A farewell to subsidies: Railways to set up an independent agency to look after fares

If all goes well, there would be no passenger subsidies in the railways from next year. The railway ministry has sought an approval from the cabinet to create an independent agency that would look into passenger fares and freight prices. This committee will consist of a chairman and four members independent of the railways. While the proposal has already been given thumbs up from the Niti Ayog, cabinet approval is still awaited.

An official of the railways has said that the Prime Minister and his office is aware of it and is supportive of this agency.

Fixing fares has always been a walking on rope for ministers of different tenures because it’s through the railways they earned the extra political mileage of appeasing the voters. If this committee is approved, passenger fares wouldn’t be a decisive matter for the minster. Regardless of whoever runs the ministry, the separate committee will decide on fare.

The first milestone of reform in the railways was brought by railway minister Suresh Prabhu by merging of the budgets with annual union budget. The national transporter of India has been bleeding a loss of Rs 33,000 crores every year in passenger fare subsidies.
"The proposed authority would be free to recommend fares and freight rates. It would rationalise the entire fare structure for the railways. It would be a big transformational change for the organisation. We will keep rationalising fare as per the market demand," Prabhu recently told ET.