The decision to hike railway fares after a decade is unlikely to improve India’s fiscal deficit, but it was welcomed by economists. “This is a step in the right direction and would help in rationalisation of pricing in the railway fare. But it won’t bring down the fiscal deficit immediately,” said Jyotinder Kaur, economist, HDFC Bank.
A Prasanna of ICICI Securities said the move could help Indian Railways take up more capital-intensive projects and will not have any impact on the general budget. However, Sonal Varma, economist at Nomura Financial Advisory and Services, believes the measure and the recent discussions on higher diesel prices “could narrow the consumption-investment gap,” alluding it’s a good tiding.