Posted at 01:34 PM ET, 03/14/2012

India’s proposed $0.006 per km train ticket hike causes concern and excitement

The cost of a train ticket on the overcrowded railways of Mumbai could soon cost passengers $0.006 more each kilometer.

The price may seem miniscule at first glance, but for the 19 million passengers in India who travel by train each day, the first proposed hike in fares in nearly a decade has come as shock.


Passengers travel on a crowded train in Mumbai. (Punit Paranjpe/AFP/Getty Images)

On Wednesday, the Indian government announced it would raise rail fares in what many economists say is perhaps a belated attempt to reform an aging and ailing transport network that has become an obstacle to growth. Some politicians, on the other hand, have called for the resignation of the Indian Railways Minister Dinesh Trivedi unless he retracts the budget.

The battle over the railways is just the latest example of the stuttering pace of reform in the world’s largest democracy.

India’s democracy is nothing if not complex and chaotic, and often elicits frustration from business leaders about the sometimes slow pace of progress.

However, as a Washington Post series this week showed, there are some signs that the elephant may be waking up.

Drawing on the work of Columbia University’s Arvind Panagariya and others, the series concluded with an article that underlines the power of India’s democracy and the role it can play in bringing about positive change in India. Since the economy was liberalized in 1991and growth took off, voters’ expectations have risen and they are now demanding growth, opportunity and the chance to take part in India’s economic miracle. They are only rewarding politicians who deliver.

It is sometimes argued that democracy is a handicap in India’s race to catch up with China economically, but Panagariya’s work shows this need not be so.

“Until 10 years ago, you could say that no democracy had grown at ‘miracle’ rates,” Panagariya said. “Korea, Taiwan, Singapore, Hong Kong and now China – all were authoritarian regimes. To my delight India has provided a counterexample, where democracy has delivered eight to nine percent growth.”

The railway budget fight seems to provide a working example of one instance in which the government faces a pressing demand for reform. It remains to be seen if it will move forward with reform, or if the budget will become mired in political debate.

Business leaders have called for more investment and private sector involvement in India’s railways, and some analysts, like the Takshashila Institute's Nitin Pai, @acorn, argue the government should go much further and privatize the entire network. “It is mindnumbing and terribly sad that we still have to make an argument for liberalization and reforms,” he tweeted.

Read more on the India democracy series:

Criminals Flourish in Indian elections:

Whereas some Americans question the power of big businesses to influence policy, it was the banning of corporate donations by Indira Gandhi in 1967 that arguably lies behind much of the corruption in India today and opened the door for criminals to enter politics. Read more here.

Some see democracy as a handicap

An examination on the confrontational and sometimes dysfunctional nature of parliament, where important legislation is increasingly getting stalled. The problem may lie in the rules of parliamentary procedure, but is clearly being fuelled by a confrontational 24-hour television news culture, offering a few obvious parallels to the situation closer to home.

By  |  01:34 PM ET, 03/14/2012

Tags:  World, India, India railways, Dinesh Trivedi

 
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