demonstrate that it has a vertebral column
and stick to the bold stand taken by the railway minister.