Railway minister Suresh Prabhu orders review of all catering contracts

NEW DELHI: Railway minister Suresh Prabhu has ordered a review of all catering contracts and blacklisting of companies involved in unfair and corrupt practices after the CBI unearthed an alleged scam in supply of packaged drinking water 'Rail Neer' and arrested two senior officials Sandeep Silas and M S Chalia.

The CBI raid against R K Associates has blown the lid off rampant corruption and near monopoly of the company in railway catering business and unholy nexus between senior railway officials and private caterers.

Over the years, railway catering has emerged as a lucrative business as contracts to provide food is valued at about Rs 2,000 crore a year. About 5.22 lakh meals are served every day by caterers in trains and railway-operated kiosks at stations.

The decision to outsource food business to private companies was based on sound business logic as catering is not the railways' core business. However, the system could not deliver.

The railways' attempt to consolidate its share of the profitable food business failed due to its ad-hoc experiments and 'unwise' intervention by political masters.

During her tenure as minister, Mamata Banerjee came out with a railway catering policy in 2010 which took away catering services from IRCTC, a railway PSU specially set up to provide such services. Today, railways handles the catering business itself.

Attempts to revamp the catering business were shot down by vested interests.

Interestingly, it would be difficult to estimate the railway food business as the transporter doesn't maintain a separate account. The plan to ask passengers for a receipt of food served in mail and express trains, where the food bill is not part of the ticket fare, did not take off. The move was expected to prevent over-billing.

The alleged Rail Neer scandal also highlights the need for cleaning up the catering tendering process as many feel the current system is heavily tilted in favour of companies which have been in the business for years.