India’s Railway Minister Dinesh Trivedi, has been the latest casualty of the country’s populist politics. The minister has been forced to resign by his own party after he attempted to raise railway passenger fares for the first time in almost a decade to overhaul the country’s ailing railway network.
The Indian railway is one of the world’s largest railroad networks in the world, carrying around 20 million travelers across the country daily. It is also the world’s largest employer, employing over a million staff. This critical network is in dire need of a major overhaul to improve the safety and efficiency of transport. The railway suffers from frequent derailments and overcrowding, and clogged freight lines have slowed the rate at which essential commodities such as coal are transported. However, the ministry’s finances are under severe strain already, preventing them from laying new tracks and improving safety.
Given that the railway fare has remained the same for almost a decade in the face of rising fuel prices, Trivedi’s proposed hike in the fares from 2 paise per km up to a maximum of 30 paise per km seems like a reasonable move. Moreover, it has been pointed out that adjusted for inflation that the price has actually fallen about 48% in the past nine years. Nonetheless, Trivedi’s proposal, which was meant to generate Rs 40 billion in revenue, was met with an uproar in parliament, with his Trinamool Congress Party as well as the opposition opposing this politically unpopular but economically essential step.
The political drama culminated in Mamata Banerjee, the populist leader of his left-leaning party, forcing his resignation after he refused to rollback the much needed price hike. This has heightened the perception that the government is being run from Calcutta, not Delhi, after Banerjee also blocked the government from passing essential retail sector reforms last year, leading to severe international embarrassment for the Congress Party.
The increasingly dysfunctional coalition has been strongly criticized for its policy paralysis and long string of corruption scandals over the past year. This incident highlights that the games of populist politics that are hampering the country’s growth and development continue unabated. Additionally, slowing growth and inflation has increased pressure on the government to curb spending. Yet, the country’s toothless budget, unveiled this week, has failed to tackle fiscal deficit reduction. Both politically and fiscally bold moves are urgently needed to veer the country on the right track; Trivedi’s dismissal sends the opposite message and is a loss to both the Congress and the country.
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