The independent regulator shall ensure fair and open access and set access charges; establish tariffs in cases where there the market fails to discover a price; and adjudicate disputes between the track-owning organization and train operators; and between competitors. This will make fair and open access a reality and open up both freight and passenger trains, in competition with IR. Transition to commercial accounting Indian Railways should shed its complicated accounting and move to standard commercial accounting by following principles and norms accepted nationally and internationally. Appropriate financial disclosures will facilitate investors in assessment of risk and taking decision to invest in Indian Railways.
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Flipboard Indian Railways: 10 transformative recommendations of Bibek Debroy Committee report From encouraging private players to eliminating the Railway Budget altogether, the report dwells on all that ails the national transporter. From encouraging private players to run trains to eliminating the Railway Budget altogether, the report dwells on all that ails Indian Railways and recommends steps to decentralise its operations for effective management.
In a telephonic conversation with Economic Times website, Bibek Debroy highlighted the ten key recommendations of the interim report. Bibek Debroy will also be available for an interactive Twitter chat on the interim report on EconomicTimes. The report recommends: Refinements in the way Indian Railways prepares and maintains accounts, and costs its businesses, activities and services. The financial statements of Indian Railways need to be re-drawn, consistent with principles and norms nationally and internationally accepted.
Casting accounts in standard commercial accounting format and making appropriate financial disclosures would not only facilitate prospective investors in assessment of risk and decision on their possible investment forays into IR but would also help IR to quantitatively assess impact of policy interventions on cost of various services.
We essentially recommended unifying and streamlining the process," Debroy said. There is also a small but significant element of recruitment of Mechanical Engineers through the Special Class Railway Apprentices examination, followed by training. The eight services can be broadly categorized in two bigger groupings viz. These activities include running hospitals and schools, catering, real estate development, including housing, construction and maintenance of infrastructure, manufacturing locomotives, coaches, wagons and their parts, etc.
To this list must be added the Railway Protection Force and Railway Protection Special Force, which carry out functions which should normally be performed by State Police forces, or conveniently outsourced. To maintain and run these diverse sets of peripheral activities, Indian Railways has created a monolith organizational structure. There is a strong case for revisiting these activities. Indian Railways should focus on core activities to efficiently compete with the private sector.
It will distance itself from non-core activities, such as running a police force, schools, hospitals and production and construction units. Immediate integration of the existing Railway schools into the Kendriya Vidyalaya Sangathana set-up. Instead the needs of the children of Railway employees could be met through subsidizing their education in alternative schools, including private schools.
We are not talking about decentralisation at the level of the GM, who is in charge of a zone. We are talking about decentralisation down to the level of the DRM who is in charge of a division, or station superintendent. A little bit of decentralisation has already happened, but it has only happened at the level of the GM. For the average passenger today, there is no one single person who is responsible for a station," Debroy explained.
The report recommends: To ensure proper decentralization, there is a need to delegate enhanced powers, especially in respect of tenders connected with works, stores procurement, service or even revenue-earning commercial tenders, to the DRMs. Some of the suggestions made by the committee are; finance must completely be under the DRM; ADRMs should be an explicit part of the administrative chain; some earnings by the Division should be retained at the level of the Division.
Coaches and locomotives could follow. Unless they are freed from 59 their constraints, the existing production units will be unable to face this competition, he says. All the production units which are not core to the Indian Railways operations, all the production workshops whether it is coaches locomotives, put them under Indian railway manufacturing company.
We have not said you are privatising it, but you sort of freeing it from the present system," he says. While this remains a government SPV, at least initially, under the administrative control of the Ministry of Railways, making it a government SPV makes it independent of the Ministry of Railways and the government, including in the determination of salary structures, and allows it to borrow.
They do not have access to tracks because as it inevitably happens, Indian Railways gives preference to the Indian Railway trains. Therefore, we recommend having a separate track holding company, which remains public, from that part of Railways which runs trains. This track holding company will be neutral between Indian Railways and the private players," explains Debroy. The independent regulator shall ensure fair and open access and set access charges; establish tariffs in cases where there the market fails to discover a price; and adjudicate disputes between the track-owning organization and train operators; and between competitors.
This will make fair and open access a reality and open up both freight and passenger trains, in competition with IR. The RRAI will have the powers and objectives of economic regulation, including, wherever necessary, tariff regulation; safety regulation; fair access regulation, including access to railway infrastructure for private operators; service standard regulation; licensing and enhancing competition; and setting technical standards. It should possess quasijudicial powers, with appointment and removal of Members distanced from the Ministry of Railways.
Debroy feels that the Ministry of Railways should set the policy, whoise enforcement and implementation will in turn be done by the regulator. There are too many Zones and Divisions and thus a rationalization exercise is required. No other metro is part of the Railway system, why should Kolkata metro be a part of it? Suburban railways should ideally be hived off to State governments, via the joint venture route. The freight rates should be left to market principles, once liberalization takes hold, and no such freight-related social cost should be imposed on Indian Railways.
End gross budgetary support, end this system of paying dividends and therefore you effectively end the railway budget. You not only end the railway budget, you eventually also end the Ministry of Railways and integrate it into a Ministry of Transport," Debroy explains. The modalities by which returns can be secured for such investments should also come under the purview of this Investment Advisory Committee.
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The railways operate more than 12, trains, carrying some 23 million passengers daily. This vast public enterprise is virtually a state within a state. It runs schools, hospitals, police forces and building companies and employs a total of 1. It is in need of modernization. The high-level railway restructuring committee, chaired by noted economist Bibek Debroy, has recommended drastic reforms in the cash-strapped Indian Railways by suggesting to allow privatisation of railways to run passenger as well as freight trains, producing coaches, wagons and locomotives and switching over to commercial accounting of railway functions. This large multiplier has been increasing over time, and the effect is greatest on the manufacturing sector. The committee recommended unifying and streamlining the process.
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