PMO puts the brakes on rail tariff regulator plan


PMO puts the brakes on rail tariff regulator plan [Governance]

  • PMO 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.
  • It 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 strengthen its powers through the legislative process, in a bid to bypass possible hurdles in Parliament.
  • 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 topmost priority for Railways.
  • 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 same period.
  • The authority’s proposed mandate was setting passenger and freight fares, ensuring fair play for private investments in railway infrastructure and setting efficiency and performance standards.
  • Policy-making, operations and maintenance, financial management and compliance of safety standards would not fall under the purview of the regulator.
  • 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.
  • Railways’ concept note on rail regulator had argued that even 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.