PMO’s direction in context of Independent rail tariff Regulator
The Prime Minister’s Office has asked the Railways to apply the brakes on its ambitious fast-track plan to set up an independent regulator for freight and passenger tariffs.
The PMO has asked the Ministry to follow the legislative route to create the regulator rather than push it through an executive order.
The Ministry had proposed Rail Development Authority by issuing a notification through an executive order and subsequently strengthens its powers through the legislative process, in a bid to bypass possible hurdles in Parliament.
Railway Minister’s proposal to set up an independent Regulator
After the historic decision to merge the rail Budget with the general Budget, Railway Minister Suresh Prabhu had cited setting up of an independent regulator to determine tariff as per the market demand as the topmost priority for the Railways.
Legislative Route may linger the setup of independent Regulator
The legislative route may be a major setback for the Railways on this front, as it was banking on creating the independent regulator this year in order to perk up its worse-than-expected financial performance in the first half of this fiscal year.
The Railways’ concept note on the rail regulator, dated January 1, had argued that even the Pension Funds Regulatory and Development Authority or PFRDA became functional through an executive order in 2003 but the PFRDA Act was passed a decade later in 2013.
“The regulators in other sectors have to deal with various industry players. But the Indian Railways is a public monopoly and a regulator for this sector requires a different approach,” the official argued.
The Railways’ estimated losses in passenger segment mounted from Rs.6,159 crore in 2004-05 to over Rs.30,000 crore in 2015-16, primarily due to sharp increase in input costs and no commensurate increase in fares over the same period.
What would be Railway Tariff Regulator?
Railway Tariff Regulator would be an independent body which will decide passenger and freight fares. It is expected to decide tariffs based on cost inputs and not take populist decisions on railway tariffs.
Policy-making, operations and maintenance, financial management and compliance of safety standards would not fall under the purview of the regulator, as per the proposal.