If Bibek Debroy has his way, private companies will soon be running trains in India

The ailing condition of Indian Railways may soon be a matter of the past. If the government approves the recommendations of the Bibek Debroy headed panel for re-structuring of the railways, private companies may soon be running trains across rail networks. Debroy’s plans include scrapping off the RPF, schools and hospitals from under the Indian Railways’charge, according to a report by The Economic Times.

Besides running passenger trains, the private companies will also be able to run freight trains, produce coaches, wagons and locomotives and switch over to commercial accounting of railway functions. Termed liberalisation and not privatisation, this reform suggests that the rail ministry should only determine policy and not indulge in day-to-day operations of the railways. The ministry should set policy for open access and the framework for the Railway Infrastructure Company, determine the policy for raising resources for social cost obligations, extending the railway network and offering on-budget and targeted subsidies to poor passengers who need them.

The ET report says, the committee has advised to setup an Indian Railway Manufacturing Company to replace all existing production units and another holding company for railway stations. It also suggested setting up a regulator - with statutory backing and independent of the railway ministry as well as the railway board - for fixing tariff, determining cost of service, managing track access, setting technical standards among other things, after private players were allowed to run freight and passenger trains. The panel said it could be called the Railway Regulator Authority of India (RRAI).

While the metro railway in Kolkata is in a mess still figuring out the execution of its expansion plan, Debroy favoured detaching Kolkata Metro Railway Corporation from its ambit for the benefit of the railways.

Debroy has envisioned the railway board as a corporate entity. The chairman should be like a CEO. He/she should not be the first among equals and should, therefore, have the power of final decision-making and veto (in case of divided view). The composition of the board should have member (traction and rolling stock), member (passenger and freight business), member (HR and stores), member (finance and PPP), member (infrastructure) and two outside, independent experts.

An individual should be appointed as chairman or member only if he/she possesses at least three years of service left. This clause should also apply to appointment as general manager, Debroy recommended.

The ET news report further clarified that the committee did not recommend privatization of railways, except in very specific non-core segments.

(Image: Reuters)