ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Autonomous Regulation and Regulatory Risk

Why Railways and Coal Should Not Have Independent Sectoral Regulators

The Ministries of Railways and Coal have recently opened up their passenger train and commercial coal mining segments to private participation. With this, there is a growing clamour for setting up independent sectoral regulators for these sectors. This article argues that railways and coal would be better off “regulating by contract” or that the independent sectoral regulators in related sectors may be given the regulatory responsibility of railways and coal, respectively.

 

Views are personal.

The clamour for an independent regulator for the railways has been gaining ground since the time private passenger trains have been mooted. It is being reasoned that with an incumbent public sector monopolist in the sector, private investment would not be forthcoming in the absence of unbiased regulation, which translates into the requirement for an independent sectoral regulator. After the request for qualification for private participation in passenger train services was issued (1 July 2020), the clamour has become shriller. The objective of private participation in this market segment is to introduce modern technology rolling stock with reduced maintenance requirements, reduced transit time, job creation, enhanced safety and world-class travel experience to passengers, and red­uced demand–supply deficit in the passenger transportation sector (Press Information Bureau 2020). As per the plan, 151 private trains are to be operated over 109 routes, which will bring in private investment of about `30,000 crore. The concession period would be 35 years and the bidding parameter would be revenue share to the Indian Railways. The concessionaires would have to pay a fixed haulage charge for path, stations, access to railway infrastructure, and energy charges based on actuals. The first private passenger trains under this initiative are expected to start operations in 2023.

Similarly, the coal sector has recently been opened up to the private sector for commercial mining. Thirty-eight ex­pl­ored coal blocks were offered, for which 43 bids were received. For 19 blocks, there were more than two bids, while for three, there was a single bid. To take this initiative to fruition, the Ministry of Coal is open to the idea of a coal regulator.

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Updated On : 17th Jul, 2023
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