The era of "populist considerations" in fixing railway ticket fares will soon end, as the Indian Railways, the world's fourth-largest rail network, will have an independent body of technocrats empowered to decide fares based solely on economics.
The Railway Ministry has reportedly finalised the structure of an independent tariff and freight regulatory authority whose role will be to "delink the fare and freight structure from political exigencies," sources familiar with the matter told The Economic Times.
The government will be required to "compensate" the organisation if the tariffs proposed by the regulator are not acceptable to it, according to the draft proposal.
The ministry plans to get it cleared by the Cabinet "as soon as possible" and table it before Parliament in the Budget session. The proposed regulator is likely to be named Railway Development Authority.
"It (the proposed authority) will be a quasi-judicial body like any other regulator and have sufficient teeth to bite in case of noncompliance. The view is to expand the body beyond conventional regulatory work and increase its scope to make it more comprehensive. It is going to be one of the most crucial reform measures of the government," said one of the officials working on the draft.
Having a regulator will result in improving the finances of the cash-starved public transporter, sources said.
"The proposed body will besides fixing fares also set efficiency parameters," said the Railway Minister Suresh Prabhu.
The regulator will also be responsible to stipulate the benchmarks the railways has to maintain in case of passenger amenities. But the body will not assigned the job of conducting safety audit.
"The mechanism of Commission of Railway Safety (CRS) seems to be functioning well. It is already independent as it works under the Civil Aviation Ministry," one official said.
Last month, a report had said the Indian Railways was looking to set up a massive fund of over Rs 1.1 lakh crore to upgrade its infrastructure to improve safety standards and avoid accidents. The fund will be named Rashtriya Rail Sanraksha Kosh.