Answer:

♤ For a long time, pricing – or rather politicisation of pricing – was considered the biggest hurdle in reforming the railways. This led to the origin of an idea to set up a separate tariff regulatory authority. That could delink fare and freight structure from political vagaries.

♤ Also, recently various reports have highlighted a decline in the share of railways in the inter-modal transport mix of the country. To illustrate, in goods transportation, the share of railways which used to be 71 percent in 1970, dropped to 35 percent in 2007. Even, in passenger transport, the share of railways has plunged from 36 percent in 1970 to almost 14 percent in 2007.

Being managed as a monopoly under the Ministry of Railways, the sector has become politically sensitive. Furthermore, the sector faces acute supply-side shortages due to inadequate infrastructure. Thus, the Govt. is planning to set up Rail Tariff and Safety Regulatory Authority (RTA), an independent institutional mechanism for deciding passenger fares and freight tariff based on efficiency and prevailing market conditions.

♤ The RTA will monitor efficiency and passenger safety issues as well. Also, the setting up of RTA is in consonance with the recommendations of Sam Pitroda Committee and Bibek Debroy committee.

Need for an Independent tariff and Safety Regulatory Authority of India in Railways:

♤ The power to fix rail tariff has always rested with the Union Government through the Railway Board, so as to protect passengers from arbitrary hikes by the monopoly supplier. However, in the past ten years, passenger fare has not been increased at all due to populist measures and pressures adopted by different parties and citizens The Railway Board is both the executing and the policy-making body. It acts as the provider as well as the regulator of all services. Thus, there is a conflict of interest. Aggrieved rail users today have no effective redressal mechanism. Indian Railways has remained organisationally unchanged since the formation of the Railway Board in 1905. Unless there is a structural change in this regard, the RTA will not able to make a difference.

♤ At present, safety in railway operations is being regulated by a body outside the railway system and according to the Railways Act, adherence to safety rules in the railways is overseen by the Commission of Railway Safety (CRS) The Commission of Railway Safety has consistently failed to ensure safety standards.

Thus, in this regard RTA if set up will not only consider the requirements of the Railways but also engage with all stake-holders to usher in a new pricing regime through a transparent process. It will gradually bring down cross subsidization between different segments; will ensure transparency.

Therefore, separation of the policy making functions and management of railways coupled with setting up of an independent regulator, will go a long way in promoting accountability, transparency and both intra and inter modal competition in the railways.