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Can Bibek Debroy recommendations change our life line - Indian Railways?

Indeed Indian Railways is the lifeline of our country where number of people loaded and offloaded by it in a day is comparable to the population of a large country like Australia. It had been the cheapest and fastest mode of surface transport in the country but after independence, populist measures by the politicians had made one of the strongest economic enterprises of the country to an ailing one.

Its glory days can be compared to the days of British India when Acworth Committee in 1921 recommended the separation of Railway Budget from the General Budget as the railway receipts accounted for around 70% of the overall budget which now has reduced to less than 15%.

Since railways are still the most popular mode of transport in the country, it is important to ensure its sustainability and make them run on the lines of economic viability rather than on the basis of populist choices.

For that matter, in September 2014, Government of India constituted a committee under Bibek Debroy , noted  Indian economist  who has also been professor at Centre for Policy Research, New Delhi. He has been given responsibilityto recommend the restructuring of Indian Railways and sources of resource mobilizations.

Some major recommendations of the committee for the reform of Railways are as under –

• Establishment of an independent regulator Railway Regulatory Authority of India (RRAI) with a separate budget and to be independent of the Ministry.
• RRAI will decide on tariffs to revamp the cash-strapped railways.
• Railway Budget should be phased out with gross budgetary support to Indian Railways.
• There is need to improve the internal resource generation and explore varied methods of financing but also to improve utilisation of available resources.
• Committee doesn’t recommended privatization of Indian Railway but allowed participation of private sector in the railway projects.
• Separation of activities like running of hospitals, schools, real estate development, catering, manufacturing of locomotives, coaches and wagons from the core business of running trains.
• State governments should be asked to entirely fund the Government Railway Police (GRP).
• General Managers should have the freedom to choose between private security guards and RPF for security on trains.
• Transition to commercial accounting as the process of accounting in railways is very complicated and it is impossible to figure out the rate of return of the project. Therefore committee recommended redraw the financial statements of the railways in line with the principles and norms nationally and internationally accepted.
• There is a multiplicity of different channels through which people enter the railway services. Railways should consolidate and merge the existing eight organized Group 'A' services into two services i.e. 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).
• For introducing decentralization, committee recommended expanding the powers of station managers, also known as station superintendents.
• The recommended changes should be implemented only by Union Railways ministry in the first five years including the resolution of the social cost issue.
• The committee also asked for adopting the Kakodkar committee’s recommendations to improve safety.

Committee said that its recommendations had three pillars commercial accounting, changes in human resource (HR) policy and the independent regulator. The regulator will have quasi-judicial powers, with the functions of rate and safety regulation, fair access regulation, service standard regulation and licensing, and setting technical standards.

These recommendations are indeed an attempt to run railways on commercial lines by pointing out the ailing features of the sector and encouraging the participation of private sectors.

However, on the question of whether these recommendations would be able to transform our lifeline is highly doubtful. Not because there is any flaw in the recommendations but the opposition to these recommendation by the railways’ employee unions.

While rejecting the report, the displeased employees have already called for observing a “black day” on June 30, 2015. The vehement opposition from inside the railways as well as from other areas including political opposition would not let the full implementation of recommendations in one go.

However, the reform of government’s biggest economic enterprise is also necessary so instead of implementing these recommendations in one go, government may think of taking baby step of reforms by gradually starting with minor reforms.  

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