Chanakya IAS Academy Blog

The article analysis the feasibility of setting up of independent regulator for Railways.

  • The proposed rail tariff authority or an independent regulator for the Railways is a complex institutional phenomenon; the more it is worked out, the greater is the complication and confusion involved in it.
  • The idea to establish an Indian Railways Regulatory Authority (IRRA) was first mooted in the Rakesh Mohan Committee Report (2001), which had other innovative recommendations as well.
  • But it was not taken up seriously because the committee stood for corporatisation of the Railways and almost proposed to dismantle the ministry and the Railway Board.
  • Later on Railway minister Mallikarjun Kharge ultimately succeeded in getting the RTA proposal passed by the Cabinet.

 

  • Scope of regulatory body:
  • The NITI Aayog made the case for an independent regulatory authority which would, in more stringent ways, control the ministry—not only its tariff activities, but also technical and standard-setting aspects.
  • However, the Bibek Debroy committee considers the regulatory authority to be a super-structured body which can appoint and remove the members of Railway Board. It will have its sway over the research, design and standard organisation (RDSO) and will bifurcate its activities to the time when they were two separate units, in the pre-1957 era.
  • The Railway Regulatory Authority of India (RRAI), as proposed by Bibek Debroy, has its own variants like the RTA and IRRA that were proposed by the Rakesh Mohan Committee or even simply a tariff structuring body as proposed by the Railways’ own committee.

 

  • All these bodies, though, have the same aim—to suggest tariff proposals—but their approach is different.
  • The Rakesh Mohan Committee talked of introducing a plethora of organisational bodies as IREB, IRRA, IRC, etc, which would displace not only the ministry but the minister as well.
  • The Debroy Committee, on the other hand, has a cautious approach. It emphasises that the liberalisation process is essential for the Railways, so they need to adopt measures of reforms and restructuring.

 

  • Complications ahead:
  • Independent regulator is proposed to become more than a tariff regulatory body and The Railways Act 1989 doesn’t allow any outside agency to have the power of fixing rates as the ministry is the only competent authority to do so.
  • If the independent regulator is so important, the Railways Act would have to be amended, rather transformed, which is again a difficult task as various clauses that govern the Railways’ financial matters are spread all over it.
  • To avoid any clash, it has been proposed that the regulatory body must have finer teeth to suppress the ministry and RRAI should be set up statutorily, possessing quasi-judicial powers, quite distanced from those of the railway ministry.
  • It is here that the complications arise. Statutorily, it is the minister who wields the power and is answerable to Parliament. No outside agency can play that role. The proposed RRAI seems to be an authority over an authority. What type of power structure does it envisage?
  • The other fact is that such regulators are used only when the players are different. Here, the players are the same. The railway ministry and RRAI would belong to the same genus and statutorily would not be different.

 

  • The idea of RRAI seems to be unrealistic because of the duplication of authority and other related factors.
  • Perhaps, the idea of a regulatory body is a concept borrowed from Trai, but one must remember that in the department of telecommunication, the players are different.
  • The tariff authority in that sector is feasible only because the sector is a multi-operator service sector, unlike the Railways which is a single operator service sector.
  • In case of the Railways, it is the minister or the railway ministry that is being proposed to be regulated by RRAI, and this is an anomaly, rather an unpleasant situation.

 

  • What could be done:
  • Establish a tariff authority through the executive process, as an advisory body, so that the ministry would follow its advice.
  • It would have two benefits:
  1. It would not create any antagonistic scenario and the Railways professionals would accept it easily; and
  2. There would be no need to amend the Railways Act.

Question:The proposed rail tariff authority or an independent regulator for the Railways is a complex institutional phenomenon; the more it is worked out, the greater is the complication and confusion involved in it. In the light of this statement, discuss the feasibility of independent regulator for Railways.

Suggested Approach:

  • Need for independent regulator.
  • Complications in setting up independent regulator.
  • Conclusion, whether independent regulator is feasible or not, what else can be done.

Link:http://www.financialexpress.com/fe-columnist/rail-tariff-authority-heres-how-to-put-indian-railways-rates-on-track/409433/

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