Railways to constitute regulatory authority

Railways to constitute regulatory authority

The Railway Ministry on Monday decided to constitute an all-powerful regulatory authority — Rail Development Authority — to determine passenger fares, freight charges, service standards and open access to rail tracks.

The body is modelled on regulatory authorities in telecom and power sectors.  It is likely to start working in March this year. The statutory authority will initially be set up by an executive order and then a Bill will be introduced. The ministry has put the concept in public domain and invited comments by January 30.

Fare hike
The concept paper of the Authority makes it clear that passenger fares and freight charges would be determined on the basis of cost.

This means there would be a phenomenal increase in passenger fares or the Government of India compensates for the losses on account of low passenger fares.

The Indian Railways will have no authority to decide passenger fares and the cross subsidisation of passenger fares by earnings from freight charges will end. 

“Estimated losses in passenger segment have mounted from Rs 6159 crores in 2004-05 to a provisionally estimated over Rs 30,000 crores in 2015-16,” the paper has argued.

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