Fares On Private Trains For 100+ Routes Can Be Anything; Govt Will Not Regulate Fares!

By Malvika Gurung Last updated Aug 14, 2020

Ministry of Railway makes it clear that the train fare decided by the associated private concessionaire will not be required to run by a government regulator.

In 2017, the government approved setting up a Rail Development Authority (RDA), to keep in check the pricing, operational efficiencies, promoting competition, cost optimization and several other reasons.

Now, in a recent corrigendum (correction of error) issued by the ministry of railways, it has been clarified that the decision of pricing on journeys by private trains, shall be under complete discretion of the private concessionaire.

Let’s understand this in detail.

Queries by Private Players to the Ministry of Railways

Private train operations in India are scheduled to begin by 2023.

According to the MoR, private companies will run such 151 trains.

There are about 23 private organisations that are showing positive interests in running these private trains. Some of them are Siemens Limited, Alstom Transport India Ltd and Bombardier Transportation India.

In a pre-bid meeting on Wednesday, the participating private firms put up several queries to the MoR, regarding bidding process, fares, operations, maintenance and several other concerns related to private trains.

One major query raised was for the ministry to clarify whether the potential buyer would have to run/approve the selected fare by a government regulatory body.

Respone

To this query, the ministry responded via a corrigendum document to the private players,

“As mentioned, fares are not proposed to be regulated and Private Train Operators (PTOs) will have the flexibility to determine the fares. To address the inflation impact, PTO(s) may consider increasing the tariffs/ fares. However, it may be noted that PTO(s) would be operating in a competitive environment, and PTO(s) ability to increase tariffs/ fares may be constrained”.

In simple terms, the ministry made it very clear that the “fare will be market-driven and no approval is contemplated.”

However, VK Yadav, the railway board chairman has clarified that the ministry shall set up a said regulatory authority, in future.

The private trains will map over 100 key routes across India and the fares for such train journeys will be exclusively market driven and shall not subject to any approval from a regulatory body.