Rail Tariff Authority plans go off track

Official sources indicate setting up an advisory tariff authority might require going back to Cabinet, but no final decision has been taken yet

The much-anticipated Rail Tariff Authority may not be formed this financial year. The authority which was expected to bring more transparency in setting rail tariffs has been delayed despite a Cabinet decision in place.

According to officials, the delay is due to the fact that no one in the Rail Ministry wants to take a call even though they had one round of discussion with the law ministry over the legal requirements. Setting up of tariff authority was one of the budget announcements this year.

 As Business Standard had reported earlier, Ministry of Railways was in consultation with the Ministry of Law over the legal requirements for setting up a tariff authority. “They came up with ambiguous answers on the questions that were raised by the Ministry of Railways,” said a government official close to the development.

Official sources also indicate that to set up an advisory tariff authority might require going back to the Cabinet, but no final decision has been taken yet.

The August 1 Cabinet order on Rail tariff Authority had provisions that would empower the tariff authority with regulatory powers. While the Ministry of Railways has been interested in a ‘strong advisory’ body, it is expected that the proposal might be sent back to Cabinet for changes in the provisions.

Officials in the Planning Commission indicated that they always wanted a tariff authority with greater powers, not merely an advisory body. During the Cabinet deliberations, the Planning Commission line was followed and later the Rail Ministry was caught in a fix as the Ministry of law came up with no clear answers.

The Law Ministry was asked whether a legislative route is required to set up an authority under the Cabinet order provisions or the authority can be set up with an executive order.

Law Ministry replied that for a regulatory authority one would require a legislative route and for an advisory body an executive order would suffice. But the entire confusion has been about whether setting up authority according to Cabinet order means an advisory or regulatory body, which the Law Ministry did not clarify, told a government official.

In a letter to the law ministry earlier, the railway ministry had said that the Cabinet had approved setting up an RTA with full powers to fix and notify rates. It had also approved a draft amendment Bill seeking changes in the Railways Act, 1989, for RTA to be a regulatory body, which the letter says "in effect tantamount to vesting in RTA full powers for fixing and notifying tariffs".

With the limbo over setting up of Rail Tariff Authority, the Rail Ministry might not want to take a call before general elections next year.