Monday, August 5, 2013

Why a Rail Tariff Authority is welcome

RTA Act must have clear-cut provision of members being periodically answerable to select parliamentary committees and, through them, the wider public.
RTA Act must have clear-cut provision of members being periodically answerable to select parliamentary committees and, through them, the wider public.
The Cabinet's in-principle nod for the Rail Tariff Authority (RTA), and the Centre's decision to expedite its formation via executive order, pending a dedicated Act of Parliament, is a welcome change of track at the railways.

For, the fact of the matter is that after long years of unsustainable populism in tariffs and giveaways, we need independent tariff setting and the proper fixation of user charges to overhaul the railways.

But it remains to be seen whether the role of the RTA would be merely of an advisory or a recommendatory nature. What is surely required is binding provisions for efficient tariff setting so as to rev up the quality of rail services, improve safety and step up much-needed investment.

Besides, it may well be that the RTA members, presumably superannuated bureaucrats, would take a cue from other infrastructure regulatory bodies, for instance, power, and go on to disallow tariff revision year after year never mind costs, simply to please the powers that be! It would defeat the very purpose of an RTA.

Hence the pressing need for regulatory accountability. The RTA Act must have clear-cut provision of members being periodically answerable to select parliamentary committees and, through them, the wider public. We do need efficiency in freight rates and passenger fares to better allocate resources for the railways to revamp its rolling stock, networks and provide for related capital requirements.

Reports suggest that the cross-subsidisation of passenger fares by freight is now over .Rs 32,000 crore annually. The huge subsidy bill clearly needs to be rationalised. The practice of jacking up freight rates to subsidise passenger travel actually means huge inefficiencies right across the board, at massive national cost and thoroughly suboptimal rail services.

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