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Who will decide Rail fares from next year?

December 20, 2016 17:26 IST

The Union Cabinet will soon take a call on setting up Railway Development Authority of India, an independent regulator, which will decide on passenger and freight rates

After Rail Budget, the Rail ministry is set to lose the right to decide fares, too. A proposal to set up the Railway Development Authority of India, an independent regulator which will decide on passenger and freight rates, is likely to come before the Union Cabinet within two weeks, according to sources close to the development.

The Rail ministry has sought views from a few ministries and the NITI Aayog regarding this, sources add.

In the 2015-16 Budget, Rail Minister Suresh Prabhu also highlighted that for orderly development of infrastructure services, enabling competition and protection of customer interest, it is important to have a regulation mechanism independent of the service provider.

"We have asked for an inter-ministerial opinion in this regard. Once the opinion comes, we will float a note and it will be before the Cabinet within two weeks,” said a senior railway ministry official.

The regulator will be housed outside the ministry for functions such as tariff determination, ensuring fair play and a level-playing field for private investments, setting efficiency and performance standards and dissemination of information.

The five-member authority will have experts from the sector, including a chairman. It was in 2014 that the National Transport Development Policy Committee recommended a Rail Tariff Authority for overall regulation of the railway sector in India.

Later, a Bibek Debroy Committee Report on the restructuring of Indian Railways also recommended a regulator with overarching functions.

In the 2015-16 Budget, Rail Minister Suresh Prabhu also highlighted that for orderly development of infrastructure services, enabling competition and protection of customer interest, it is important to have a regulation mechanism independent of the service provider.

In countries such as the UK, Russia, the US, Australia and Germany, where there is a developed railway system, an established regulatory structure exists now.

The Indian regulator will strive to protect the interest of consumers by ensuring the quality of service, promoting competition, encouraging market development and efficient allocation of resources, among others.

The Narendra Modi-led government had decided to merge the railway Budget with the main Budget this year, thanks to which the railways will be saving about Rs 10,000 crore on waiver on the dividend it used to pay.

According to sources, the key functions of the authority will be fixing tariff, ensuring fair play and level-playing field for private investment in railways, determination of efficiency and performance standards, and dissemination of information.

Earlier, the ministry had sought public opinion in setting up the body. The members will include experts who have experience and knowledge in railways, infrastructure, finance, law, management and consumer affairs.

Meanwhile, the Railways have announced a 10 per cent rebate in the basic fare on the vacant berths after preparation of first chart on an experimental basis for six months in Rajdhani, Duronto and Shatabdi trains.

The Narendra Modi-led government had decided to merge the railway Budget with the main Budget this year, thanks to which the railways will be saving about Rs 10,000 crore (Rs 100 billion) on waiver on the dividend it used to pay.

Illustration: Uttam Ghosh/Rediff.com

Shine Jacob in New Delhi
Source: source
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