Labyrinth of Rail Tariff Authrity

LABYRINTH OF RAIL TARIFF AUTHORITY The proposed rail tariff authority is a complex institutional phenomenon; the more it is worked out, the greater is the complication, intricacy and confusion involved in it. One is sure to be lost in its incompatibility and impracticality of thought process and action. The idea was first mooted to establish Indian Railways Regulatory Authority (IRRA) by The Rakesh Mohan Committee Report (2001) along with other innovative recommendations. But it was not taken up seriously because the committee stood for corporatization of the railways and almost proposed to dismantle the Ministry and the Railway Board. Not knowing about the consequences, the idea was reopened by Dinesh Trivedi (2012), although the railways’ professionals and think tank did not consider it a welcome step. Later on, other ministers - Pawan Kumar Bansal and Mallikarjun Kharge - under the pressure of the Planning Commission - took up the cause for establishing Rail Tariff Authority. Though Bansal had to leave the railways, it was Kharge who ultimately succeeded in getting the proposal of Tariff Authority passed by the Cabinet. It is at present lying with the Ministry of Law. The tragedy with Indian Railways is that it is molested, time and again, by its own mentor for personal and party pleasure. Who is to check the top brass? And how is it possible to bell the cat? When it comes to Railways Budget Session, the minister feels elevated – a time for bounty distribution – mostly unplanned expenditure is added year after year. And the back log grows so heavily that no amount of Vision 2020 or any other such Vision would suffice to end this process. The past experience shows that the malady lies somewhere within the ministry of railways. It is the minister who needs to be checked, controlled and stopped from making imprudent and whimsical decisions. But what is the way out? Is there any authority over him? Is there any regulatory body to mend his ways? Constitutionally none, except the Parliament to which the minister is answerable. For the past several years, the railways has shown unprecedented ways of bringing the department to near bankruptcy. It seems to be the fall out of insensible decisions taken by the ministers like popular schemes of no hike in tariffs, unplanned expenditure, unfeasible projects and adding up limitlessly new trains and new programmes every year without any financial provisions for the same. It is perhaps for this reason that a consensus was created to establish Rail Tariff Authority. It sounds good to have such an authority provided it is feasible. Perhaps neither the Planning Commission nor the Cabinet has given a second thought to it about its impracticability. The idea of Rail Tariff Authority (RTA) is unrealistic, inappropriate and disruptive because of the duplicity of the authority and other related factors involved in it. It seems like creating an authority over the final authority. What type of power structure does it envisage? The most experienced financial cadre of Indian Railways and academics engaged in research studies at various rail study centres like Rail Transport Institute, Delhi, and Railways’ Staff College, Varodara, have opined that the set of players involved in railways are different than those in other tariff authorities like the Tele-Communication Sector (from where this idea is borrowed). The players of the Tele-Communication Sector are outsiders and cannot be equated with the railways. A. V. Polouse, an authority on railway finance, and former member Railway Board, has never welcomed the idea of Rail Tariff Authority. He is of the opinion that tariff authority like the Tele-Communication is working only because this sector is multi-operator-service-sector, unlike railways which is single-operator-service-sector. The railways is a single player business unit. Whom will the RTA regulate? An authority to regulate an authority! Should one regulate the Minister for Railways or for that matter the Prime Minister if he keeps the railways portfolio with him? The Rail Tariff Authority is a mismatch proposition and does not conform to the railways setup and its operative pattern. The railways as a department, and the government at the centre – both seem to be rather confused over the setting up of the Rail Tariff Authority. Perhaps it is on the basis of such a scenario that the proposed RTA has yet not taken a concrete shape and though it has got a nod from the Cabinet, the proposal is still languishing in cold storage or perhaps lying somnolent with the law ministry. The doubts regarding feasibility of the Tarff Authority have come home to the roost. The protagonists now say that if RTA has to be adopted, it must go through both ways i.e., executive and legislative. Though it is easy to establish RTA through executive order but it would remain in that case a subordinate and weak institution. Its recommendations would never be mandatory. The railways by nature and authority cannot digest any super body dominating it. It is not practically possible to do so without recourse to legislative process. It, therefore, needs an amendment in the Railways Act 1989. It is here that the conflicting opinions prevail. The nature, role and practicability of RTA have to be ascertained first. The purpose of tariff authority has to be well defined. Its functioning has to be made clear. The feasibility aspect must be judged properly. The railway ministry wants it to be an advisory body where as the government at centre thinks it to be much stronger an institution whose recommendations would be mandatory. The Cabinet Committee though in principle has accepted the establishment of a regulatory body but it has different versions of the proposed authority. The minister for railways, Mallikarjun Kharge, has said that the Cabinet has approved the proposal of establishing RTA but there are some points which are still to be clarified. What are those points are not clear. In fact, a stronger RTA needs amendment in the Railway Act. The Act should provide fine teeth to RTA to enable it to regulate railways tariffs with power, grace and dignity. In this case it would have authority to fix fares and freights binding on the railways. And, perhaps the railway administration would not accept this process on technical grounds and in the long run the Rail Tariff Authority would become useless. The railways on the other hand, has an authority to submit budget to the Parliament - an authority - which is superior to any other department functioning within the government except the Ex-Chequer, the Ministry of Finance. How can a third party intervene the functioning of the railways and the Parliament? Does the RTA want to make this power of the railways redundant? There seems to be a tussle of power being exercised between RTA’s advisory and mandatory role. This situation, in any case, should be avoided in the general interest of the railways and the people. What is use of submitting separate budget by the railways if it cannot fix fares and freights on its own? The aspect of fare and freight policy governs the gamut of railways system and functioning. If this process is changed, the railways cannot survive as a dignified department. The setting up of an intermediary body would disturb the whole power structure of the railways. A common acceptable solution has to be found so that the RTA would fix the brackets of increase or decrease of rail fares and freights taking into account input costs like fixed and variable costs, marginal and average costs and other expenditures and market conditions of demand and supply including elasticity and sensitivity aspect of passengers and consignors. However, the final authority must remain with the railways. This requires executive and legislative changes and amendments. Only the time will tell what shape the RTA takes if the government is keen to establish it. If Indian railways has to be saved from the political clutches and unrestricted power being exercised by the ministers to promote their private and party interests, the RTA with fine teeth should emerge as a solution to the present deteriorating situation or else the railways would be driven into doldrums. The railways has already experienced a damaging effect due to ministers uncontrolled behavior during the recent past and the ministry of Railways needs a shock therapy to bring it on the right track.