Let private players run and maintain passenger trains: Bibek Debroy-headed panel

NEW DELHI: Indian Railways is on the threshold of dramatic changes. A government panel, mandated to suggest ways to overhaul the railways, has recommended the entry of private players to run passenger trains. While there was talk of private sector role in freight, this is the first time a move is being made to bring it in the running of passenger trains.

Along with this, the panel headed by NITI Aayog member Bibek Debroy, has recommened the entry of private companies in operation and maintenance of railways, and has pitched for attracting talent from outside for a radical revamp of the lumbering state-owned behemoth.

The Debroy panel, set up by the Narendra Modi government, has prepared a detailed report (a copy of which is with TOI) which will be presented to the government on Friday. The government is expected to act on the recommendations in the months ahead as railways is regarded as a priority sector for the Modi administration.

The panel has also suggested the scrapping of a separate railway budget — something for which many economists have argued in the past — as the railways was just another public sector company. The railway budget is seen as British colonial legacy which has lingered on for decades.

The radical measures suggested include, switching over to commercial accounting of railway functions, corporatization of railways production units and involving private sector in manufacturing coaches, wagons and locomotives.

The Debroy committee has backed the idea of separating the Railways' unremunerative activities — such as running schools, hospital, stadia, catering, real estate development and its huge security set up, RPF, -- from the core business of the railways. The railways run some of the biggest hospitals and schools across the country.

Commenting on the organizational structure of the railways, the committee has said that it has become an overly centralized and hierarchical organization. Its departments worked in separate silos and that has adversely affected the work culture. The panel suggested rewriting of some of its staffing rules in order to attract outside talent and restructure the house along business units for ushering in efficiency.

The committee has stressed that it was not recommending privatization, in the sense of sale of equity, of the railways. "The committee did not recommend privatization of India Railways. It does, however, endorse private entry, which is not ab initio but ab hinc — as this is already part of the accepted Indian Railway policy — with the provision of an independent regulator," said the report.

The panel noted that private sector participation in railways has been muted when compared to other sectors such as ports, telecom, airports and roads. It found that one of the main reasons was that the same organization dealt with the three prime functions — policy making, regulatory functions and operation.

The committee recommended the setting up of a Railway Regulatory Authority of India (RRAI) with a separate budget and independent of the railway ministry. To ensure level playing field for private players, the regulator should have quasi-judicial powers with statutory backing, it said.

For speedier execution of projects and to cut time and cost run, the panel suggested that construction organizations working at zonal railways must be brought under the umbrella of one or more PSUs such as RVNL, IRCON etc. It has also strongly pitched for decentralisation of decision-making to empower divisional and zonal railway managers.

It was of the view that existing railways production units must be exposed to competition from private sectors. "To face the competition the existing units may be placed under government SPV—Indian Railways Manufacturing Company," it said.