The union Cabinet today initiated a major reform in the Railways by approving setting up of rail regulator called the Rail Development Authority (RDA). This comes as a major reform measure after the historic decision by the government to merge the railway budget with main budget last year.
According to sources, the ministry of railways will issue a notification in this regard within a week’s time and a search and selection committee will be convened soon. According to the plan, the functioning of RDA is likely to happen by August 1 this year.
The regulator will decide over tariff determination, ensuring fair play and level playing field for stakeholder investment in the railways, setting efficiency and performance standards and dissemination of information.
According to railways, RDA will help the government to take appropriate decisions on important policy and operational issues including pricing of services commensurate with costs, suggest measures for enhancement of non-fare revenue, protection of consumer interests, promote competition, encourage market development, create positive environment for investment, promote efficient resource allocation, benchmarking of service standards, suggest measures for absorption of new technologies and human resource development and provide framework for non-discriminatory open access to the Dedicated Freight Corridor infrastructure.
The concept of a regulator was first mooted in railways way back in 2001 by an expert group under the chairmanship of Rakesh Mohan, which was later re-iterated by the National Transport Development Policy Committee (NTDPC) in 2014 and Bibek Debroy’s Committee in 2015.
In the railway budget of 2015-16, Railways minister Suresh Prabhu had announced that for the purpose of orderly development of infrastructure enabling competition and protection of customer interest, it is important to have a regulation mechanism independent of the service provider.
The authority will have a chairman and three members and can engage experts from relevant areas. The team will be having a term of five years.
The government will provide an initial corpus of Rs 50 crore for setting up the organisation. The selection of RDA members is likely to happen buy July 15.
According to experts, RDA will provide transparency to passenger and freight tariff determination in railways and will protect consumer interest by ensuring quality of service and cost optimisation. RDA will also monitor policies regarding the ministry of railways on public private partnerships of railways.
This comes after the NDA government broke a 92-year-old tradition of presenting a separate railway budget this year as per the suggestions by Debroy committee. It was in 1924 that a separate railway budget was first presented after recommendation of a panel headed by British railway economist William Acworth in 1920-21.