CP Joshi

New Delhi, Oct. 8: The railways have decided in principle to set up a tariff authority, seeking to de-politicise the holy cow of passenger fares.

“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 would be moved for the consideration of cabinet,” C.P. Joshi, who is holding charge of the utility 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 tariff from the beginning of this month.

In Delhi, Joshi said the details of the proposed rail fare authority had yet to be worked out. “No decision has been on whether the authority would itself set the tariff or its recommendations would be advisory…. these were finer details to be worked out,” he said.

Joshi, after addressing the annual Economic Editors' Conference here, said the tariff authority would try to eliminate the uncertainties in tariff formulation and take a balanced approach in determining the tariff.

Asked whether the fares would be dynamic, which would move 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 financially viable.”

By this in-principle decision, Joshi has reversed the decision of Mukul Roy to put on hold his party colleague Dinesh Trivedi’s proposal of setting up a committee to examine whether there should be an independent tariff regulatory authority.

The decision to hike passenger tariff and regulatory authority had cost Trivedi to lose his job as a railway minister.

Vinay Mittal, chairman of Railway Board, said a committee of officials had been constituted to work out the modalities and the cabinet note could be moved within the next two months.

Officials indicated that the tariff authority would be an independent body as suggested by the Sam Pitroada committee to enable the railways generate its own resources and attract investors in public-private projects.

Trivedi had said he was contemplating a system of segregating fuel component in the cost associated with passenger services and call it FAC (fuel adjustment component). The FAC will be dynamic in nature and will change in either direction with the change in fuel costs.