Rail Development Authority

News:Minister of Railways has informed Lok Sabha about the setting up of Rail Development Authority(RDA).

Facts:

Background:

• The need for a separate regulator was emphasised by various committees including the Dr. Bibek Debroy Committee on Mobilisation of Resources for Major Railway Projects and Restructuring of Railway Ministry (2015).
• It was also recommended by the National Transport Development Policy Committee(2014) and Expert Group under the Chairmanship of Dr. Rakesh Mohan(2001).

About Rail Development Authority(RDA):

• Rail Development authority(RDA) will be set up within the parameters of the Railway Act,1989.
• It will only make recommendations to the Railway Ministry which will take a final call on passenger and freight fares.
• It will be an independent body with a separate budget.The independence is ensured through provision of a separate budget and the appointment and removal process.

Composition:

• The RDA will have a chairman and three members with a fixed term of five years each. 
• They can be removed by the Central government only on certain grounds, including insolvency, conviction, and misbehaviour, physical and mental incapability.
• The Chairman and members of the Authority will be appointed by a Search and Selection Committee headed by the Cabinet Secretary.
• The search committee will also include Railway Board Chairman, Department of Personnel and Training Secretary and Chairman of any regulatory body of Central Government nominated by the Cabinet Secretary.

Functions of RDA:

• Tariff determination:The authority will frame principles, recommend tariffs, principles for classification of commodities, frame principles for social service obligation and guidelines for track access charges on dedicated freight corridors.
• Ensure fair play: It will ensure level-playing field for all stakeholders.It will propose modifications and send suggestions or advisory notes on investment in railways.
• It will also make suggestions regarding policies for private investment to ensure reasonable safeguards to PPP investors to ensure a level playing field and resolve disputes regarding future concession agreements.
• Setting standards: It will help to set efficiency and performance standards and disseminate information in line with global best practices and benchmarking. It will also collect, analyse and disseminate information and statistics concerning the rail sector.

Significance of RDA:

• At present,the railway tariffs were set by the Union government and are mostly based on political considerations especially in passenger segment.
• As per provisional estimate,Railways losses had touched over Rs 30,000 crore in 2015-16 in the passenger segment due to sharp increases in input costs and no proportionate increase in fares over the same period.
• Hence,RDA will help the Indian Railways to take decisions on pricing of services commensurate with costs and will also protect consumer interests by enhancing transparency and accountability.