Rail Reform: Cabinet Approves Setting Up Of Rail Development Authority

The Cabinet today (5 April) approved the formation of a rail regulatory authority whose job it will be to determine and recommend passenger and freight fares and set service-level benchmarks.

Setting up of the Rail Development Authority (RDA), pitched as “the biggest reform in rail sector” by the Ministry of Railways, will look to improve passenger services, create a positive environment for investment and enhance transparency and accountability.

The RDA, which will have an initial corpus of Rs 50 crore, will have a chairman and three members, and can engage experts from relevant areas. The chairman and the members will serve a term of five years. The Search and Selection Committee will recommend names for the two roles to the central government, which will finally make the appointment.

The Authority will soon be set up through an executive order. As reported by the ministry, it will act within the parameters of Railway Act, 1989, and undertake the following broad functions:

- Tariff determination

- Ensuring fair play and a level-playing field for stakeholder investment

- Setting efficiency and performance standards

- Disseminating information

Ministry of Railways has tweeted out several other functions of the RDA as well.

Several committees have recommended the formation of such an authority for years. The latest were the National Transport Development Policy Committee (NTDPC) in 2014 and Bibek Debroy's Committee in 2015. With the Cabinet’s approval, this long-proposed rail reform will finally materialise.