Constantly failing to implement tariff reforms and augment internal reserves for the investments needed to stay afloat, Indian Railways has now found itself with a pittance as surplus.

The predicament of the national transporter has now forced the railway ministry to look for external advice to stop it from plunging into a deeper crisis.

According to officials, HDFC non-executive chairman Deepak Parekh, noted for his sagacity among India?s corporate leaders and who has chaired many such government-appointed panels, including the ones on infrastructure financing, is set to be roped in by the ministry to head a committee to rectify the railways? deteriorating finances. The idea is to devise a model to increase the revenues and cut the costs of the transporter.

The proposal for a new committee on railway finances comes at a time when the transporter?s cash reserves (surplus) have dropped below R1 crore now from R39,412 crore accumulated in the five years to 2008-09. The operating ratio (percentage of earning spent on operations) also rose to 94.6% in 2010-11 from 78.7% in 2006-07, which denotes lack of funds available for new investments.

The transporter is currently losing R11 crore a day due to the ban on import of some fertilisers and iron ore mining in Karnataka. Further, the threat of imposition of service tax on passenger fares and freight prevails.

Even through service tax can be passed to the customers, it could affect the competitiveness of the railways, which currently doesn?t pay any tax but only the dividend (interest payable on capital at charge or Plan expenditure) to the government.

?Our surplus has come down to R75 lakh,? railway minister Dinesh Trivedi told reporters on September 16. ?We are setting up a committee to recommend how we can raise income and reduce costs,? Railway Board chairman Vinay Mittal told FE. Although Mittal did not say who would head the panel, sources said Parekh had held several meetings with senior railway board officials in last few days, and was most likely to chair the committee.

When contacted, Parekh said, ?It is for the minister to decide whether I will head the committee on financial issues. But yes I have agreed to be a part of the panel.?

In the past, Parekh has been in government-appointed committees and the advisory panel on financial services, capital markets and infrastructure sector reforms.

In 2010, he drafted the strategy paper on investment by insurance and pension funds in India? infrastructure sector. In 2009, Parekh anchored the revival of scam-ridden software maker Satyam. He was also instrumental in reviving government-owned mutual fund firm Unit Trust of India in late 1990s.

This is not the first time that railways is forming a panel to improve its financial health. It had created a committee under former Reserve Bank of India deputy governor Rakesh Mohan in 2001. But the panel’s recommendations of running railways on commercial lines remain only on paper after a decade. In fact, railways has not revised passenger fares in last eight years.

Railways also set up an expert committee under the chairmanship of Amit Mitra, former secretary general of the Federation of Indian Chambers of Commerce and Industry, in 2009 for innovative funding through public-private partnerships to reduce pressure on own resources.

However, that panel was dissolved mid-way after Mitra became the West Bengal finance minister earlier this year.