Cabinet approves setting up rail regulator to recommend passenger fares
NEW DELHI: The Cabinet on Wednesday approved a proposal to set up a regulator to recommend passenger and freight fares and set the performance standards for the railways, a move that could help depoliticise the national transporter’s tariff-fixing process improve its efficiency.
The Railway Development Authority of India, to be constituted within three months, will comprise a chairman and three other members who will be independent of the Indian Railways.
“It is one of the biggest reforms in the rail sector. The move will improve the services offered to passengers, provide comfort to investors in the rail sector and will enhance transparency and accountability,” railway minister Suresh Prabhu told ET. “The authority would be free to recommend fares and freight rates. It would rationalise the entire fare structure for the railways. We will keep rationalising fare as per market demand,” he said.
The body will lay down efficiency standards which the railways will need to comply with, a railway official said. “It would be a great move as now consumers would see comparisons of Indian Railways vis a vis other transporters.”
The railways has been losing more than Rs 30,000 crore every year in passenger subsidy. In recent years, it had increased freight rates to compensate for the loss from the passenger segment.
“Our freight rates are much more than several European countries and also China. Because of this we have lost a lot of traffic to roads as price differentiation has reduced. The authority will recommend freight rates considering the competition we have from roadways,” the official said.
The appointment of its chairman and members will be done by the central government for a five-year term. A `50 crore corpus has been approved to set up the authority. The body will function within the bounds of the Railway Act, 1989 and have four main tasks: tariff determination, ensuring a level playing field for stakeholder investment, setting efficiency and performance standards, and dissemination of information.
The Railway Development Authority of India, to be constituted within three months, will comprise a chairman and three other members who will be independent of the Indian Railways.
“It is one of the biggest reforms in the rail sector. The move will improve the services offered to passengers, provide comfort to investors in the rail sector and will enhance transparency and accountability,” railway minister Suresh Prabhu told ET. “The authority would be free to recommend fares and freight rates. It would rationalise the entire fare structure for the railways. We will keep rationalising fare as per market demand,” he said.
The body will lay down efficiency standards which the railways will need to comply with, a railway official said. “It would be a great move as now consumers would see comparisons of Indian Railways vis a vis other transporters.”
The railways has been losing more than Rs 30,000 crore every year in passenger subsidy. In recent years, it had increased freight rates to compensate for the loss from the passenger segment.
“Our freight rates are much more than several European countries and also China. Because of this we have lost a lot of traffic to roads as price differentiation has reduced. The authority will recommend freight rates considering the competition we have from roadways,” the official said.
The appointment of its chairman and members will be done by the central government for a five-year term. A `50 crore corpus has been approved to set up the authority. The body will function within the bounds of the Railway Act, 1989 and have four main tasks: tariff determination, ensuring a level playing field for stakeholder investment, setting efficiency and performance standards, and dissemination of information.
