A panel led by NITI Aayog member Bibek Debroy has suggested some sweeping changes to the way Indian Railways is run...
A panel led by NITI Aayog member Bibek Debroy has suggested some sweeping changes to the way Indian Railways is run, including facilitating the entry of private players in various activities including running of trains and dispensing with the annual ritual of the Railway Budget.
It has suggested that the financially crippled monolith be unbundled into two independent organisations, one responsible for tracks and infrastructure and another that will operate train services.
The national transporter would focus on core activities to efficiently compete with the private sector and distance itself from non-core activities, such as running a police force, schools, hospitals and production and construction units.
The panel recommended that tracks and signalling equipment, currently being controlled by the railways, be transferred to a government SPV and, with a railway regulator in place, private firms should be permitted to run both passenger and freight trains.
FE first reported that the committee was likely to make these proposals on March 21.
Greater private sector presence in the production of coaches and locomotives has also been recommended. All railway production units would be made independent by converting them into holding companies.
“For national projects and projects on cost-sharing basis, there should be cleaner bearing of the subsidy burden between the Union government and state governments on the one side and the Indian Railways (IR) on the other, covering not only capital investments, but also operating losses,” it said.
In the 2015-16 Railways Budget, railway minister Suresh Prabhu ventured to tap new ways to address the transporter’s chronic resource crunch and announced a huge Rs 8.5-lakh-crore capital investment in the country’s rail network and complementary facilities over five years.
The idea is to mobilise considerably higher amounts of extra-budgetary and non-internal resources by various means: Alliances with states and PSUs and public-private partnerships as well as long-term debt from pension funds and multilateral agencies.
In line with this plan, the railways recently signed an MoU with LIC under which the transporter will raise Rs 1.5 lakh crore from the state-run entity through bonds in five years beginning FY16.
The panel favours access for any new operator wishing to enter the market for operating trains with non-discriminatory access to railway and a level playing field.
An amendment in the Indian Railways Act will be required to allow the levy of tariffs by private operators without administered tariff-determination and fares being left to the market, it said.
The panel has recommended that subsidised tickets be linked to Aadhaar IDs to curb leakages. The Economic Survey had pointed out that the bottom 80% of households comprised only 28.1% of the total passenger traffic on the railways, making it clear that it is not the poor who get subsidised.
Rationalisation of zones and divisions; decentralisation of power to GMs and DRMs; complete switch to commercial accounting for all railway functions; and delinking of RPF, hospitals and schools are among the other steps outlined by the committee.
Apart from Debroy, the panel comprised seven members, including Kerala state Planning Board vice-chairman KM Chandrasekhar, former NSE managing director Ravi Narain, Ajay Tyagi, additional secretary with the department of economic affairs, and Ajay Narayan Jha, additional secretary with the department of expenditure.
Suggestions by various stakeholders on the panel’s report have to be submitted by April 30.