Bibek Debroy panel for scrapping rail budget, cost-sharing with state governments

NEW DELHI: The Bibek Debroy panel set up to suggest ways to restructure the railways has suggested merger of railway budget with the general budget while arguing that any increase in passenger fares must be accompanied by better services and amenities.

It has also argued that the state governments must share the financial burden with the railways for suburban passenger services and uneconomic routes.

"Suburban railways should ideally 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 the state governments on a 50/50 basis, with MoUs signed with state governments for this purpose," said the panel's interim report.

The 7-member panel suggested that the subsidy burden for national projects should be borne on a cost-sharing basis between the Centre and state governments on one side and the railways on the other.

Among the slew of measures suggested to tap alternative sources of funding include tapping multilateral funding agencies, take out financing by long-term funds, a long-term bullet bond or a zero-coupon bond and joint ventures with state governments for suburban services. It has also suggested leveraging railways' assets to raise funds such as monetization of land.



It has proposed setting up of an investment advisory committee that will include experts, investment bankers and representatives of Sebi, RBI, IDFC and other institutions.

As reported by TOI, the panel has recommended corporatization of the railway board and separation of roles of policy making, regulation and operations. Suggesting that the railway ministry be only responsible for policy-making, the report recommended setting up of a railway infrastructure company which will own railway infrastructure and an independent regulator for economic regulation which is required as the private sector will only come in if there is fair and open access to infrastructure.

"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 the train operators; and between competitors," said the report.