Indian activists of the Communist Party of India-Marxists (CPI-M) burn an effigy representing Prime Minister Narendra Modi during their protest against the price hike in railway fares, in Hyderabad on June 21, 2014. The government has increased the railway passenger fare by 14.2 percent and freight charges by 6.5 percent with effect from June 25 (midnight of June 24). AFP PHOTO / Noah SEELAM

New Delhi - Angry demonstrators blocked railway tracks and burned effigies of Indian Prime Minister Narendra Modi on Saturday to protest a steep hike in train fares, seen as the government's first tough step towards reforming a sluggish economy.

Modi's government, which came to power a month ago after overthrowing the ruling Congress, has pledged to revive the economy after it grew at just 4.7 percent last year - the lowest in nearly a decade.

The hike is seen as the first dose of the “bitter medicine” that Modi recently warned was needed to revive the economy, Asia's third-biggest.

In northern Uttar Pradesh state, scores of flag-waving protesters blocked railway tracks in Allahabad city, forcing the Ganga-Gomti passenger train to halt.

And in the capital New Delhi, hundreds of supporters of the opposition Congress party set fire to an effigy of Modi before police fired water cannon to disperse the crowd.

“It is a massive hike. If they continue to take steps like this, I am sure people of the country will punish the government,” Arvinder Singh Lovely, a Congress leader, told reporters.

Modi's effigy was also burnt in the southern city of Hyderabad by supporters of the Communist Party of India (Marxist), which is part of the opposition.

Rail passenger fares were increased Friday by 14.2 percent and freight rates by 6.5 percent with effect from June 25, the steepest in the last 15 years.

Railway Minister Sadananda Gowda said he was “forced” to take the step in order “to meet all the necessary expenditure”, hinting at the financial crunch the state-controlled network is facing.

The Indian railway system, one of the world's largest, is still the main form of long-distance travel in the huge country. But years of financial neglect and populist policy of subsidising fares have hit the network hard.

Congress spokesman Ajay Maken said the increased fares would put an “additional burden” on the middle-class and the poor, who are already facing the brunt of high inflation.

“This comes at a time when the prices of onions and potatoes have skyrocketed. As an opposition party, we demand an immediate rollback of this hike,” Maken said.

However, in an editorial on Saturday, the leading business daily Economic Times welcomed the “courage” shown by Modi's government in raising the fares.

It said the move was justified, given the high fuel costs and “railways' desperate need for more revenues”.

The previous government led by left-leaning Congress did not revise the fares in an interim budget announced just before the elections in April-May.

Prominent industry body FICCI said “an increase of this magnitude in one go would not have been necessitated” had tariffs been increased gradually over the years.

“We of course hope and expect that there will be a concomitant improvement in both the quality and safety of services offered by Indian Railways (post the fare hike),” it said in a statement. - Sapa-AFP