Regulator for Rlys long overdue

The government’s decision to set up a Railway Development Authority (RDA), which will function as a regulator for the Indian Railways, meets a long-standing demand. It is intended to improve the working of the railways which are in poor health for various reasons. The proposal to set up an independent regulator was first made in 2001 by an expert group and has since been made by many others. The railways are among the most politicised of India’s public sector enterprises and have badly suffered from arbitrary decisions, poor strategies and badly thought-out actions. The regulator should have been appointed long ago, considering the importance of the railways. It is now being set up through an executive order. Legislative support can be given for the body later, if necessary. It is appropriate that it is being set up in the year when the railways saw an important change with the merger of the railway budget with the Union budget.

The RDA has the remit to advise the government on policy matters including fare and freight fixing, services, new projects, infrastructure upgradation, staff requirement and technology changes. All these are important in turning the country’s biggest public utility, which has a key role in development, into an efficient, profitable and modern organisation. The railways are important because they also touch the lives of millions of people every day unlike many other enterprises and have the responsibility to provide safe travel at affordable rates, offering the best comfort to passengers. It will have to find the ideal tariffs and rates which will attract customers both in the travel and freight segments and at the same time bring profits to the organisation. At present, passenger fares are cross-subsidised with higher freight. It is losing passengers to airlines and freight to road transport companies. So fare and freight policy reform will be a major challenge in improving the railways’ finances, and the RDA is expected to have an important say in the matter. It will have to identify sectors where higher tariffs can be introduced and traffic boosted. The role of private investment will also have to be looked into.

The RDA, however, is a recommendatory body and the government can accept or reject its advice. Granting more powers to it should be considered in due course.
It is independent functioning that makes the regulator in any sector useful and effective. Even in its present format, the RDA can be a useful body if it is seen as committed to its tasks and left to function as an expert body.