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India waters down rail price hike after protests

India's new government has partly withdrawn a steep rise in rail fares announced last week, in a change to the first difficult policy reform attempted by right-wing Prime Minister Narendra Modi.

MUMBAI: India's new government has partly withdrawn a steep rise in rail fares announced last week, in a change to the first difficult policy reform attempted by right-wing Prime Minister Narendra Modi.

The railways ministry announced last Friday that passenger fares would increase by 14.2 per cent and freight rates by 6.5 per cent with effect from June 25, the steepest hike in the last 15 years.

The changes were seen as the first dose of the "bitter medicine" that Modi has warned is needed to revive the economy, and were part of a strategy to restore financial health to the loss-making and dilapidated state network.

But following protests over the weekend during which some crowds burned effigies of Modi, a Hindu nationalist, a partial rollback was announced late on Tuesday.

The hike in fares will not apply to second-class suburban journeys up to 80 kilometres (50 miles), a decision that will give relief to commuters, particularly outraged residents of the commercial capital Mumbai.

Modi came to power after elections in April and May in which his Bharatiya Janata Party (BJP) won the first parliamentary majority in 30 years after two-terms of rule by the left-leaning Congress party.

The Congress found it frequently difficult to push through pro-market or unpopular reforms and U-turns, either partial or complete, were a feature of their two-term period in power.

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