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Bibek Debroy committee on railway restructuring submitted report to Union Ministry of Railways

Jun 15, 2015 12:00 IST

The High Level Committee (HLC) on railway restructuring headed by Dr Bibek Debroy on 12 June 2015 submitted its final report to the Union Ministry of Railways.

The HLC known as the Committee for Mobilization of Resources for Major Railway Projects
and Restructuring of Railway Ministry and Railway Board was formed in September 2014.

For implementing its recommendations the committee has given the following timetable
Immediate–Liberalization, or the allowing of private entry; changes in the composition of the Railway Board.
0-2 years–Decentralization to zones/divisions; cleaning up finances between Union government and IR.
2 years–Reform of RPF, schools and medical services; transition to commercial accounting, reform of production and construction units.
3 years–Changes in the Railways Act and the Railway Board Act, setting up a Regulator; unified entry into the Railway services; resolution of social costs.
5 years–Bifurcation between Railway Infrastructure Corporation and rest of IR as train operators; end of the Railway Budget.
7 years–Transition of the IR that operates trains to a government-owned SPV.

Major recommendations of the HLC

• It is imperative to split the roles of policy-making, regulation, and operations. There should be clear division of responsibility between the Government of India and railway organizations. The Ministry will only be responsible for policy for the Railway sector and Parliamentary accountability and will give autonomy to the IR.

• Unbundling of Indian Railways (IR) into two independent organizations: one, responsible for the track and infrastructure and another that will operate trains.

• To enable proper decision –making, the IR needs to adopt a commercial accrual-based double entry accounting system. This will help determine the precise extent of subsidization.

• The Railway Board should become like a corporate board for IR. The Chairman of the Railway Board should thus be like a CEO. He/She is not first among equals and should therefore have the powers of final decision-making and veto (in the case of a divided view).

• A Railway Infrastructure Company should be created as a government SPV (with a possibility of disinvesting in the future) that owns the railway infrastructure, delinked from IR.

• A provision needs to be made for open access for any new operator who wishes to enter the market for operating trains with non-discriminatory access to the railway infrastructure and a level playing field.

• Amendment in the Indian Railways Act will be required to allow the levy of tariffs by private operators without administered tariff-determination and fares being left to the market, with a qualification about passenger fares with guaranteed standard of services to a particular passenger class, such as ordinary sitting class and sleeper class.

• Set up a Railway Regulatory Authority of India (RRAI) statutorily, with an independent budget, so that it is truly independent of the Ministry of Railways. It will have the powers and objectives of economic regulation, including, tariff regulation; safety regulation, service standard regulation, etc.

• RRAI should possess quasi judicial powers, with appointment and removal of members distanced from the Union Ministry of Railways.

• There should be an Appellate Tribunal which will hear appeals against the orders of RRAI and further appeals against the orders of the Appellate Tribunal can be directed to the Supreme Court.

• Separation of rail track from rolling stock and unbundling the former and separation and unbundling of non-core as well as peripheral activities.

• Delink of RPF from the IR system and bring in private security for protection of Railway property.

• Immediate integration of the existing Railway schools into the Kendriya Vidyalaya Sangathana set-up.

• All the existing production units should be placed under a government SPV known as the Indian Railway Manufacturing Company (IRMC) under the administrative control of the Ministry of Railways. No privatization need be contemplated, at least initially.

• An ex-cadre post of a Chief Technology Officer (CTO) needs to be created, reporting directly to the Chairman of the Board and all IT initiatives should be integrated and brought under the umbrella of this directorate exclusive of any departmental handling in Board.

• There are too many Zones and Divisions and thus a rationalization exercise is required.

• The head of the Zone (GM) must be fully empowered to take all necessary decisions without reference to Railway Board within the framework of policies.

• There is a need to shift focus to business/customer units like freight business, passenger business, suburban business, parcel business etc. which is essential for IR to be competitive, for its long term-economic viability, customer satisfaction and for being an adaptive/flexible organization.

• IR should consolidate and merge the existing eight organized Group ‘A’ services into two services i.e. the Indian Railway Technical Service (IRTechS) and the Indian Railway Logistics Service (IRLogS), comprising the three non-technical services (IRAS, IRPS and IRTS).

• Subsidies should be targeted towards those who need them. Link Aadhaar numbers for passenger when tickets are purchased. Subsidies on passenger fares to be reimbursed directly into bank accounts, for those who are targeted BPL. Such subsidies must be borne by the Union government.

• IR must encourage on-board catering through large food chains and local restaurants on the payment of a modest license fee. This can be enabled simply through web booking and thus offer customers a wide choice of local cuisine, delivered at his/her choice of station by the restaurant.

• For raising resources for investments, an Investment Advisory Committee may be set up, consisting of experts, investment bankers and representatives of SEBI, RBI, IDFC and other institutions.

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