In-principle approval for Rail Tariff Authority

In a major move to keep rate fixation at an arm’s distance from operational and administrative functions of the Railway Ministry, the Union Cabinet on Thursday approved setting up of a Rail Tariff Authority, which would determine freight and passenger rates for the Indian Railways.

However, officials in the know said that route through which this authority will come into operation has not been okayed. The authority could either be set through an executive order or needs approval from the Parliament because of a change in Act. The move is expected to depoliticise passenger tariffs in the Indian Railways. The authority would be formed through an amendment to the Railway Act, 1989.

The authority would have five independent members, including a Chairman. It would interact with all stakeholders after bringing in proposals. Before notifying, due consideration would be given to these submissions.

The idea for tariff authority was put up by former Railways Minister Dinesh Trivedi in 2012-2013. The idea was also highlighted as an area of priority for 2013-2014 in the budget speech of Pawan Kumar Bansal. Though the eventual notification for changes in tariff would be done by the Railways, an official said the authority would set strong guiding principles for changes and in that respect, would be more than just a recommending body.

Various experts have often criticised the ‘populist budget’ of Indian Railways, where passenger fares are not hiked even when it makes bad business. The Rail Tariff authority would be one of the first steps towards depoliticisation of Indian Railways, which ended on an operating ratio of 88.8 per cent for the year of 2012-2013.

Bansal, in his last budget, had already taken fare fixation out of the purview of Parliament, by increasing tariffs prior to the Budget. He also introduced fuel surcharge in freight tariffs, which is now expected to be extended to passenger fares.