Indian Railway Minister Dinesh Trivedi quit on Sunday after he raised fares on the vast, but creaking network, underscoring the government’s inability to take unpopular policy steps and adding to speculation the unsteady ruling coalition will fall apart.
Trivedi’s decision to resign, and the fare rollback that is likely to come, follows a pattern in recent months of India’s leaders announcing economic reform, but being too weak to enforce it.
Trivedi announced the first increase in passenger fares in eight years on Wednesday, a move aimed at shoring up a network whose dysfunction has become a major drag on the economy.
That news cheered investors, but prompted a furious response from Trivedi’s own party, a powerful regional ally of the ruling Congress party that has stood in the way of economic reform in the past.
“I’m a loyal soldier of the party,” Trivedi said of his decision to resign. “I’m worried about [passenger] safety. I did what I did because of the safety.”
Still smarting from defeat in regional elections last month, the government of Indian Prime Minister Manmohan Singh is currently seeking to pass its budget in parliament and seems to be again bending to the wishes of ambitious coalition partner Mamata Banerjee.
If Banerjee’s Trinamool Congress does not support the budget and withdraws from the ruling coalition, the government of Asia’s third-largest economy would face a no-confidence motion and have to look to other parties to maintain its majority in parliament.
In the unlikely scenario Congress failed to prove it had a -majority, a snap general election could be called, two years before the government’s term is due to end in 2014.
If the prime minister agrees to a rollback of the fare hike, it would feed the impression that his government — already reeling from graft scandals — is unable to implement policies needed to lift economic growth, which has slowed to its lowest in nearly three years.
Last year, Singh attempted to allow foreign retailers, such as Wal-Mart Stores Inc, to invest in India’s supermarket sector, but his move was blocked by the Trinamool Congress.
Earlier this month, a flip-flop over whether India would ban cotton exports plunged global markets for the commodity into uncertainty.
Decades of low investment, a poor safety record and frequent delays mean India has fallen far behind China in building a network fit for Asia’s third-biggest economy.
Many Indians see the railways as a service for the common man, left on the periphery of two decades of surging growth that has seen millions buy cars or travel by air for the first time.
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