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Indian government partially rolls back steep railway fare hike

Published on Jun 25, 2014 4:22 PM

MUMBAI/NEW DELHI (REUTERS) - The Indian government partially rolled back a steep hike in rail passenger fares announced last week after protests from allies, highlighting the political realities facing the new prime minister in his push to cut the country's massive subsidy bill.

Prime Minister Narendra Modi's government said late on Tuesday that fares for city commuters will now effectively be frozen, reducing the savings it will see from the fare rises by an estimated 14 per cent or some US$180 million (S$210 million).

The decision will appease local politicians and voters in Mumbai ahead of local elections that Mr Modi and his allies are expected to win. The largest number of India's suburban rail commuters are in Mumbai and they were angry at the hike.

"Political realities, political compulsions do rule at some point in India," said Tirthankar Patnaik, a strategist and economist at Religare Capital Markets. "The loss of a few crore is nothing compared to getting negative publicity."

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