The Cabinet on Thursday cleared the formation of an independent rail tariff authority (RTA) paving the way for de-politicisation of fare determination by the national transporter.
The new authority would be formed after making amendments in Railway 1989 act. The RTA would suggest the floor level of tariff for both the freight and passenger fares from time to time, taking into account the input costs and volatile market conditions. It would mark the delinking of railways’ financial health from politics. The RTA will be a four-member body headed by its chairman.
?It will be more than a recommendary body. It will be strong guiding principle for determining railway fares,? a government official said.
The RTA was mooted by former railway minister and Trinamool Congress MP Dinesh Trivedi in his Rail Budget 2012-13. In a review meeting of infrastructure ministries, Prime Minister Manmohan Singh had instructed to fast track the process of setting up the RTA. ?The body will interact with all stakeholders including passengers,? a railway official said.
The railways is losing R25,000 crore in the passenger segment as it has not been able to hike passenger tariffs in accordance with the increase in the input cost due to political considerations.
Railways operating ratio continues to be an unhealthy 88%, leaving it with little cash to complete the ongoing projects.
The passenger fare-freight rate ratio is 0.3:1 in India versus 1.3:1 in China. Apart from making the subsidies unbearable, the loss in freight traffic makes the railways even more unviable?in FY12, when the economy grew 15% in nominal terms, freight traffic grew much slower, as Indian railway freight rates are higher than US and China.