Changes in rail tariffs only after regulator in place

Rail regulator Bill to be taken up in next Parliament session

As a follow-up to the historic decision to merge the railway Budget with the general Budget, the Union government is likely to present the Bill to set up an independent regulator for the railways in the next session of Parliament.

Till then, a hike in fares, passenger or freight, is unlikely. 

According to sources close to the development, the Narendra Modi-led government wants to give judicial powers to the tariff authority. When asked about this, the financial commissioner of the railways, B B Verma, said: “As of now, there is no proposal to increase fares immediately. We are in the process of setting up a tariff regulator and it is likely to be before Parliament soon.” 

The idea, first mooted by the Rakesh Mohan Committee in 2001, was re-stressed by the Bibek Debroy panel in 2014. This comes at a time when the losses in the passenger segment mounted to Rs 30,000 crore in 2015-16, due to increasing input costs and the government’s decision not to hike fares for years.

Doing away with a separate railway Budget too was in accordance with the Debroy panel’s suggestions. It was in 1924 that a separate railway Budget was first presented following the recommendations of a panel headed by British railway economist William Acworth in 1920-21. In the merged Budget presented by Union Finance Minister Arun Jaitley, the capital expenditure target for the railways for 2017-18 was set at Rs 1.31 lakh crore, of which Rs 55,000 crore is to be contributed as government support.

According to a concept paper of the railways in January 2016, the regulator will have four major functions: Setting tariffs, ensuring fair play and a level playing field for private investment in the railways, determining efficiency and performance standards, and disseminating information. The authority will have a chairman and four other members with experience and knowledge in the railways, infrastructure, finance, law, management and consumer affairs.

The regulator will be mandated to protect the interests of consumers, ensuring good service, promoting competition, encouraging market development, efficiently allocating resources, providing non-discriminatory open access, specially on dedicated freight corridors, and benchmarking service levels for ensuring quality, continuity and reliability of services.

Currently countries such as the UK, Russia, the US, Australia and Germany have a regulatory structure in the railways in some form or the other.