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Vivian Fernandes
Thursday , March 22, 2012 at 17 : 14

Comment: when ministerial whim passes off as policy


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Mukul Roy, the new railway minister, is a very quick learner. Within a day of taking over, he has decided that the Railways do not need an independent tariff regulator as his predecessor Dinesh Trivedi had proposed in the budget. The railway ministry, he says, can 'balance' the interests of employees and users, thank you. Trivedi's idea of expanding the railway board and inducting two members, one for private partnerships and another for safety, has also been trashed. And the fare increase has been reversed except for Ist and 2nd class AC.

The idea of an independent tariff regulator did not come to Trivedi as a revelation. The Rakesh Mohan committee of experts had proposed it after considerable thought in 2000. Recasting the railway board along business lines with members for passenger traffic, freight, rolling stock and track, was another of its suggestion. The railway board as it is now constituted has the mentality of an operator, and its division along functions like mechanical engineering, electrical and so on is crafted for turf wars, not for business expansion.

The Sam Pitroda committee in its 2012 report had endorsed these fine suggestions. So had Mamata Banerjee's white paper of 2009!

Nor are these ideas novel. All infrastructure sectors - power, ports, aviation and telecom - have tariff regulators. If some of them are not very effective, blame the people heading them. Separating the enterprise function from policy and regulation is necessary for better governance. This has been done even in China.

Only in India is the railway ministry the policy maker, executor and regulator, all rolled in one. Roy says a tariff regulator is not necessary because there is no competition in the railways. In fact, this is all the more reason why it should have one. In the absence of a tariff regulator one does not know how the railways fix tariffs. There is no independent oversight. The railways just pass on the costs without trying to control them.

Retaining the fare hikes on the top two air-conditioned classes is illogical. Of the 8,291 milion passengers that the railways carried this year, only 24 million travelled AC first and AC-II Tier. That is a quarter of one per cent! They contributed just 8 per cent of passenger earnings. Ordinary second-class fares have been flat for 18 years. They rose just 6 per cent during a period that saw the wholesale price index jump by 295 per cent.

What will the railway unions now do? After declaring support for the fare hikes, will they give in? Was their threat of industrial action just a negotiating tactic?

And on what basis has Mukul Roy made his assertions? Does coalition politics absolve ignorance? In what way are an independent tariff authority and a recast of the top management against the aam aadmi? Does Roy need to spit on the railways to spit a colleague?

The question to ask is: whose budget is this? Is it the Trinamool Congress' or the UPA's? How can the Finance Minister, who was privy to the rate hikes, accept the rollback? And how can the Prime Minister acquiesce after praising the budget in the Lok Sabha?

Does this government have any convictions?


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More about Vivian Fernandes

Vivian Fernandes is a senior journalist with nearly 30 years of practice, 19 of them in television, all of which he spent at TV18. Vivian’s last assignment was as executive editor of a book on India and China written by the founder of the Network 18 group, Mr Raghav Bahl. He has been an observer of Indian business and politics, and had reported on economic policy making as reporter, chief of Delhi bureau of correspondents and economic policy editor. Vivian has traveled abroad with Prime Ministers Narasimha Rao, Atal Behari Vajpayee and Manmohan Singh. He was also reported on the World Trade Organization’s trade talks from Cancun, Hong Kong and Geneva. He continues his association with the Network18 group, but not as an employee.
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