Planning Commission for Rly Tariff Regulator

New Delhi, Sept 3: Railway Minister Lalu Prasad may have scripted a spectacular balance-sheet for his ministry without effecting any hike in passenger fares during the last three years, but the Planning Commission is not impressed.

The Plan Panel is against the populism of the Railways, arguing against any further hike in upper class fares, and is also opposed to cross-subsidising second class fares beyond a point.

It is also at loggerheads with the charismatic Railway Minister on the setting up of a regulator for monitoring the fixation of fares for various classes.

The thinking in the Commission is that very high levels of higher class fares are diverting traffic to low-budget airlines and any further burden on this segment will be a blow to the potential of the Railways to generate larger volume of revenues.

This has been argued in the Approach Paper to the XIth Plan (2007-12), and planners continue to hold on to their own despite criticism from Mr Prasad, whose thinking is to make Railways a common man's transport.

''Rationalisation of passenger and freight tariff can also help in getting more freight traffic. Cross-subsidising passenger traffic through freight traffic, and within passenger traffic cross-subsidising second class fares by overcharging higher class of travel cannot be carried beyond a point because overcharged freight migrates to road and overcharged passengers to air,'' says the Commission.

To put railway fares on a rational basis, it is essential to establish a Rail Tariff Regulatory Authority (RTRA), it argues.

However, the Railway Ministry has opposed the move by already sending a ''Cabinet Note'' to the government.

The Prime Minister-headed Committee on Infrastructure (CoI), with the Plan Panel as the nodal agency, has a mandate for putting in place a regulatory mechanism for core sectors.

The Tenth Plan also suggests that the Railways should fix tariff on technical and commercial consideration. ''The pace of railway modernisation needs to be vigorously accelerated in the 11th Plan. A paradigm shift in provision and delivery of rail services is called for,'' points out the Approach Paper.

Sources said a common regulator for the entire transport sector would facilitate India's plan to secure FDI worth 150 billion US dollars in the transport infrastructure sector. The previous NDA government had approved four Thrust Areas and Priority Items for the year 2003-04 for the Railways, the setting up of a Tariff Regulator being one of them on the ground that it was needed to end cross-subsidisation.

Later, when Mr Lalu Prasad took over as the Railway Minister in the Congress-led UPA Government, the ministry decided to put up a ''Cabinet Note'' for deleting the item ''Setting up Rail Tariff Regulatory Authority to rationalise Rail Tariff'' from the list of approved Thrust Areas and Priority Items.

Sources in Rail Bhavan said the ministry felt that there was no rationale for setting up a Tariff Regulator because under the Railways Act, 1989, full powers had been conferred on it to fix the tariff rates.

''However, as a regular annual Budget exercise, the proposals for adjustments in fares and freight rates are debated and approved by Parliament which acts as a regulatory authority,'' the sources said, adding that tariffs were also subject to continuous scrutiny by various Parliamentary Committees.

Further, the Railways should not function purely on commercial lines as far as public transport was concerned. ''It has a social obligation to provide transport at affordable cost to a large section of population which is economically weak.'' The Railways' opposition to a Regulator also stems from the fact that it faces competition from the road sector, which has no regulator at present. ''The Railways will have to adopt a flexible policy, especially of freight, towards incentives so that it can compete with the road sector,'' the sources said.

The thinking in Rail Bhavan is that a regulatory authority for the Railways will be inappropriate, keeping in view the fact that none of the committees set up in the past to study the Railway rate structure have recommended any such authority.

Unlike Japan, which has 27 Railways, India has a single Railway.

''There is thus a need for the regulator not for the Indian Railways but for 37-38 railway companies in the country,'' the sources said.

UNI