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Rail regulator on course

New Delhi, Jan. 29: Indian Railways hopes the proposed tariff regulator will help it to set fares without political interference.

“The cabinet note on the authority is likely to be moved in the next two weeks. While the structure has been finalised, the mandate is being worked out. The aim is to make it free from political pressure,” a senior Railway Board official said.

“If it is a merely advisory body, it will defeat the purpose of setting up the authority because at present the railway minister is being advised by the board and the final decision is influenced by political considerations also,” he added.

The authority is expected to review input costs such as diesel and power expenses, and suggest fare hikes to offset any increase in expenditure.

Sources said the regulator was likely to be a 3-4 member body headed by a chairman.

There are indications that passenger fares will be dynamic like airline tickets.

Officials said one option was to link fares to inflation with a certain percentage of the rise in the wholesale price index being passed on to the passengers. Like the airline ticket, the rail ticket may also mention the fuel cost besides details of other expenses, they said.

The government’s recent move to decontrol diesel prices for bulk customers such as the railways could lead to frequent changes in fares.

In fact, the market pricing of diesel will adversely impact the revenues of the railways by increasing the fuel bill by at least Rs 3,300 crore annually.

The railways were expected to earn Rs 6,600 crore per year following an across-the-board hike in passenger fares after a decade. However, the rise in diesel cost has “washed out half the expected revenue… perhaps it could be more if the diesel prices move upwards in the coming months”, officials said.

The oil companies raised diesel prices by Rs 10.80 per litre for bulk buyers, including the railways, which spends around Rs 24,000 crore per year on fuel. Diesel constitutes Rs 16,000 crore and electricity the rest.

Losses in the passenger segment were expected to go up to Rs 25,000 crore this fiscal, a four-fold increase over Rs 6,159 crore in 2004-05. In contrast, input costs have grown 10.6 per cent every year between 2004-05 and 2010-11.

“Cross-subsidy through freight is also no more viable in view of the fast-evolving competition from other modes of transport,” officials said.

The power tariff is also expected to rise with the Centre announcing a financial restructuring package for distribution companies (discoms) whose losses stood at Rs 2.46 lakh crore at the end of March 2012.

 
 
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