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New Delhi: India will establish a railways tariff regulator for passenger fares and freight rates that would try eliminate current distortions, railways minister C.P. Joshi said.

“We have decided to constitute a rail tariff authority that will look into rationalization of tariff rates and the skewed relationship between freight and passenger tariff rates," Joshi, who is also minister for roads and highways, told reporters on Monday.

The authority was first mooted in this year’s railway budget. Joshi said details of the constitution of the authority would be finalized over the next few months.

“The exact nature and power of the authority—whether it will be a regulator or only an advisory body, membership of the authority—will be finalized only after further discussions and deliberations with everyone," Joshi said, without elaborating.

The railways has been facing increased pressure to raise passenger fares with the hike in diesel prices expected to raise its expenses by around 600 crore in the remaining part of the fiscal year to March.

The passenger fare hike announced in the budget had to be rolled back after protests from Trinamool Congress president Mamata Banerjee, a former ally of the ruling United Progressive Alliance government.

A committee headed by Sam Pitroda had recommended the constitution of a tariff regulator in its report on modernization of the railways submitted earlier this year.

An external authority will check the arbitrariness in fixing tariff rates, according to R. Sivadasan, former financial commissioner of the railways. “It is important to take away the arbitrariness that goes into price fixation and set rational standards for it, but a lot will depend on how this regulatory authority is empowered," Sivadasan said.

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