Railway ministers may lose their ‘absolute’ power to decide on passenger fares as the current incumbent Suresh Prabhu announced the decision to finalize the proposal for setting up of an independent regulator by the year end.
The move is aimed at freeing fixing of passenger fare and freight rates from the clutches of political populism.
The proposed regulator will also be entrusted the task of making regulations, setting performance standards and determining tariffs. The regulator will have the mandate to adjudicate on possible disputes among licensees or private partners and railways. This is intended to ensure a level playing field for private players investing in railways which are coming forward to invest in rail infrastructure.
“The decision on the setting up of the rail regulator will be taken by end of this year,” Prabhu told TOI, adding that the regulator, along with initiatives such as accounting reforms will help in creating an enabling climate for private players looking to invest in railways.
In his budget speech, Prabhu had said, “Indian Railways currently is the only rail-based trans-city infrastructure provider and operator in the country. Therefore, for the purpose of orderly development of infrastructure services, enabling competition and protection of customer interests, it is important to have a regulation mechanism independent of the service provider.”
Similar proposals, moved by railways minister during UPA regime, were limited to setting up of rail ‘tariff’ regulator mandate to fix passenger and freight tariff. But, the proposals failed to take off due to lack of political will and resistance from the rail bureaucracy.
Prabhu’s fresh reform push is aimed at depoliticizing passenger fares as railway ministers in the past decades have chosen to tread the populist path of not revising fares forcing the national transporter deep into the red. The transporter is losing around Rs 30,000 crore in passenger earnings. Railways is cross-subsidizing passenger segment at the cost of freight earning.
An official said that a task force under Niti Aayog vice-chairman Arvind Panagariya is working out the modalities for putting in place a regulator. “A draft bill to set up the rail regulator would be prepared and is likely to be moved in the coming winter session of Parliament,” he said, adding that the existing Railways Act has to be amended to facilitate setting up of the regulator.