05/09/2017 Blog 0 comment

Rail Development Authority for UPSC

Rail Development Authority –

Government has approved formation of a Rail Development Authority (RDA) comprising Chairman and three Members. The objective underlying RDA is to get expert advice/make informed decision on –

  • Pricing of services commensurate with costs.
  • Suggest measures for enhancement of Non Fare Revenue.
  • Protection of consumer interests, by ensuring quality of service and cost optimization.
  • Promoting competition, efficiency and economy.
  • Encouraging market development and participation of stakeholders in the rail sector and for ensuring a fair deal to the stakeholders and customers.
  • Creating positive environment for investment.
  • Promoting efficient allocation of resources in the Sector.
  • Benchmarking of service standards against international norms and specify and enforce standards with respect to the quality, continuity and reliability of services provided by them.
  • Providing framework for non-discriminatory open access to the Dedicated Freight Corridor (DFC) infrastructure and others in future.
  • Suggesting measures to absorb new technologies for achieving desired efficiency and performance standards.
  • Suggesting measures for human resource development to achieve any of its stated objectives.

Necessary adjustments –

  • A degree of independence through the manner of appointment and funding of the Rail Development Authority is necessary.
  • The degree of impact of the Authority will depend significantly on the first Chairman and Members.

How to achieve the planned objectives?

The ability to persuade the Ministry and the Board to implement the guidelines will be critical to success.

  • The first objective, namely “Pricing of services commensurate with costs”, will require separation of the commercial function of the railways and the social/subsidising function of the government. This is a necessary step to be able to bring focus on efficiency in the commercial function.
  • Secondly, getting an early agreement on the reform roadmap, with well-defined roles of each stakeholder in making the transition will be key to sequencing the Authority’s priorities. This will also help in syncing the priorities with various steps that other stakeholders need to take. While the spotlight will be on the Rail Development Authority, the reformers in the government will need to play a strong role in making the structural changes needed to achieve the ambitious objectives.
  • Thirdly, the objectives of “promoting competition, efficiency and economy”, “promoting efficient allocation of resources” and “creating positive environment for investment” require more fundamental reform. A fully empowered regulator will likely be a necessary milestone in that journey. In creating the case for reforms, its ability to position itself as “external” to the Railways will be essential for the Rail Development Authority’s credibility among stakeholders.
  • Fourthly, the Centre-State joint ventures, special purpose vehicles for port and mine connectivity projects, private licensees for container rail operations, Dedicated Freight Corridor Corporation of India Limited, among others, will provide the initial eco-system in which the Rail Development Authority could play a key role as an independent agency among stakeholders.
  • Lastly, its fourth function, namely “Dissemination of Information” may turn out to be the most potent in creating stakeholder support for reforms. Through this, the Rail Development Authority could still play a significant catalytic role in transforming the railways, even within its limited recommendatory mandate.