The Prime Minister’s Office has asked the Railways to apply the brakes on its ambitious fast-track plan to set up an independent regulator for freight and passenger tariffs.
The PMO has asked the Ministry to follow the legislative route to create the regulator rather than push it through an executive order, a senior official of the Rail Ministry said.
The Ministry had proposed Rail Development Authority by issuing a notification through an executive order and subsequently strengthen its powers through the legislative process, in a bid to bypass possible hurdles in Parliament.
“The PMO has objected to the executive order route and is in favour of setting up the regulator through legislation, which may delay the process,” the official said.
After the historic decision to merge the rail Budget with the general Budget, Railway Minister Suresh Prabhu had cited setting up of an independent regulator to determine tariff as per the market demand as the topmost priority for the Railways. He said the Ministry had been “aggressively” pushing for it since last one year.
The legislative route may be a major setback for the Railways on this front, as it was banking on creating the independent regulator this year in order to perk up its worse-than-expected financial performance in the first half of this fiscal year.
The Railways’ estimated losses in passenger segment mounted from Rs.6,159 crore in 2004-05 to over Rs.30,000 crore in 2015-16, primarily due to sharp increase in input costs and no commensurate increase in fares over the same period.
The authority’s proposed mandate was setting passenger and freight fares, ensuring fair play for private investments in railway infrastructure and setting efficiency and performance standards. Policy-making, operations and maintenance, financial management and compliance of safety standards would not fall under the purview of the regulator, as per the proposal.
“The regulators in other sectors have to deal with various industry players. But the Indian Railways is a public monopoly and a regulator for this sector requires a different approach,” the official argued.
The Railways’ concept note on the rail regulator, dated January 1, had argued that even the Pension Funds Regulatory and Development Authority or PFRDA became functional through an executive order in 2003 but the PFRDA Act was passed a decade later in 2013.
