The flawed and anomalous fare and freight structure has brought about serious distortions in the country’s transport domain.
While Indian Railways suffers huge losses (over ₹30,000 crore annually) in its passenger business, it has allowed competing modes to wean away large volumes of freight in bulk as well as non-bulk segments, causing much damage to the economy and environment.
In his Railway budget speech for 2015-16, Minister Suresh Prabhu pleaded for “a regulation mechanism independent of the service provider” for “orderly development of infrastructure services, enabling competition and protection of customer interests”.
Instead of “only a tariff regulator” in tune with the recommendation of the National Transport Development Policy Committee 2014, also reiterated by the Bibek Debroy panel 2015, he drew up a blueprint for the expanded mechanism “which will be entrusted with making regulations, setting performance standards and determining tariffs. It will also adjudicate on disputes among licensees/private partners and the ministry, subject to review in appeal”.
That was the genesis of the NDA-led Cabinet decision in 2017, for the formation of the Rail Development Authority of India (RDA).
The RDA’s recommendatory role with regard to tariffs has elicited apprehensions that political considerations may still prevail over attempts to rationalise rail tariffs. Although its role is only advisory, the process is expected to free the railways from politicisation of its businesses. “In cases where the Government does not accept the suggested tariffs, IR would need to be compensated either through allocations in budgetary support or other mechanisms,” explained a senior official.
Set up as an independent body to be formed through an executive order of the Government and be subsequently strengthened by legislation, the RDA with an initial corpus of ₹50 crore will have a five-year term and will be empowered to engage experts.
The RDA is expected to enable the sector to move towards market-determined tariffs, full recovery of costs and reduction of cross-subsidies.
While Indian Railways suffers huge losses (over ₹30,000 crore annually) in its passenger business, it has allowed competing modes to wean away large volumes of freight in bulk as well as non-bulk segments, causing much damage to the economy and environment.
In his Railway budget speech for 2015-16, Minister Suresh Prabhu pleaded for “a regulation mechanism independent of the service provider” for “orderly development of infrastructure services, enabling competition and protection of customer interests”.
Instead of “only a tariff regulator” in tune with the recommendation of the National Transport Development Policy Committee 2014, also reiterated by the Bibek Debroy panel 2015, he drew up a blueprint for the expanded mechanism “which will be entrusted with making regulations, setting performance standards and determining tariffs. It will also adjudicate on disputes among licensees/private partners and the ministry, subject to review in appeal”.
That was the genesis of the NDA-led Cabinet decision in 2017, for the formation of the Rail Development Authority of India (RDA).
The RDA’s recommendatory role with regard to tariffs has elicited apprehensions that political considerations may still prevail over attempts to rationalise rail tariffs. Although its role is only advisory, the process is expected to free the railways from politicisation of its businesses. “In cases where the Government does not accept the suggested tariffs, IR would need to be compensated either through allocations in budgetary support or other mechanisms,” explained a senior official.
Set up as an independent body to be formed through an executive order of the Government and be subsequently strengthened by legislation, the RDA with an initial corpus of ₹50 crore will have a five-year term and will be empowered to engage experts.
The RDA is expected to enable the sector to move towards market-determined tariffs, full recovery of costs and reduction of cross-subsidies.
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