With the cabinet nod for scrapping of the Rail Budget presentation in Parliament, the next step now will be to develop a mechanism for rationalisation of the rail fares, which is currently distraught with losses (Rs 33,000 crore in FY15) in the passenger segment due to the subsidised fares, and high freight charges.
While the ministry of railways under Suresh Prabhu has done well by running better trains like Gatimaan and charging extra along with the courageous experiment of surge pricing in Rajdhani and Shatabdi, what needs to be done is a complete review of the Indian Railways (IR) fare basket.
This job is to be performed by the proposed railway regulator or development authority. The problem here is that the government at present appears to be in favour of setting up the authority through an official order and not by taking the nod of Parliament as it may be time-consuming.
But, it would be good if along with the clubbing of the Rail Budget with the General Budget from the next year, a Bill is introduced in Parliament in the Budget session, or if possible, even in the coming Winter session, to create a rail regulator with statutory backing.
This is a necessity as the real reform in the functioning of the railways would need larger private sector participation, besides development of a more remunerative and realistic fare structure — this would mean the regulator will have to be completely independent of the ministry of railways.
Just doing away with the Rail Budget would turn out to be a cosmetic change if this is not done.
According to the government release, as per the changes approved by the cabinet, “The Railways will continue to maintain its distinct entity as a departmentally run commercial undertaking as at present,” and it will retain ‘functional autonomy and delegation of financial powers’.
It is up to prime minister Narendra Modi now to take the reform in railways to its logical conclusion and initiate the process of creating an effective railway regulatory authority which is backed by law and not just another administrative authority which lacks credibility and trust of the stakeholders.