Rail Tariff Authority gets Cabinet’s approval

August 6, 2013

Union Cabinet has given nod to the set up Rail Tariff Authority (RTA) in order to improve the financial situation of the Railways forthwith without any delay.

The RTA has been mandated to completely eliminate the subsidy component and cross-subsidy of passenger fares from surplus generated from freight business completely within 10 years.

To set up RTA, the Cabinet has directed the Law Ministry to initiate the process through an executive order. This will save time than going by the Parliament approval route which is a long drawn process that needs more than six months. By setting up the authority through an executive order, the government would obtain the first ruling from the authority for raising passenger fares. It would not only be speed up the process of decision-making, but rake in more revenue in the process.

What is the urgency to raise passenger fares?

The net loss in the passenger segment has been rising at a steep rate of 17.6% and has mounted to a whopping Rs. 22,507 crore in 2011-12. With the Railways finding it difficult to meet even their operating expenses, there has been little or no progress on the development and growth front. To make the Railways self- sufficient, the Authority’s domain is to generate surplus funds for creating and maintaining rail infrastructure on a long term basis.

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