Rail Tariff Authority gets Cabinet nod

Role not only advisory, Railways will have to ordinarily accept its recommendations.

3 min readNew DelhiJan 21, 2014 01:13 AM IST First published on: Jan 21, 2014 at 01:13 AM IST

This minute clause makes the five-member RTA as strong as possible without amending the Railway Act, 1989. (PTI)

The Cabinet on Monday cleared the Rail Tariff Authority (RTA) giving it more teeth than the mere advisory body the Railways had planned to create.

The RTA, to be formed as per this executive order, will advise the Railway ministry on fare revision and freight revision with the caveat that Railways will “ordinarily accept its recommendations”, and in extraordinary cases if Railways disagrees, it will send the recommendations with its observations back to the authority which will review its decision.

This minute clause makes the five-member RTA as strong as possible without amending the Railway Act, 1989. This will be the first external pricing regulatory body for the country’s rail sector. According to sources, the Cabinet has “in principle” approved moving an amendment to the Act by which power to decide tariff will be vested with the Authority making it a statutory regulator in future.
Railway sources said Chapter 5(A) will be inserted in the Act for the same.

At present, as per the Railway Act, the Railway Board is the only authority to set fares and freight rates. A search committee will be likely set up in 15 days to look for a chairman and four other members. Two members will be former senior railway officials. Former heads of PSU banks, former deputy governor of the Reserve Bank and eminent expert in any field from the civil society are some criteria for the posts, sources said.

In October, some Cabinet members said the clause in the proposed RTA that intended to let Railways have the power to disagree with the RTA if it did not like the recommendations was “draconian”. Railways had been asked to hold wider consultations with the Law ministry to fine-tune the proposal. But the current form of RTA ensures its recommendations are not brushed aside as easily.

At present, setting of tariffs for railways is the Railway Board’s job. Historically, political dispensations have prevailed over the Board to stall moves for tariff revision fearing political backlash. Railway ministers like Mamata Banerjee, Mukul Roy and earlier Lalu Prasad had desisted from revising tariff.
In the meantime, Indian Railways’ losses mounted, sending the passenger subsidy up to Rs 25,000 crore per year.

The Cabinet also gave formal approval to an electric locomotive factory at Madhepura, and a diesel locomotive factory at Marhowra, both in Bihar, at an estimated cost of Rs 1,293.57 crore and Rs 2,052.58 crore, respectively.
There will be 800 electric locos of 12,000 horse power each and a mix of 1,000 diesel locomotives of 4,500 and 6,000 horse power with high level performance guarantees similar to international practices.