“Union Cabinet has approved a major policy reform in Railway sector. The RDA will be set up as an independent regulatory body in New Delhi,” stated an official statement.
In an important development, the government on Wednesday gave its nod to setting up of an independent regulatory body for recommending passenger and freight fares. The body called Rail Development Authority (RDA) will also set efficiency and performance standards for the railways and also ensure fair play and level playing field for stakeholders.
“Union Cabinet has approved a major policy reform in Railway sector. The RDA will be set up as an independent regulatory body in New Delhi,” stated an official statement.
According to the final print, the authority will consist of a chairman and three members, who will each have terms of five years. Apart from the members, the authority can also engage experts from relevant areas. The Authority will have an initial corpus of Rs 50 crore. The Chairman of the Authority can be from the private sector and will be selected by a committee chaired by the Cabinet Secretary, a Railway Ministry official said.
The official added that the authority will soon be set up through an executive order. "It will act within parameters of Railway Act, 1989 and undertake the following broad functions: tariff determination, ensuring fair play and level playing field for stakeholder investment in Railways, setting efficiency and performance standards, dissemination of information,” the official statement stayed.
A senior Railway Ministry official explained the RDA will only be a recommendation body and the final decisions on setting fares will be made by the Railway Ministry.
The authority will set tariff based on cost recovery principle and “what the traffic can bear". "All the direct and indirect costs such as pension liabilities, debt servicing, replacements and renewals along with productivity parameters, market driven demand and supply forces and future investments will be considered by the regulator before setting tariffs," a railway ministry official said.
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