The Union Cabinet on Wednesday approved the formation of an independent rail regulatory authority to determine tariffs ensuring fair play and level playing field for private players keen on investment in the railways.
Considered to be the biggest and first-of-its-kind reform in the rail sector, the Rail Development Authority (RDA) is meant to improve the services offered to passengers, provide comfort to investors, and enhance transparency and accountability.
The RDA will be formed through an executive order of the government, as per the Cabinet decision.
It will make suggestions regarding policies for private investment to ensure reasonable safeguards to public-private partnership (PPP) investors and to resolve disputes over future concession agreements.
The need for a rail regulator has been emphasised by various committees for the past many years since 2001. This includes an expert group under the chairmanship of Rakesh Mohan in 2001, the National Transport Development Policy Committee (NTDPC) in 2014 and Bibek Debroy's Committee in 2015.
The RDA will act within the parameters of the Railway Act, 1989 and its major functions will be tariff determination, recommending principles for classification of commodities, framing principles for social service obligation and guidelines for track access charge. It will also be responsible for setting efficiency and performance standards besides global best practices and benchmarking.
The authority will have a chairman and three members and can engage experts from relevant areas. The chairman and the members of RDA will have a term of five years. An initial corpus of Rs 50 crore will be provided for setting up the organisation.
The RDA will help the government take appropriate decisions on pricing of services commensurate with costs, suggest measures for enhancement of non-fare revenue, protection of consumer interests, promote competition, encourage market development, and create positive environment for investment. It will also suggest measures for absorption of new technologies and human resource development and provide framework for non-discriminatory open access to the Dedicated Freight Corridor infrastructure.
The appointment of the chairman and members will be done by the Centre from the panel of names recommended by the Search and Selection Committee consisting of the Cabinet Secretary as chairman, Railway Board chairman, secretary of the Department of Personnel and Training, and chairman of any regulatory body of the central government nominated by the Cabinet Secretary.
The chairman and members can be removed by the central government on certain grounds like insolvency, conviction, misbehaviour, physical and mental incapability.
The Railway Budget 2015-16 had said that for the purpose of orderly development of infrastructure, enabling competition, and protection of customer interest, it is important to have a regulation mechanism independent of the service provider.
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