Indian Railways development authority: Suresh Prabhu led ministry divided over route

By: | Updated: September 27, 2016 7:44 AM

The railways ministry, which was in the final stages of preparing a Cabinet note for setting up the proposed railway development authority (RDA) via an executive order, is now divided over which route to take.

Indian Railways, Indian Railways news, Indian Railways latest, Indian Railways freightRailway officials believe that setting up RDA through an executive order will be prudent because it will be faster and the organisation, whenever it becomes functional, will take time to come out with a robust mechanism to determine market driven tariffs.

The railways ministry, which was in the final stages of preparing a Cabinet note for setting up the proposed railway development authority (RDA) via an executive order, is now divided over which route to take. The ministry may choose to table the proposal in Parliament and enact it through a legislation by amending the relevant section of The Railways Act.

Ministry sources cite concerns over effectiveness, credibility and absence of an appellate authority if passed through an executive order, while certain officials believe that the parliamentary route will lead to an inordinate delay in setting up the authority, especially at a time when the government is working on the finer modalities of merging the Rail Budget with the Union Budget and advancing the date of presentation of the Budget.

“Currently, Indian Railways is the only rail-based trans-city infrastructure provider and operator in the country. Therefore, for the purpose of orderly development of infrastructure services, enabling competition and protection of customer interests, it is important to have a regulation mechanism independent of the service provider. Initially, it was contemplated to set up only a tariff regulator. However, it is now proposed to set up a mechanism which will be entrusted with making regulations, setting performance standards and determining tariffs. It will also adjudicate on disputes among licensees/private partners and the ministry, subject to review in appeal,” Union minister for railways Suresh Prabhu had said while presenting the 2015-16 Rail Budget.

Many countries in the world have a separate transport regulator which besides tariff determination also sets performance and safety standards for the industry.

“Tariff determination has been a very tricky affair, influenced by political compulsions… which has in most cases affected the profitability and effectiveness of Indian Railways. A separate authority for market-driven tariff determination besides other regulatory matters will improve the financial health of the organisation as well as attract private investment,” a senior railway official said requesting anonymity.

Railway officials believe that setting up RDA through an executive order will be prudent because it will be faster and the organisation, whenever it becomes functional, will take time to come out with a robust mechanism to determine market driven tariffs. Therefore, setting it up as soon as possible will be key in bringing about the desired changes in the railway segment.

The officials added that Parliament backing can be sought at an appropriate time. For example, the pension funds regulatory development authority became functional in 2003 through an executive order, but the Act itself was passed 10 years later in 2013.

The transporter in the current year announced a slew of tariff rationalisation schemes in the freight segment as well as increased passenger tariff in Rajdhani, Shatabdi and Duronto trains.

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