Railways minister Suresh Prabhu is planning to set up an independent tariff and safety regulatory authority as he aims to end populism in the cash-strapped public transporter by delinking the fare and freight structure from political vagaries.
The regulator is part of the government’s reform agenda and will provide leg room to the railways minister to hike passenger fares on the basis of market conditions without fear of a political storm. A decision is expected by the end of the year.
“The existence of such a body has become critical at this juncture when a generational shift in rail operations is being planned,” Prabhu told HT.
The regulator is directed at ending the ‘patronage raj’ perpetuated by several railways ministers in past decades at the expense of rail finances, jeopardising the world’s fourth-largest rail network that has seen a spate of accidents in recent months.
For almost nine of the ten years of UPA rule, passenger fares were not increased.
“The situation might well have served the political interests of past railways minister, but finances of the public transporter have been left in a crumbling state, as a result,” a senior official said.
Losses in the passenger segment earnings last year were estimated at a whopping Rs. 29,000 crore, while the Rail Operating Ratio (paisa spent against every rupee earned) has hovered alarmingly around 92% in past years.
The fare versus freight ratio of the Indian railways is among the most distorted, with freight earnings heavily continuing to subsidise fares.
“Such a situation cannot be allowed to continue. The decision to set up a regulator is a step in the right direction and in consonance with the recommendations of several experts committees including the Sam Pitroda Committee and the more recent Bibek Debroy committee”, a senior official said.
Besides determining the fare and freight structure, the regulator will monitor efficiency and passenger safety issues as well, while also acting as the arbitrator in possible disputes between private investors and the Railways.
An initiative of Niti Aayog vice-chairman Arvind Panagariya, a draft bill to set up the rail regulator by amending the existing railways act has been prepared and is likely to be moved in the coming winter session of Parliament, sources said.