Rlys likely to proceed with rates authority, fare rise

Rail Tariff Authority is likely to be a reality by the year-end

Fare rise is likely to happen in the next railway budget, unlike the past two instances when passenger fares were raised outside the budget

The new government seems likely to proceed with two reforms announced by its predecessor concerning Indian Railways (IR).

One is a fuel adjustment component (FAC) in passenger and freight rates, to be decided by IR instead of needing Cabinet or legislative approval. The other is a Rail Tariff Authority (RTA) to fix all rates; this is likely to be a reality by the year-end. The FAC was used in the past year to raise freight rates. Mallikarjun Kharge, the previous railway minister, also used it to raise passenger fares last October.

Movement on the RTA appears likely to be hastened. It would be an advisory body till the Railways Act, 1989, is amended.

Railway Minister Sadananda Gowda had earlier said he would seek Cabinet advice on the need for both, fare increases and an RTA. “We have told the minister about the current situation and why is it important to raise the fares and he seems convinced on the validity of both,” said a senior Railway Board official.

Last month, the railways had put on hold a freight rate increase of 6.5 per cent and passenger fares of 10 per cent after announcing it, explaining it was better left to the new government. The fare rise is likely to happen in the next railway budget, unlike the past two instances when passenger fares were raised outside the budget.

Indian Railways earlier in October had introduced a fuel charge on passenger fares which led to a hike of 2% under the Fuel Adjustment Component (FAC) in the higher classes and around 3.5% in lower classes. Similarly freight rates were increased by 1.7% under the FAC.

The proposed Rail Tariff Authority would be a five-member body, headed by a chairman. RTA would frame rates, keeping in mind the Centre's projection of Plan and non-plan requirement of funds. This is expected to bring politically-motivated announcements out into the open. "Once you have an RTA, it would ask how a project can be announced without the required funds. It would bring more transparency and put announcements made as political compulsions an explicit fact open to public scrutiny," said a senior government official.