The decision was made at the meeting of the task force here on Wednesday under Planning Commission deputy chairman KC Pant. Among others, railways minister Mamata Banerjee, civil aviation minister Sharad Yadav, plan panel member Montek Singh Ahluwalia, Infrastructure Development Finance Corporation managing director N Munjee, the civil aviation secretary, the chairman and the member (traffic) of the Railway board attended the meeting.

According to a participant, Pant exhorted the task force members to keep in mind that they are supposed to look ahead and make recommendations accordingly.

Banerjee pointed out that the fifth pay report has put an additional burden of Rs 6,000 crore on Railways. Besides, her ministry has to meet a lot of social obligations. All this has caused the present financial crisis. She, however, expressed her commitment to the reforms process.

Ahluwalia was of the opinion that there is no economic rationale in keeping Railways separate from the reforms. It is to be noted that the plan panel member and eminent economist had drafted the integrated transport policy which is under discussionn by the task force.

The Railway board chairman said in the event of corporatisation, there will be a loss of Rs 150 crore in sales tax. He lamented that the share of Railways in freight movement has gone down from 90 per cent in 1950-51 to 40 per cent at present. Similarly, in the passenger segment, the decline is from 70 per cent to 20 per cent.

The issue of freight subsidising passenger fare was also discussed at the meeting.

On the proposal for creation of an independent Railways Tariff Regulatory Authority for fixing tariff, it was decided to wait for the Rakesh Mohan committee report. An official source told The Financial Express, the Rakesh Mohan committee has complete modelling for Railways, and has predicted a very bleak future for it. The committee also likely to strongly recommend regulation for the survival of Railways.

At the meeting, the participants observed that large amounts of investments are needed to enable Railways to cope with an increasing demand. All this cannot be generated by the government.

The task force will discuss the new civil aviation policy at its next meeting.