Concerned that the Indian Railways’ failing fiscal health could upset expansion plans, the Planning Commission has again flagged the issue of setting up of a regulatory authority for it. The panel has also asked the Railways to usher in tariff reforms by addressing freight revenue and passenger fares.

The Railways is faced with an intense fund crunch as its successive ministers have refrained from hiking travel fares, thereby bringing the monolith on the verge of bankruptcy. The decision to set up a Rail Tariff Regulatory Authority (RTRA) was taken by the NDA government in the final leg of its term. However, the plan did not find favour with the UPA.

In a note prepared for the government, highlighting the measures needed for improving the Railways’ fiscal health, the panel has mentioned reducing cross subsidisation within freight and passenger tariffs, through the setting up of an RTRA.

Railway minister Mamata Banerjee’s predecessor, Lalu Prasad, had during his stint rejected the plan panel’s suggestion. The former railway minister had argues that the setting up of an RTRA and putting a stop on new lines were unacceptable to his ministry. Banerjee herself is believed to not be too keen to set up such a regulator.

The Commission has argued that the most important policy distortion in the Railways was its lopsided tariff policy, which overcharges freight movement to subsidise ordinary passenger traffic. It had earlier pointed out that overemphasis on new lines for passenger traffic and inadequate thrust on expanding capacity in areas where there was potential commercial traffic was affecting the fiscal health of the Railways, the note states.

... contd.