Bibek Debroy Committee’s interim report on Indian Railways

The Bibek Debroy Committee, in its interim report on the Indian Railways, has recommended sweeping changes in the way the ailing organisation runs. 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.

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 that are internationally accepted.
  • IR should consolidate and merge the existing eight organized Group ‘A’ services into two services—the Indian Railway Technical Service (IRTechS) comprising the existing five technical services (IRSE, IRSSE, IRSEE, IRSME and IRSS) and the Indian Railway Logistics Service (IRLogS), comprising the three non-technical services (IRAS, IRPS and IRTS).
  • Indian Railways should focus on core activities to efficiently compete with the private sector. It should distance itself from non-core activities, such as running a police force, schools, hospitals and production and construction units.
  • 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.
  • All existing production units should be placed under a government SPV known as the Indian Railway Manufacturing Company (IRMC). While this remains a government SPV, at least initially, under the administrative control of the Ministry of Railways, making it a government SPV will make it independent of the Ministry of Railways and the government, including in the determination of salary structures, and will allow it to borrow.
  • A separate track holding company, which remains public, should be formed from that part of Railways which runs trains. This track holding company is to be neutral between Indian Railways and the private players
  • Set up a Railway Regulatory Authority of India (RRAI) statutorily, with an independent budget, so that it is truly independent of the Ministry of Railways. The RRAI should 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 quasi-judicial powers, with appointment and removal of Members distanced from the Ministry of Railways.
  • Suburban railways should be hived off to State governments, via the joint venture route. Until this is done, the cost of low suburban fares, if these fares are not increased, must be borne by State governments on a 50/50 basis, with MOUs signed with State governments for this purpose.
  • 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.
  • For raising resources for investments, an Investment Advisory Committee may be set up, consisting of experts, investment bankers and representatives of SEBI, RBI, IDFC and other institutions. The existing assets of Indian Railways may be leveraged to raise resources and institutions created like InviT, NBFCs. The modalities by which returns can be secured for such investments should also come under the purview of this Investment Advisory Committee.
  • A separate Railway budget should be phased out progressively and merged with the General Budget.

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