Regulator for railways coming soon, train fares likely to go up
Brace to pay more for your train
travels from this summer. Fares are expected to shoot up as the government is
almost ready to set up by June an independent railway regulator that will
determine passenger and freight tariffs. Called the Rail Development Authority,
it can recommend tariff changes periodically by taking into account all direct
and indirect costs such as pension, debts and market-driven forces. It will be
set up through an executive order as part of a bold step to revamp the
decrepit, loss-making railway network. “One can expect a gradual and calibrated
increase in passenger fares, but a steep rise is unlikely as the regulator will
also need to take care of the people. It is a good decision, as the freight
versus fare distortions need to be addressed,” former railway finance
commissioner R Sivadasan said.
The move is aimed at unshackling
the railways from political reluctance to hike fares, which has bled the
country’s largest public transporter that carries 23 million passengers every
day. Train tariff is heavily subsidised because successive governments have
shied away from the politically unpopular move of raising fares. Currently, 67%
of rail revenues come from shipping freight and just 27% from passenger
tickets. Profits earned from freight are diverted to subsidise passenger fares.
The long-awaited plan to delink
passenger and freight tariffs from political decisions is likely to get cleared
by the Union cabinet this month, an official said. The regulator will ensure a
level playing field to private or foreign investors. Investor sentiment in the
railways has been low because of uncertainties and frequent policy changes.
“Among its other key functions,
the authority will establish guiding principles to ensure a stable policy
environment for private and foreign investors,” the official said. The
regulator will have a chairman and four officials, drawn from within and
outside the railways, including the private sector.
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