Rail fares may increase as cabinet clears setting up of rail regulator

Rail fares are likely to go up in coming months, with the Union cabinet on Wednesday having cleared the long-pending proposal to set up a Rail Development Authority, which will determine goods and passenger tariffs.

Passenger fares have remained hugely subsidised in India, with annual losses in the passenger segment estimated at around Rs 30,000 crore. For the price of a kilogram of sweets, one can travel 1,166 kilometer from New Delhi to Patna in the general unreserved class.

Seen as a big reform measure, the regulator will undertake the task of fixing tariffs on the basis of prevailing market prices and other parameters, including the cost of travel.

In what is seen as a big-ticket reform measure aimed at attracting private investments, the authority has also been entrusted with the task



of ensuring fair play and a level playing field for stake-holders/investors in the Indian Railways.

"This will ensure that policies (for private investors) do not change with the change in governments," an official said.

The regulator will also set efficiency and performance standards for the Indian Railways and will also have functions in relation to the dissemination of information, so as to bring transparency in the functioning of the state-owned transporter.

A funds corpus of Rs 50 crore has been earmarked for the setting up of the authority, which will function within the ambit of the Railways Act of 1989. The regulator will have a chairman and three members and will have the authority to engage experts from other fields. The chairman and members will have five-year tenure.