The Planning Commission is pitching for an independent body to regulate railway tariffs, as it feels that this is integral to encouraging the much-needed private investments into the sector. Commission member BK Chaturvedi told FE: ?Passenger tariffs have not been revised regularly for a while and there have been only marginal adjustments in freight rates. There is a marked gap between India?s ratio of passenger fares to freight and that of other countries. We need to remove this anomaly and ensure that tariffs and user charges are fixed through a mechanism that is independent of government functioning.?
When asked whether this would be a politically feasible, he said: ?Politics is part of governance. But fixation of tariff and user charges should be an independent decision.? According to the Indian Railways? own estimate, the sector needs an investment of Rs 14 lakh crore in the next 10 years, the bulk of which has to come from the private sector.
?Railways needs large investments for expansion. For this, tariff fixation should be kept away from other decisions,? Chaturvedi said, adding, independent decision-making would facilitate better investment opportunities in the railways by linking fares to cost.
Indian Railways, with its monopoly over rail traffic in the country, is free to fix tariff for its services. But tariff decisions are largely influenced by politics, as evident from passenger fares remaining unchanged for the last seven years.
At one point, the Railways thought of linking fares to variable costs like fuel costs, but the same did not fructify. A senior railway official said: ?We cannot afford to raise passenger fares as it would hamper many political ambitions.?
Former financial commissioner of Railways Vijayalakshmi Viswanathan said: ?For some stretches, we have passenger fares below that of a bus. We need a better transport policy, which prohibits use of road transport beyond a particular distance.? She said such a policy will improve traffic and enable the utility to link its fares to actual costs.
?We have not had a comprehensive revision of transport policy since 1984, despite the huge surge in vehicle population choking cities,? she said.
Railways carries 35% of freight and 12% of passenger traffic in the country, with the road network accounting for the rest.
Railways is now getting more aggressive in raising freight rates to make up for the losses on passenger transport. ?We would be looking at increasing freight rates frequently while appearing not to be doing that,? Railway Board chairman Vivek Sahai had said last week. In May, the rate of iron ore transport was raised by Rs 300 per tonne, which was second such hike in two consecutive months.