Rail Budget 2013 should allow an independent tariff authority

Various railway ministers managed to hold back a raise in passenger fares as these are cross subsidised by the freight rates to the extent of Rs 25,000 crore.According to an article in the Business Standard, because of this the Indian Railways has the lowest passenger fares and the highest freight rates.“The average freight rate per tonne km is nearly four times the rate per passenger km against a factor of only around one on most world railways,” Shanti Narain, a former Railway Board member, said in the article.The distortion has weaned away the freight traffic from the rail tracks to road, resulting in huge loss to the Railways.

If the government wants to correct this, it has to restructure the Railway Board, by separating regulatory and executive functions, the article says.An independent tariff regulatory authority has to be set up to take care of the rail tariff.While many key sectors, like telecom and power, witnessed such a divergence with the economy becoming market-oriented, the Railways is yet to see such a development, the article says.Besides this, the Railways is now dealing with different players like special purpose vehicles, private port operators, Container Corporation and IRCTC. A separate tariff authority will help the Railways streamline its dealings with these players.Such a set-up will depoliticise the tariff policy and make the process of deciding tariff transparent, the article said.“The authority should function as a permanent reviewing body not only for streamlining the tariff structure based on rational economic principles, but also for reviewing the costing and accounting methodologies that are both transparent and based on rational economic principle,” it said.Read the full article here.