The Centre on Thursday approved the constitution of the Rail Tariff Authority (RTA) to develop and implement an integrated and dynamic pricing mechanism for its passenger and freight services. The subsidy component would be phased out in 10 years.
The RTA, as cleared by the Union Cabinet, will be at arms’ length with the government and its decisions will be binding on the government though it retained the power to modify it. A lower rate could be adopted through a special or general order, provided the budgetary impact was at best neutral but in no case negative.
The authority to be instituted by a legislation enacted by Parliament will comprise a chairman and four full time members with a five year term or maximum age of 65 years.
They would be chosen by a four- member selection committee headed by the Cabinet Secretary with Chairman Railway Board, Secretary Department of Economic Affairs, and an expert to be nominated by Railway Minister.
The chairman and members of the authority will be chosen from experts in economics, finance and accountancy and law and management and fields of operating and commercial working of railways including pricing of its services and financial services.
In the case of serving or retired government officials, the government has set different criteria for different posts and none less than the rank of Secretary will qualify for the post of chairman of the authority.
The government has set a deadline of 10 years to the authority to phase out the subsidy or cross subsidies. The authority will specify the modalities for the purpose.
The government has made it clear that the pricing of goods and passenger services would have to in tune with its plan and non-plan requirement of funds and the investments required for future expansion, replacement of assets and enforcing safety measures, among other considerations.