Friday, June 20, 2014

Bold and welcome move by the Government

The Rail fares have been hiked by the Government, passenger by 14 pc and Freight fares by 6.5 pc. This move is most welcome and a pre-cursor to Acche Din.

Freight fares cross subsidize passenger fares. The passenger fares have rarely been hiked in the past 10 years of the UPA. The subsidy burden was dragging the railways down.

Since, freight fares have been hiked marginally compared to the passenger fares, impact on inflation will be lesser.

My prediction:
Expect the budget to have Infrastructure announcements for the Railways.

A good beginning has been made by the Government. No pain no gain. Next in line will be kerosene subsidy. Diesel subsidy is almost at an end, Petrol has no subsidy, question remains of LPG. Next move coming would be to go back to 9 cylinders or even 6 per year and eventually do away with the subsidies.

The money saved can be invested into Inffrastructure and that will automatically increase producvity. The Mumbai Pune expressway is the prime example of this. It takes almost just over 2 hours from Navi Mumbai to Hinjewadi where the IT hub is. Paying 400 toll, one can leave in the morning, go to Hinjewadi and be back in the evening.

Earlier it used to take 4 hours 1 way from Mumbai to Pune. Nitin Gadkari is the man who conceptualized the much ridiculed 45 flyovers i Mumbai and Mumbai Pune expressway. Roads will be the focus in next 5 years.

If this continues, Congress can expect to be out of power for next 10-15 years minimum.


  1. IL&FS Transportation and L&T will be bigges gainer....

  2. I agree with you small bit of change. I would say if a consumer has to buy more than 9 cylinders they pay more (may be market price). And I think GoI should follow same mechanism as diesel regular price hike for gas and align it.
    Btw Urea subsidy is another!!

  3. @ Karthik - You are on the right track

    @Achin - Urea will be treated later. Holy cow in India!!!