Narendra Modi government clears new Rail Development Authority to regulate tracks where Indian Railways, private players will operate

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New Delhi | Published: April 6, 2017 3:00:53 AM

The Cabinet on Wednesday approved the setting up of Railway Development Authority (RDA), which apart from recommending passenger fares and freight charges, will also regulate the sector that will be opened to private players.

narendra modi, Rail Development Authority, Rail Development Authority of india, india Rail Development Authority, indias Rail Development Authority, RDA approvedRegulating access to tracks, where Indian Railways and private players, are expected to operate, will be one of the key functions of RDA. (PTI)

The Cabinet on Wednesday approved the setting up of Railway Development Authority (RDA), which apart from recommending passenger fares and freight charges, will also regulate the sector that will be opened to private players.

Regulating access to tracks, where Indian Railways and private players, are expected to operate, will be one of the key functions of RDA. While tracks will remain with the government, private train operators will be allowed.

According to a government release, the RDA will, to be located in the capital and will have a chairman and three members, who will have term of five years. It can also engage experts from relevant areas. Tariff determination and ensuring fair play and level-playing field for stakeholders and setting efficiency and performance standards will also be the RDA’s functions.

Currently, there is heavy (`30,000 crore annually) cross-subsidy in the sector in favour of passenger fares. While Indian Railways is getting its revenue from bulk transport items like coal, cement, iron ore and food grains, it has had only limited success in attracting other other freight customers.

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While some efforts through innovative schemes like surge pricing has been implemented of late to accelerate passenger receipts, analysts say the transporter would need to effect across-the-board fare hikes to bolster its rickety finances.

With IR’s operating ratio being very high (practically above 100) and support from Union budget being inadequate, it is unable to invest for development and modernisation from own/government resources and depend largely on extra-budget sources, including market and institutional borrowings and multilateral funds for capital expenditure.

RDA may be also entrusted with the task of regulating private investment in railways and resolving commercial disputes. National Transport Development Policy Committee (NTDPC) Report of 2014 had recommended that a Rail Tariff Authority should be set up which should become the overall regulator. Later Bibek Debroy Committee Report had also recommended a regulator with overarching functions.

Many countries like the UK, Russia, the US, Australia and Germany have regulatory structure in some form. The idea of a tariff authority for railways was first mooted in 2012 Budget by then railway minister Dinesh Trivedi. A concept paper had said, “The authority will discharge functions in a manner to protect the interest of consumers, ensuring quality of service, promoting competition, encouraging market development, efficient allocation of resources, provide non-discriminatory open access specially on DFC and to benchmark service levels for ensuring quality, continuity and reliability of service.”

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