Joshi and Mamata
New Delhi, Oct. 8: The railways have confirmed an in-principle decision to set up a tariff authority, seeking to de-politicise the holy cow of passenger charges and offering an unsolicited way out to Mamata Banerjee who is grappling with bus fares in Bengal.
“An in-principle decision has been taken to set up a rail tariff authority. The modalities are being worked out by the ministry and soon a note will be moved for the consideration of the cabinet,” C.P. Joshi, who is holding charge of railways after Trianmul’s Mukul Roy resigned, told The Telegraph.
This is the second significant step taken by Joshi following the departure of the Trinamul Congress from the UPA government. Joshi had recently agreed to collect service tax on passenger and freight tariffs from the beginning of this month.
With the in-principle decision on a tariff authority, Joshi has reversed Roy’s decision to put on hold his party colleague Dinesh Trivedi’s proposal to set up a committee to examine whether there should be an independent tariff regulatory authority. Trivedi, who had lost his job then, has now been reinstated as Bengal government adviser.
Joshi’s decision comes at a time the Mamata government has been struggling to come up with a viable response to repeated appeals by bus operators to raise fares.
The Bengal government has so far stuck to its “no-hike” mantra, although diesel prices have gone up by almost Rs 16 a litre since the last bus fare increase. The impasse has made the commuter bus business virtually unviable, forcing many private operators to cut the frequency of services or pull out from routes altogether.
The situation has reached such a pass that a surreal cycle of strike threats, postponement under political duress and issuance of a fresh deadline is playing itself out in the state almost every week.
The net result is that no one can say with certainty if private buses will run in a particular week or not. The latest threat to go on strike was put on hold today till Lakshmi Puja, which falls on October 29.
Since the state government thinks a hike is not in its “DNA”, one way out is to let an independent authority, like the one in the power sector, to set tariff according to changes in fuel prices and the rate of inflation.
On September 19, The Telegraph had quoted Asish Verma, in-charge, urban planning, Indian Institute of Science, Bangalore, as saying: “Setting up of an independent bus fare regulatory commission (can) rid the fare determination process of political control.”
The suggestion assumes significance against the backdrop of the inability of a group of ministers set up by the state government to come up so far with a solution acceptable to all stakeholders.
In Delhi, Joshi said the details of the proposed rail fare authority needed to be worked out. “No decision has been taken on whether the authority would itself set the tariff or its recommendations would be advisory… these are finer details to be worked out,” he said.
Joshi said the authority would try to eliminate the uncertainties in tariff formulation and take a balanced approach.
Asked whether the fares would be dynamic, moving up and down like airline rates, the minister said: “Wait for the ministry to work out the details… the move is to make the railways viable.”
The operating ratio of railways, the money spent to earn every Rs 100, has risen from Rs 91 in 2004-05 to Rs 95 in 2011-12. This means that after meeting interest costs, the railways do not have enough surplus to plough back as investments.
Vinay Mittal, the chairperson of the Railway Board, said a committee of officials has been constituted to work out the modalities.
Trivedi had mooted a system of segregating the fuel component in the cost associated with passenger services and call it FAC (fuel adjustment component). The FAC will be dynamic and change in either direction in line with variations in fuel costs.