Rail regulator via executive order?

Ministry to approach Cabinet with detailed note to avoid parliamentary hurdles

The rail ministry is mulling setting up the long-delayed regulator for the sector through an executive order and later on widen its powers, to ensure the proposal does not meet parliamentary hurdles.

The regulator would approve passenger fares and freight rates, ensure fair play and a level-playing field for attracting private investment in the sector and define efficiency benchmarks and performance standards. The proposal comes at a time when the Indian Railways is struggling to meet the current financial year's tall target of incremental freight loading of 50 million tonnes and reverse a declining trend in passenger volumes.

PROPOSED REGULATOR’S AMBIT

• To approve passenger fares and freight rates
• To ensure fair play and a level-playing field for attracting private investment
• Set efficiency benchmarks and performance standards

"In order to speed up the process, we will prepare a detailed note very soon and approach the Cabinet for its approval. Once that is achieved, the regulator may be set up through a notification issued by the rail ministry in the form of an executive order," said a senior rail ministry official.

The official also said the ministry wanted to ensure the regulator's mandate did not overlap with that of the Competition Commission of India. Besides, it has to be in line with the Railway Act. To ensure this, the ministry has hired a legal firm, DSK Legal.

The proposal to set up a rail authority was announced by Minister of Railways Suresh Prabhakar Prabhu while tabling the Rail Budget for 2015-16 in February last year. The ministry had later floated the note detailing the powers and responsibilities of the authority.

Prabhu had last week told Business Standard the rail ministry would petition the authority every time a revision in fares or freight rates was required. The concept note said in case the government does not accept the tariff suggested by the regulator, "Indian Railways would need to be compensated appropriately perhaps through increased allocations in the gross budgetary support."

The Rail Development Authority has been envisioned as an independent body housed outside the rail ministry but funded through the annual Railway Budget sanctioned by Parliament. The approved Budget would be placed at the disposal of the regulatory authority. It would also be permitted to arrange funds through adjudication fees and penalties levied.

The previous Congress-led United Progressive Alliance (UPA) government had also floated a proposal to set up a regulator for the Indian Railways. That proposal was only meant for a tariff regulator. But it never materialised. The present government has widened the scope of that proposal to other areas, to usher in private sector investments and ramp up efficiency of the system.