New Delhi: In a major concession to private players, the Indian Railways has decided that there would be no overarching body to regulate tariffs or fares for private trains even as it left open the scope for the creation of such a body in the future.
In a corrigendum issued Wednesday when the Railways met private players for the second pre-bid meeting for the running of private trains, the Railways told the interested players, “There would be no fare regulation and the PTOs (Private Train Operators) shall have autonomy to determine tariffs/fares.”
As far as regulating prices is concerned, the Railways said competition in the market will ensure that the players do not overcharge.
“Indian transportation landscape is quite competitive and there is sufficient competitive tension in the market. PTO(s) are likely to compete with all modes of transport and not likely to operate in a monopolistic environment,” the Railways said.
“Accordingly, though PTO(s) will have autonomy to determine and levy fares, travellers would always have choice for alternative trains/modes of transport. Such competitive tension should address such risk of prohibitive pricing by PTO(s),” it added.
Moreover, the private players will have no control over the Indian Railways’ fares, which it will be free to reduce on its own. “There is no restriction on Indian Railways to reduce its existing fares.”
The Railways is looking for private players to operate passenger train services over 109 routes formed in 12 clusters across its network.
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Excessive regulation will kill interest
The corrigendum is in contrast with the Railways’ claim so far that the fares will be regulated by a Rail Development Authority (RDA), which was approved by the Union Cabinet in 2017. In the context of private trains, it was said the RDA will perform a role similar to that of the Telecom Regulatory Authority of India (TRAI).
“There is no final decision as of now,” a railway spokesperson told ThePrint. “The whole point of pre-bid meetings is that you respond to the concerns of the private players… But what will be in the final tender will be the final decision on the issue.”
Sources in the Railways said since it is a new sector, which is just opening up, it is believed excessive regulation will deter private players from coming forward.
“The Railways would want a civil aviation kind of arrangement wherein prices are regulated through competition, and not a body,” said an official. “Moreover, in case of any cartelisation or predatory pricing, there is already the Competition Commission of India.”
If there are any complaints against the fares fixed by private players, however, the Railways will be empowered to look into them, the official added.
Yet, the Railways has not ruled out the RDA’s involvement in price determination in the future.
“There is a possibility of a rail regulatory body being set up in India in the future to regulate various entities and their functions. Functions of such a regulator may include economic regulation. Any form of economic regulation may have impact on Project revenues,” the corrigendum said.
“Based on its objectives, MoR (Ministry of Railways) may consider clarifying that the Project would not be under oversight of the proposed regulator. This would provide clarity/certainty to interested bidders,” it added. “However, if MoR desires to have this Project under the oversight of regulator in future, provisions to this effect should be included.”
It gave the example of development of greenfield airports in Hyderabad and Bengaluru.
“For example, when the PPP projects for development and operations of greenfield airports at Hyderabad and Bangalore were awarded, India did not have an independent economic regulator. However, as Government of India had already envisaged setting up of the regulator, the Concession Agreement addressed the same,” it said.
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