Taking head-on Ms Banerjee's stand on the no-passenger fare hike issue, thegroup has recommended an annual increase of 10 per cent in second classsleeper and 8 per cent in second class ordinary fares over the next fiveyears (assuming about 6 per cent annual inflation over the period).

The committe has also submitted copies of its `interim executive summary'(pending its final report) to Prime Minister Atal Behari Vajpayee andFinance Minister Yashwant Sinha besides Ms Banerjee.

The summary has said that the Railways must aim to be corporatised into`Indian Railways Corporation' governed by a reconstituted `Indian RailwaysExecutive Board'. Since some members of the expert group were scepticalabout the usefulness of corporatisation, the summary has made a case forinsulating the railways from political and governmental interference.

Ringing the alarm bells for the Railways, the committee has observed thatthe economics of Indian Railways are now "extremely vulnerable" with itsability to invest adequately in providing efficient and cost-competitiveservices in question.

The committee has observed that although the Railways may have justifiableclaim on the Centre for resources for investment in the public interest, thefiscal situation is such that it may simply be incapable of providing thevolume of resources required by the Railways to be competitive in thefuture.

According to the summary, a copy of which is available with The FinancialExpress,the Railways fall in the "limited access" infrastructure categorythough a tradition has been built up to see the railways as part ofessential public service, the usage of which should not be denied to eventhose who are unable to pay fully.

The group has favoured institutional separation of Railways' roles whichmeans that policy-makers are limited to setting policy; regulators fixcompetition rules in general and pricing in particular; management manageand they are measured against clear performance indicators. Calling forsegregation of its commercial and social roles, the summary has saidinvestment expenditures that do not result in additional revenue must beeschewed. "Indian Railways is fundamentally a commercial entity that needsto achieve independent self-sustaining financial viability. It cannot beexpected to make unremunerative business decisions unless it is directly andfully compensated."

As reported in these columns earlier, the committee has also asked theRailways to engage only in those business directly related to its coreactivity of rail-based logistics and passenger transport. "Non-corebusinesses should be spun off on an arms length basis."

Mamata boycotts joint House meet
MS Mamata Banerjee played some pressure politics by staying away from thePresident's address to the joint session of Parliament on Monday. Though, asa member of the Cabinet, Ms Banerjee was required to be present on theoccasion, she conveyed her displeasure over being forced to hike passengerfares by staying put at the Rail Bhawan and taking pre-Budget meetings withthe senior officials of the Railway Board.