India Insight

(Any opinions expressed here are those of the author, and not necessarily of Thomson Reuters)

The railway budget in India is usually presented in parliament a few days before the main budget in February. In a rare move, the railways minister on Wednesday announced an across-the-board increase in passenger fares starting Jan. 21, the first such step in nine years.

The increase is significant. A ticket for an air-conditioned coach with three-tier sleeping berths in a mail or express train from New Delhi to Mumbai will cost 1,205 rupees, up 13 percent from 1,065 rupees.

Former railways minister Mamata Banerjee and some political parties panned the government’s move, but reactions have been muted among the media and the public. There was little criticism even on Twitter, with the fare increase not making it to the day’s trending topics.

It seems that the government timed its announcement perfectly. Here’s why:

The Indian media is preoccupied. Be it legal proceedings in the Delhi gang rape case or the border skirmish between India and Pakistan or the arrest of Muslim leader Akbaruddin Owaisi for hate speech — the media has a lot to do. It’s the best time to ensure the railway fare increase is not overplayed in newspapers and on television screens, unless politicians take it to the street.

India’s state-run oil marketing companies launched a media blitzkrieg on Tuesday to justify a recent price hike in petrol prices and came out strongly against allegations of profiteering at the consumers’ expense.

Their logic, however, failed to answer why, while being entirely dependent on state subsidy, they are still eager to reward shareholders with rich dividends.

Here is the background.

A flurry of protests swept India recently after oil retailers announced the steepest price rise in the country’s history, leading to a partial rollback.

Indian milk and dairy products producer Amul’s campaign has a new subject — the rupee.

The newspaper advertisement features the iconic Amul girl, in her polka dotted red dress, in a boat made of the rupee, about to sink in turbulent waters. She says ‘mujhe mere rupee se bachaao!’ in Hindi. Loosely translated into English, it would mean ‘save me from my rupee.’

The tagline, tongue in cheek, says ‘valued highly’.

The Amul mascot’s angst today reflects that of investors who have so far been bullish on the India growth story.

India’s central bank chief Duvvuri Subbarao may not be an established economist or a career banker, but he has a rare set of skills — of an administrator, non-conservative thinker with degrees in physics and economics — who can take on the group wisdom of economists and markets.

While delivering an address on “Role of Economics in Policy Making” at the golden jubilee function of the Indian Economic Service — the career economists in Indian administration — he said they were challenging the wisdom of “celebrated” economists and economic models.

That may be the reason why Subbarao was probably alone in opting for a 50 basis points rate hike in July while the majority of panel members favoured a pause in monetary tightening or at the most a 25 basis points rise in rates.